Clever Budgeting Strategies To Stretch Your Dollars Further

It can be easy to get overwhelmed by the thought of budgeting. There are a lot of parts to it, and things can come up that require you to use the money for something else you didn’t foresee.

The good news is budgeting is a framework, and plenty of different budgeting strategies can fit your lifestyle, habits and approaches to managing money. The key is that your budget must cover your required expenses and some of the things you want while enabling you to save for your future. Let’s take a look at some budgeting strategies you can implement so you can find one that fits your goals as well as your lifestyle.

Budgeting Strategies To Stretch Your Dollars

Budgeting is more than just determining your income, expenses and what you can put into savings. You can find a method that fits your lifestyle while helping you meet your goals. Here are some ideas to get you started:

50/30/20 Budget

This budgeting strategy is pretty straightforward and intuitive. You’ll split your after-tax income into the following categories:

• 50 percent on essential expenses such as housing, car payments, groceries, utilities, minimum debt payments and insurance or healthcare.
• 30 percent on wants such as tickets to concerts or sporting events, vacations and new unnecessary clothing or accessories.
• 20 percent on savings such as an emergency fund, retirement savings, setting aside money for future goals, and paying off debts.

This budgeting system enables you to balance your essential purchases with saving for emergencies while still giving you some leeway for items you want. You can further simplify the 50/30/20 budget by setting up automatic deposits and payments.

Envelope System

Need a rigid system to prevent overspending and stay out of debt? This system involves setting a specific spending limit for each category, such as groceries and wants, and then putting the amount of cash you’re dedicating to those categories into separate envelopes. Once an envelope is empty, you can’t spend more money in that category for the rest of the month. 

The idea behind this system is that it gives you something tangible to work with and see the depletion of money instead of simply a number in your checking account.

Zero-Based Budget

This budget is beneficial for overplanners and overspenders alike. With this system, you’ll use every dollar in a specific way, such as saving for a vacation or paying for groceries and other bills, until you don’t have any money left — hence the “zero-based” name. But unless you’re combining this budget with the envelope system, you’ll need a budgeting app to ensure you’re sticking to your budget.

Flexible Budget

A flexible budget enables you to adjust your amounts from month to month, or even from week to week. This may feel more helpful to those who have variable incomes, but it can also be helpful in the event of unexpected car repairs or medical expenses. (If you have an emergency fund, the money in that account can help cover those unforeseen expenses.)

With a flexible budget, you’ll track and manage your money according to what works best for you. It doesn’t stay fixed; rather, you’ll review your income and expenses for the month and then adjust accordingly. For example, if you had car repairs but don’t have an emergency fund to help you cover those expenses, then you may use funds you allotted for other categories, such as entertainment or clothing.

Master the Art of the Monthly Budget

Budgeting is one of those practice-makes-perfect things. It will likely feel uncomfortable and like a hassle at first, but it’s an important practice for financial wellness — and the more you do it, the easier it gets. Get started on the path toward financial wellness and start mastering the art of budgeting with our free resource, “Budgeting for Beginners: A Quick Guide for Budgeting in Your Twenties”.