Top 3 Budgeting Techniques You Can Apply to Any Budget Template
This blog post explains 3 BUDGETING TECHNIQUES YOU CAN APPLY TO YOUR BUDGET TEMPLATE.
Creating the best budget template is no easy task. There are numerous “ultimate” budget templates and techniques, but they can be challenging to apply to every financial situation.
There is no universal budget template or budgeting technique that works for everyone. Each person needs to find the budgeting method that fits their lifestyle.
In this blog, I’ll explain the three most used budget techniques and how you can apply them to any budget template.
These budgeting techniques are effective for monthly budgets, spreadsheet-based budgets, and beginner-friendly budgeting templates.
What Is A Budget?
A budget is an estimation of your income and expenses for a specific period of time, usually a month, used to plan and manage your money. You make a calculation of your income and expenses.
A budget is meant to be re-evaluated regularly, to adapt it to your spending tendencies and seasonal expenses.
Budgets could have these categories:
- Income: salary, gifts, secondary income, etc.
- Expenses: wants, needs, miscellaneous, etc.
You can create a budget on any platform you prefer. Spreadsheets are a great tool for budgeting, but many people also use envelopes or physical budgets.
If this is your first time creating a budget, read my blog post on how to start budgeting. In this beginner’s guide, you’ll learn the main steps you must take in order to create the perfect budget for you.
My TOP 3 Budgeting Techniques
There are many different budgeting techniques you can choose from. You can opt for physical and visible choices, or go for online apps and resources.
I could make a never-ending list of budgeting techniques:
- The envelope budgeting system
- The 60% solution
- Value-based budgeting
- Reverse budgeting
- The priority-based budget
However, that’s the trick with finances. There are so many options that beginning your budgeting journey becomes too difficult.
That’s why I’ll be presenting my favourite budgeting techniques. They are simple, easy to apply, and a great way to start your budgeting journey.
TIP: You can apply them to my FREE Budget Template. If you have never used a spreadsheet template, read my step-by-step guide for beginners.
The 80/20 Budget Method
The 80/20 Budget is a simple choice to start automating your savings. I believe that saving is the most advantageous financial habit one can have.
The 80/20 has only one rule: the minute you get your salary (or total income), save 20% of it. You can’t spend it; you need to make sure you save 20%. For example, if you earn 2.000€ a month, you’d immediately move 400€ into savings and budget the remaining 1.600€.
However, like any budgeting technique, you need to adjust it to your financial reality. If saving 20% feels unrealistic right now, don’t worry, you can start with 5% and increase it over time.
The goal of this budget is to automate savings, not to save an exact amount of money.
Zero-Based Budgeting Technique
Zero-Based Budgets are the foundation of most budgeting techniques. The Zero-Based budget follows one simple rule: you need to give your money a purpose.
What does giving your money a purpose mean? At the end of the month or year, when you prepare your budget, ensure you allocate funds for all your income, without leaving any unplanned expenses.
The Zero-Based budget allows you to identify your main spending categories and be intentional with your money.
That’s why the Zero-Based budget is my favourite budgeting technique. This is the system I use in my own budget planner. However, I do like to combine it with other budgeting tools, for instance, the 80/20 budget or the 50/30/20 budget methods.
The 50/30/20 Budgeting System
The 50/30/20 Budgeting method has a similar approach to the 80/20 budget. According to this budgeting style, your income should be budgeted this way:
- 50% for needs
- 30% for wants
- 20% for savings
Just like the 80/20 budget, this one helps with automated savings. However, it has an additional advantage: it’s more intentional with the remaining 80%.
If we don’t track our expenses and try to be intentional with them, it’s really easy to lose focus and end up overspending. Thanks to the 50/30/20 budgeting method, we can combine the previous two budgeting techniques: we have a zero-based budget with automatic savings.
Nevertheless, as I previously stated, every financial situation is different, and it may occur that the 50/30/20 percentages aren’t suitable for you. In that case, rearrange them. If you keep your focus clear (being intentional with your expenses, specifically “wants”, and ensuring savings every month), you can change the portions to fit your budget.
How To Apply These Budgeting Techniques To Your Budget Template
Once you choose the budgeting technique you’ll be using, applying it to any budgeting tool is simple.
Let’s say you choose the 50/30/20 budgeting technique. Next, you should follow these steps:
- Calculate each percentage from your income. If you have a 2.000€ income, you’ll have 1.000€ for needs, 600€ for wants, and 400€ for savings
- Write down those numbers on your budget template.
- Arrange that money, deciding how much you’ll be spending in each subcategory, as well as how to save it.
- Start tracking your expenses.
The Main Learnings From These Budgeting Techniques
Here is a quick overview of the 3 Budgeting Techniques:
- 80/20 Budget: Best for beginners who want automated savings
- Zero-Based Budget: Best for full control and detailed tracking
- 50/30/20 Budget: Best for balance between structure and flexibility
Budgeting is no easy task; it takes patience, consistency, and perseverance. However, it is no rocket science, and once you get the hang of it, you will see that it’s uncomplicated.
Start slow and steady. Instead of trying to cut out your wants category in the first month, try budgeting for your current spending situation.
First, you must identify your overspending categories. After identifying those expenses, it will be easier to allocate that money and rearrange your budget.
If you don’t know where to start budgeting, read my beginner’s guide to budgeting.
Remember that you aren’t alone in this journey, and that failing is an important part of it. The focus should be on continuing it.
Which of these budgeting techniques feels most realistic for your current lifestyle? If you want a ready-made spreadsheet to try them out, download my free budget template here.