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Budgeting Doesn't Have to Be Boring

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Budgeting money isn’t easy for most people, no matter what their age. When it seems like there is always too much month left at the end of your money, it's time to make a commitment to changing your financial priorities. The good news is that you can start today, regardless of how little cash or how much debt you currently have.

Just as losing weight boils down to consuming fewer calories than you burn, creating a budget and getting out of debt is also a simple concept. You must spend less money than you take in every month. However, the type of budget you initially create depends on whether you are truly broke or just looking to manage your money better.

The 50/30/20 Method

If you're not struggling to make ends meet but could still use some budgeting help, the 50/30/20 method may be appropriate for you. This consists of the following:

  • 50 percent of your net pay goes towards fixed expenses like rent or mortgage, utilities, car insurance, or a car payment. These bills don't vary much from one month to the next. If you're trying to cut back on expenses, it's usually easiest to do so from this category. For example, could you give up a gym membership or another prepaid monthly subscription until your financial situation improves?
  • Flexible spending should make up approximately 30 percent of your budget. This accounts for expenses such as fuel, groceries, dining out, entertainment, vacations, and occasional medical expenses. Groceries are included in this category because the amount can vary depending on whether you have coupons or are entertaining extra people one week.
  • Finally, plan to set aside approximately 20 percent of your budget towards your long-term financial goals. These may include contributing to a 401K or Individual Retirement Account (IRA), building up an emergency fund, and paying off debt like student loans and credit cards. Financial experts agree that all of these things are essential to secure a better financial future.

Budgeting When You're Deeply in Debt

If you owe several thousand dollars in credit card or other unsecured debt, you should switch your focus to paying it off first. This may mean that you may need to forgo saving for retirement and other goals until your debt load is more manageable. To reach this goal, choose one of the following methods:

  • Debt Avalanche: To employ this method, prioritize your debts according to which one has the highest interest rate. By focusing on paying that debt first, you can potentially save thousands of dollars in the time it takes to pay off your debt.
  • Debt Snowball: With this method, you pay off your smallest debt first and then move on to the next one. Most people say this gives them a sense of accomplishment and the momentum to keep going.

How to Cut Expenses While You're Reducing Debt

To use either the debt avalanche or the debt snowball method, it's often necessary to cut expenses, increase income, or both. The first step is to find out where your money really goes. Before committing to a budget, track every penny you spend for one month. This gives you the opportunity to identify problem areas and make a plan for cutting costs wherever possible.

You will need to get creative when slashing expenses, such as giving up unnecessary cell phone features and reviewing your insurance policies for coverage you may not need. However, you should leave some room in your budget for fun or you will quickly feel burdened and want to give up on your goals. Just remind yourself that each stay you remained disciplined now is one more day of financial freedom in the future.

Comments 2 comments

billybuc profile image

billybuc 13 days ago from Olympia, WA

I'm 68. I would estimate I've had to budget for almost fifty of those years. It definitely isn't boring. Challenging sometimes, yes, but never boring. :) Great tips here.


nybride710 profile image

nybride710 13 days ago from Minnesota Author

I am 48 and wish I would have gotten on board earlier. I enjoy keeping track of our money now.

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