Everything you want and don’t want to know about personal budgets

What is a budget?

A budget is how you plan to spend YOUR money. Its a system to keep track what dollars are coming in and where/when they are going out. Overall the keyword is PLAN.

Why do you need a budget?

If you find yourself at the end of the month asking yourself, where did my money go or stating “I just got paid, why am I low on money?”

Then you most likely need a budget.

As stated previously, budgets keep track of your spending so you know what’s coming in and what’s going out. It can also identify possible bad financial habits, trouble spending areas, and it can help you SAVE.

Budgets are your best friend.

Several types of budgeting systems/techniques are commonly described including:

50/30/20 Rule:

This rule refers to the division of your monthly salary into categories according to NEEDS, WANTS, and SAVINGS.

50% of your income is devoted to what you NEED to survive (i.e. rent/mortgage, groceries, etc).

30% is devoted to what you WANT in life (i.e. clothes shopping, restaurants, movies, etc).

And lastly 20% is allocated your to savings/investments.

Envelope System:

The envelope system requires obtaining cash/checks and placing them into pre-labeled envelopes which are to be used for a specific purpose. If you estimate that you need $250 for utilities then you place that amount in an labeled envelope to use throughout the month. The same thing is done for everything you need to pay (including yourself) throughout the month.

At the end of the month, any left over money in your envelopes can be saved or used to buy yourself something nice.

We recommend saving it but thats us 🙂

Pay yourself first:

This is the simplest budget of them all. Treat yourself as a bill and make sure you savings/investments are funded before you pay anything else throughout the month. The rest of the money is divided up according to ensure your bills are taken care of.

Zero Based Budgets

This budget technique can be used in conjunction with the others previously listed. Every cent is accounted for. If your estimated budget over shoots your true spending that left over that money is then placed into another category like savings.

All of these techniques help frame the method you choose to use to visualize your budget.

Old-School Method	Pen, paper, and a caculator
Tech-Savy Method	Spreadsheet Software (i.e. Excel, Google Docs)
Time-Saver Method	Mobile/Website Applications: Mint Personal Capital YNAB NerdWallet

Ways to create a budget

Whatever method/technique you decide to use, just stick with it. Budgets aren’t easy nor comfortable when you start one. However if you’re flexible and willing to adapt/revise you can create a budget you’ll be happy with.

As always if you have questions or concerns regarding creating an emergency fund, investing, real estate, insurance, or planning for the future, don’t be afraid to speak with qualified financial advisor. Smart Asset has a great tool to find an advisor in your area or feel free to email me (contact@surgifi.com) to help you on your path to financial independence.