It’s been said EVERYWHERE and it’s always one of the first things on the list when it comes to taking control of your money.
Businesses do it. Governments implement it. And now, you’ll be trying it out. Why? Because budgeting is our best friend when it comes to not overspending, saving, and improving our finances.
Think of budgeting as more of a plan for your money. Whatever financial situation you’re currently in right now, it doesn’t hurt to have a plan for your money because you’re essentially planning your way to fulfilling your financial goals - clearing out your education loan, having an emergency fund, or just never worrying about going broke.
Budgeting isn’t a one-size-fits-all approach, but here are a few methods to start with.
The Famous: 50/30/20 Rule
Simple yet effective, the 50/30/20 rule is all about breaking down your income into 3 parts: needs, wants, and savings.
50% goes to your needs, which includes rent, food, bills, fuel, and other items that need to be paid every month. Your wants will get 30%, this includes shopping, eating out, movies, etc. Lastly, the vital 20% are your savings.
The great thing about this method is that you’re free to adjust the allocations. For example, if you calculated that your needs do not take up 50% of your income, you could always move the extra cash to your savings. #budgetexpert
The Strict: Zero Budgeting
Okay, if you’re all about extreme drive, power, and determination (go you rockstar!) then zero-based budgeting could be for you.
Income - Expenses = ZERO
Zero-based budgeting is about setting a purpose for every note. This means adding up your monthly spending and savings to equal your income.
Let’s say you earn RM5000 minus tax. If your monthly expenses are about RM2800, then that leaves RM2200 for your savings. The tricky part about this is that you have to be able to accurately plan out your expenses every month and make sure not to go over budget for any one category.
The zero-based budgeting method also gives you room for error because you’ve literally planned your money for the month.
Take it from the famous words of Winston Churchill: He who fails to plan plans to fail.
The Offbeat: Pay-Yourself-First Budget
Now for some of us who aren’t really into detailed numbers and excel sheets, the Pay-Yourself-First Budget is definitely at the top of your list.
The basis is that you simply set aside a set amount of your income for your savings and/or debt repayments. That’s it.
Once you’ve set it aside, the rest of your money goes to your primary essentials to be paid for and your ‘fun’ spending.
As simple as it may seem, paying yourself first does make it easier to prioritise saving, but it’s also important to remember to rein in the impulses to overspend.
As we’ve mentioned before, budgeting isn’t a one size fits all approach. Try out either of these methods, adjust, and you’ll eventually master the art of budgeting.
#BudgetWithBigpay with the in-app analytics feature, you’ll be able to track how much you’ve spent in a month and in which categories such as retail, food & beverage, transportation, and even in-and-out bank transfers.
Happy budgeting, ya’ll!