How to Find Your Budgeting Personality
1. The Cash Diet
The Cash Diet is really as simple as it sounds: you pay for everything in cash. Granted, it's the digital age, so I get that not everything can be paid for with actual dollar bills. If you need to buy a plane ticket or pay your bills, you'll probably have to do those online. But everything else must be paid for in cash.
Just the Basics: The Cash Diet
Here's an overview of how to successfully utilize a Cash Diet budget:
2. The Tracking Every Penny System
The name says it all: you're going to record every financial transaction you make, down to the penny. You can customize this budget plan to suit your style of tracking expenses. For example, you can total your money spent at the end of each day or wait to crunch the numbers 'til the last day of the week. You might record your purchases by writing down each transaction (on your phone, of course; nobody does that pen-and-paper thing anymore). Or you may want to exclusively use one credit card for all purchases so you can just log into your account and make note of your daily or weekly transactions.
Just the Basics: The Tracking Every Penny System
3. The Envelope System
The Envelope System dictates how much you can spend in certain categories.
This can be done digitally or with physical envelopes. Personally, I find the latter to be more motivating, but again it is potentially problematic to keep that much cash stashed in your home.
Take some time to sit down and write out your financial responsibilities and priorities into categories that will become envelopes. Common envelopes include rent/mortgage, utilities, transportation, cell phone bill, student loans, other debts, food, pet and/or kid, emergency fund, retirement, and entertainment. Once the envelopes are defined, it's time to fund them. Determine how much money out of each paycheck should be going into your various funds. Do you get paid bi-weekly and your rent is $800? Then $400 of each paycheck goes into the rent envelope.
Just the Basics: The Envelope System
Adapted from BROKE MILLENNIAL by Erin Lowry with the permission of TarcherPerigee, an imprint of Penguin Random House. Copyright © 2017 by Erin Lowry.
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