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Many people start feeling depressed when it comes to budgeting. It’s usually associated with an unpleasant, difficult, or useless task. But we have a few tips that will turn your savings into a real phenomenon, not just a myth everyone knows about but has never seen.
Bright Side knows some tricks that make money a tool leading to a better life. Read and follow them.
6. The 20/80 method
Using this plan implies you’re able to do the following actions: Pay off all your debt and bank loans. Invest in a business or save around 20% of your monthly salary. This is the money that you can’t spend. Spend the other 80% of your salary in whatever way you want. You should also remember that you should save first, then spend the rest. If 20% is too big of a number, try to start with 10% or at least 5%. This will help you develop a habit and create an initial saving’s fund.
5. The 60/10/10/10/10 method
This method works this way: 60% for your main expenses, 10% for your retirement, 10% for long-term purchases, 10% for rare expenses, 10% for entertainment. Your main expenses are food, utilities, transportation, and clothing. A car, a house renovation, or paying off debt all belong to long-term purchases. Rare expenses would be things like repairing your car, visiting a doctor, or expensive gifts. If you have a large debt, it’s better to just repurpose the 10% that you saved for retirement until you pay it off.
4. The 10% method
This method means you have to save 10% of your money from your total income. Such a small amount won’t affect your budget or the quality of your life. It’s even better to put this money in a bank so you don’t have the urge to spend it right away. If you can easily save 10%, try 15% or even 20%.
3. The “halves” method
This method suggests that you divide all your money into 2 parts: the first part goes toward everyday needs, the second part goes to the bank. When your cash on hand is gone, go to the bank and take half of the sum you have in there. Repeat as needed. It works best for those who can’t control their everyday expenses.
2. The “4 envelopes” method
First of all, you have to count the total sum of your upcoming income. Then you “take” money for big purchases or you save 10-20%. Then you “take” money for regular expenses (rent, school, parking, and so on). The remaining sum should then be divided into 4 parts. So we get 4 envelopes, one for each week. This money may be spent on anything you want (food, entertainment, transportation). Just don’t forget about the budget you have.
1. The granny method
This idea is really simple: For each important expense category you have a special envelope. You write its name and the total that you need. These categories depend on the person and their lifestyle, and can include things like: food, clothing, medicine, car, entertainment, and so on. All income is divided into parts, depending on the number of categories, and put into envelopes. When you need money, you take it from the relevant envelope. If you run out of money from the “entertainment” envelope, it’s better to avoid entertainment that you have to pay for until your source of income replenishes itself. If you run out of money from an important envelope, like the “food” envelope, you take money from a less significant envelope and adjust the future sum you put into this envelope. The remaining money may be spent or saved. It depends on your goals and the amount of money left.
Which of the methods suits you the best?
Illustrated by Anastasiya Pavlova for BrightSide.me