What is Best Way to Budget Money?

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Hello everyone,

I would appreciate some help since I am looking for the best approach to manage my finances. Which techniques or resources have you discovered work best for tracking spending, managing your money, and saving money? I’m open to suggestions for any applications, spreadsheets, and budgeting techniques.

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Hi
The best way to budget money is by using the 50/30/20 rule: allocate 50% to needs, 30% to wants, and 20% to savings or debt repayment.

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What helped me is using an app called YNAB (You Need a Budget) to track spending—it’s simple and keeps me on track. I also started using a spreadsheet just to see everything laid out, and it made a big difference. Little tip: automate your savings, so it’s done before you even think about spending.

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Reducing your monthly expenses by not overspending or overbuying is the biggest and best approach to save money.

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To budget money effectively, you can use these methods: the 50/30/20 Rule, where you allocate 50% of your income to needs, 30% to wants, and 20% to savings and debt; the Envelope System, which involves using cash in envelopes for different expenses; Zero-Based Budgeting, where every dollar is assigned a specific purpose; and Pay Yourself First, where you save a set amount before spending.

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All you need is a book on budgeting to get the basics, excel spreadsheet, and maybe a notebook.

The important thing is to keep track. Carry a small notebook or index cards to write down expenses as they happen, or put receipts in your wallet until you’re home and can record.

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Let me share a good example for Budgeting

  1. Determine Your Income After Taxes: Start by calculating how much money you have after taxes are deducted.
  2. Allocate 50% to Necessities: Set aside half of your income for essential expenses like rent, utilities, groceries, and transportation.
  3. Give 30% to Wants: Allocate 30% of your income to discretionary spending, such as dining out, entertainment, and hobbies.
  4. Save 20%: Reserve 20% of your income for savings, investments, or paying off debt.
  5. Categorize Last Month’s Spending: Review your previous month’s expenses and sort them into the categories of necessities, wants, and savings.
  6. Review and Modify Your Expenditures: Regularly check your spending habits and make adjustments to ensure you’re sticking to your budget.