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Finding the right budgeting method for you can make it a lot easier to achieve your financial goals.  Ideally, you want a plan that’s easy to follow and doesn’t feel like torture.  Keep in mind that what works for your best friend, may not work for you so test drive a few different strategies.  Here are three budgeting methods that can drastically improve your finances.

Cash envelope system

Credit cards can be your best friend or worst enemy.  They’re a lifesaver when you’re short on cash but it’s also easy to get carried away.  If your credit card is constantly getting you into trouble, switch to the cash envelope system.  With this approach, you’ll divide your money into different envelopes according to your monthly bills.  Since you’ll be relying solely on cash, you’ll be required to put extra thought into each purchase.  Start by reviewing your last few bank statements to get a good idea of where your money goes and how much to budget for each area.  Then create an envelope for each category with the budgeted amount written clearly on the front.  Anytime you need to make a purchase, you’ll withdraw the cash from the matching envelope.  If you get any change, don’t forget to put it back in the right spot.

50/30/20 rule

One of the main reasons people hate budgeting is because they assume you have to give up everything you love.  However, that’s not the case.  With the 50/30/20 rule, you can take care of your financial responsibilities and still have a life.  This method works by dividing your take home pay into percentages.  Half of your income will go towards essentials such as groceries, housing, utilities, insurance and transportation. Some people also place their minimum credit card payment in this category.  From there, 30 percent of your remaining income will go towards things that make life more enjoyable such as your cell phone, going out to eat, things of that nature.  The final 20 percent can be used to build your rainy-day fund, save for retirement or to dig yourself out of debt.

Zero-based method

When you don’t have a plan for your money, you’re more likely to waste it on foolishness.  The main idea behind the zero-based method is to give every dollar a job.  You want to get your income and expenses to balance out with no money left over.  Start by writing two lists, one for your monthly income and the other for your expenses.  Compare both lists to see how they measure up.  If you’ve budgeted for all the bills and see there’s $50 remaining, you need to find something to do with the extra cash.  For example, you can put in the bank or use it to make an extra debt payment.  If your calculations show that you’ve been overspending, start trimming your expenses until you break even.  Keep track of your spending throughout the month and make adjustments as needed.