Your budget does not matter if it is not right for you.
Budgeting and planning for your expenses are just the first steps to having control over your finances.
Sticking and executing your budget according to your plan is the real challenge.
Learn about how budget templates and finance apps can help you be on track to the road of financial freedom via CNN Money.
Household Budget: Does Your Plan Fit?
About 20% of people budget “in their heads,” according to a study by Bankrate.
That may be why a majority of Americans don’t have enough savings to cover an unexpected $1,000 expense.
Creating a household budget seems to be easy.
There are a lot of templates and guides that you can follow online.
However, the problems come with creating a budget that is right for you and your family.
Executing this budget is another challenge that can be quite difficult for the adventurous, busy and YOLO generation of today.
It’s not just you—here’s some interesting science behind why budgeting is so difficult. https://t.co/PRx2uLZu9U
— Beth Kobliner (@BethKobliner) June 16, 2017
Common Budgeting Strategies
One size does not fit all, the same is true with your household budget.
Here are some of the most basic budgeting techniques that may suit your needs:
The 50-30-20 Household Budget
This type of budget allocates half of your salary to your needs, 30% for extras and 20% for savings and debts.
The challenge in this budgeting strategy is identifying your wants over your needs.
Do you really need to eat every weekend at your favorite restaurant or is this a want you’ll remove on your monthly budget?
Acknowledging the things you really need over the wants you can live without makes this budgeting suitable for young adults with few financial responsibilities.
A budget template would be enough to monitor this type of budgeting strategy.
Top-Down Household Budget
This is just like the 50-30-20 budget, only more detailed and specific.
Categorize your needs into different sections like rent, utility bills, food, transportation and such.
Wants can be subdivided into travel fund, gym membership or a brand new car purchase.
Savings may include saving for retirement, your kids’ college fund, or emergency fund.
This type of budgeting strategy is perfect for families that are just starting up With goals that have a specific time frame.
Mobile finance apps like Mint App might be a helpful tool to keep track with this kind of budgeting system.
Reverse Household Budget
This is the most difficult strategies in CNN Money’s list but is also the most rewarding.
This system equips that “pay yourself first” strategy setting aside a percentage of your earnings directly to savings.
You are left with an amount allocated responsibly to your basic needs and a few extras.
This is the least flexible budgeting strategy that will most likely be difficult for beginners.
It would be advisable to have stable financial reserves before attempting this type of budgeting system to successfully reach a specific financial goal.
Budgeting is A Discipline
There are other budgeting strategies that can suit your household or a specific need that you have at present. However, even with different techniques, budgeting tools and applications available to track each household budget progress, it all boils down to discipline and taking full control over one’s finances to successfully achieve financial freedom.
Here’s a look at the best budgeting apps available on Android via Tasia Custode’s video:
Do you have a budgeting tip or app to share? Post your stories in our comments section!
Take control over your finances even on the go through Managing Your Finances With Budgeting App!