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The 4 Easiest Ways to Budget: Which Helps You Most?


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Budgeting strikes fear (or annoyance, or disgust) into the hearts of many people, because we tend to see budgeting as something that is tedious, is complicated and keeps us from having any form. But budgeting doesn't have to be a dirty word. Here are four ways to make budgeting as easy and painless as possible.

1. Automate It

To make room for savings in your budget, pay yourself first. Set up automatic deductions from your checking to your savings account each pay period so you're not tempted to spend money you've earmarked for your emergency fund or retirement goals.

To avoid late fees and having to keep track of numerous due dates, set up automatic payments for as many bills as you can. The amount due will be deducted straight from your bank account when it's due, and you won't need to worry about mailing anything out by a certain date.

Remove the potential for human error as much as possible, and you'll find budgeting is already a lot easier.

2. Use Budgeting Tools

You don't have to go it alone, especially if you're not mathematically or organizationally gifted.

There are tons of great programs and software out there that can help you create a budget, track your spending and identify areas for improvement. Some are free, and some require a purchase -- but they're all waiting to make budgeting a breeze.

Check out free websites like Personal Capital or Mint that let you view all your accounts at a glance, or use an old-school worksheet to help you track your spending. Whichever tool you choose, make sure it feels intuitive and easy-to-use to you.

3. Adopt an 80/20 Budget

If the idea of tracking every purchase and reviewing your budget line-by-line makes you crazy, you may want to adopt an "anti-budget" or 80/20 budget.

Simply put, an 80/20 budget is where you put 20 percent of your income into savings automatically. This money becomes untouchable, and you have the other 80 percent available for the rest of your monthly expenses, such as groceries, utilities and rent.

If you find your monthly expenses go over 80 percent? Then it's time to trim some fat and find spending areas you can reduce.

You can also adjust the "anti-budget" to fit your own personal financial goals. If you'd like more savings to fall back on, try a 70/30 budget. If you want to aggressive pay down debt, you may want to consider a 60/40 (or even a 50/50) budget until you're out of the hole.

4. Try the Envelope System

Another alternative is the envelope system, made famous by financial guru Dave Ramsey. If you're a visual or tactile person, this could be the system that helps you finally see what budgeting looks like in action.

The envelope method involves taking all of the discretionary cash you have for the month and placing it in -- you guessed it -- envelopes that represent each of your budget categories.

If you can only afford to spend $300 a month on groceries, you place $300 in the "groceries" envelope. Being able to see how much cash you have left for the month helps you stretch out your spending-and if you use up what's in the envelope before the month is over, you're forced to make do with what you've already spent. (Maybe it's time to get creative with leftovers, "shop your pantry" or eat rice and beans for the rest of the month.)

If you're the sort who tends to swipe a card and not really think about what you're spending, the envelope system could be a great, old-fashioned way to get back to basics.

Paula Pant quit her office job in 2008, traveled to 32 countries and became a successful real estate investor. Her blog Afford Anything is the groundswell of a rebellion against standard, tired old financial advice that says you should skip lattes and chain yourself to a desk for 40 years. Afford Anything is dedicated to crushing limits, creating riches and maximizing life.


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