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Goldilocks Budget

Let's be honest, when anyone hears the word "budget" most people aren't super excited. In fact, most people experience dread, anxiety and a case of 'oh do you need that labor intensive project done right now? That I've been putting off for 6 months? I'd love to do it!'

When it comes down to it, a budget is a guideline to spend, save and take actions on your goals.

There are many types of budgets, but the three I find most common are:

Zero based budget

The idea of a zero based budget is to essentially pre-spend and account for all your money for the month.

Start with your money coming in at the top.

List out your expenses for the month.

Some categories may include:

  • Rent/mortgage

  • Electric

  • Gas

  • Car payment

  • Clothes

  • Eating out

  • Travel

  • Savings

  • Givings

  • Cable/Internet

Be sure to include one-off or bi-annual categories like

  • Car insurance

  • Yearly termite inspection

  • Home warranty

You keep subtracting the expenses from your monthly income until $0 remains. This ensures you know how you are going to spend your money for the month, and all bills are accounted for.

50/30/20 budget

The 50/30/20 budget divides your monthly income into 50% on your needs, 30% on your wants and 20% on your savings.

Your needs would consist of items like rent/mortgage, basic utilities, insurance payments, groceries, etc.

Your wants consist of items like travel, eating out, subscriptions, etc.

Your savings would go to building up your emergency fund, paying off debt, contributing to retirement savings, etc.

70/20/10 budget

The 70/20/10 budget divides your monthly income into 70% on your needs, 20% to your savings and 10% to donate.

This is a good option for those who have an automatic separation of your money, so the 20% and 10% are automatically moved to a different account. This allows you to know whatever is in your account is available to spend.

Which is your preferred method?