Three Easy Ways to Budget

Three Ways to Pay Off Debt
March 5, 2015
Four Ways That Spring Cleaning Helps You Save Money
March 25, 2015
Show all

Three Easy Ways to Budget

You want to create a budget, but the idea of listing every single expense sounds time-consuming and daunting. You’re not realistically going to track every banana that you buy; that’s just too much effort.

How can you budget in a way that’s manageable and easy? Here are three ideas.

#1: Two-category budget

The two-category budget, also called the anti-budget, is as simple as it gets: You pull your savings from the top and then spend the rest. You don’t need to worry about tracking every single purchase; you simply “pay yourself” (pay into your savings) first and foremost, and then spend the rest of the money without a shred of guilt.

This strategy hinges on the idea that you’ll automatically adjust your lifestyle, unconsciously, to fit whatever amount of money you allow yourself to keep. By tucking away your savings first, you mentally recalibrate into living on less.

#2: The three-category budget

This simple three-category strategy allows you to break up your spending into three areas: needs, wants and savings. This is similar to the two-category budget outlined above, except that instead of lumping your money into ‘savings’ and ‘spending,’ you can subdivide spending into ‘needs’ and ‘wants.’

This gives you a better idea of how much of your money is going towards discretionary costs, such as clothes, movies, fast food, restaurants, holidays and other non-necessary items. If you need to trim back your budget, this strategy helps you identify how much you’re spending on discretionary purchases so that you can make realistic adjustments.

#3: The five-category budget

This budget allows you to break up your savings into five simple categories: savings, housing, transit, bills and wants. Let’s explain:

  • “Savings” refers to both money you put in investment or savings accounts, and also money you use to repay debt over-and-above the minimum monthly payment.
  • “Housing” refers to all home-related costs, like electricity, heating, repairs and maintenance, and furnishings.
  • “Transit” refers to all vehicle-and-transit costs, like petrol, maintenance, train tickets, insurance and more.
  • “Bills” refer to all other fixed or necessary bills.
  • “Wants” refers to discretionary spending like restaurants, movies and holiday spending.

The advantage to this budget is that you can see broadly how your money is getting spent, which means that you have an understanding of where your funds are going. At the same time, you don’t need to micro-track every small purchase that you make; you can separate your expenses into a manageable number of categories.

 

COVID-19 ANNOUNCEMENT

MARCH 23RD 2020

At this time we are continuing business as usual however our team will now largely be working from home. This limits our phone contact availability. Customer support remains available Monday to Friday but please email in to info@oraclelegal.com with your query. We aim to get back to you within 48 hours. On receipt of PPI refunds our fees remain payable and can be paid via our website www.oraclelegal.co.uk/payments/ or via BACS. We are also working on some other areas of potential claim for you in connection with your PPI and will be in touch shortly where applicable to present this to you.

IMPORTANT:The last day we can accept a new claim is Friday 23rd August – midday – to ensure the paperwork is properly processed and lodged with your lender before the cut-off time.