My husband and I wholeheartedly attribute our success with debt repayment to having a budget. I don’t mean a budget where you just have a vague idea of where your money is going; we tried that, and it didn’t work. I mean a budget that is thoughtfully planned out and written down so that you can see it and hold yourself accountable. In the Broke on Purpose Ebook, I give you the fundamentals needed to create a budget. However, over time I’ve realized that budgeting methods aren’t one size fits all. Methods that work for one person aren’t necessarily going to work for another. Think of it like dieting or studying for a test. For some people, it will come easy and for others, they will need to put more work into it. However there is one thing about budgeting that will always remain the same is that you need to write it out. Writing out your budget will reveal so much about you and your spending habits. It will tell you if you’re making enough to support your lifestyle, show you areas where you can cut back, and even reveal your spending habits you didn’t even realize you had.
Choosing the best budgeting method is essential to your financial success. In our household, we use an online budgeting system called EveryDollar. It’s a free budgeting tool created by Dave Ramsey. Everydollar.com also comes with an iPhone app which allows us to carry our budget with us everywhere and updates it the minute we spend money. I’m very anal about tracking where every cent is going so this works great for our family.
Some opt to use the cash envelope system to budget. The cash envelope system is excellent for people who need a little discipline and accountability when it comes to keeping up with their budgets. Each envelope has a designated category like groceries, gas, or even dining out. You place the amount you planned into the envelope at the beginning of the month and only spend what’s in the envelope when paying for that particular category. Once they money in the envelope is gone it means you can no longer spend in that category. Like I mentioned this is a great method for those who need a bit more discipline when it comes to keeping up with their budget as long as you don’t try to rob peter to pay paul.
Having multiple accounts is becoming more and more of a popular trend in the budgeting world. Instead of having all your money in one bank account users of this method open three or four separate checking or savings accounts and put money into each account based on each category. One account can be used for paying bills while the other can be used for holding your “play” money. I’ve even seen people open accounts save up and pay irregular bills like car insurance and taxes. Most people do this so that they don’t have to worry about overspending. Like the cash envelope method of budgeting once that money is gone, it’s gone. The only downside to this method would be having to keep up with multiple account balance and debit cards. If you’re a beginner budgeter I wouldn’t recommend this method.
Finding the perfect budgeting method for you may take a little trial and error. Remember, if you’re new to budgeting it can take up to three months before you really get the hang of the process so don’t get discouraged if things don’t work out for you the first time around. If you’re looking for a great way to start off your budget, grab the Broke on Purpose Financial Worksheet kit which comes with a great starter budget!
