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The Best Budget for You

The Best Budget for You5/25/2018

creating and sticking to a budget is one of the most important steps to taking control of your finances and achieving your goals, but many Americans can’t stick with it. One of the problems may be working with a budget that is not right for you. Read about the different types of budgets and the goals of each budgeting strategy. Help yourself succeed by choosing a budget that fits your lifestyle!


Build The Perfect Budget - close up of a person with a calculator and spreadsheets

Zero-Sum Budgeting

Zero-Sum Budgeting, also commonly referred to as Zero-Based Budgeting, is a budgeting method in which your income minus your expenses equals zero. In this budgeting system, every dollar is accounted for. 

To build a zero-sum budget, decide in advance where you want to spend your available income. First, take all your available income and decide in advance where you want to spend it. Your categories can be as broad or granular as you’d like. Don’t forget to add a category for savings. Once you have your categories figured out you’ll need to set a budget for each category. At the end, your income minus planned expenses should equal zero. If you have income that’s unaccounted for you can increase the budget of a category, like adding it to savings.

Cash Only Budget

The goal of a cash-only budget is to use just cash to pay for all your spending needs. This can help you avoid the temptation of making unnecessary purchases on your credit card. In the digital age, we’ve become accustomed to online and mobile banking. But taking advantage of features such as online billpay doesn’t make the Cash Only Budget method completely impossible. 

First, figure out what transactions you will pay for online, like automated bills or credit card payments. Then, plan on paying cash for everything else. Withdraw cash from your checking account and sub-divide it into main spending categories, like dining out, gas, groceries or other regular expenses. Write each category on an envelope and keep your cash in the designated envelopes. You’ll be able to see how much you have left after each purchase!

When creating a budget, break your expenses up into Fixed and Variable expense categories -  Image of a woman going over expense sheets

Reverse Budgeting

Reverse budgeting is sometimes known as the “Pay Yourself First” budget. In a Pay Yourself First budget, you build your budget around your savings goals rather than focusing on fixed and variable expenses. 

Revere budgeting utilizes three categories: fixed expenses, savings goals, and everything else (variable expenses). Start by calculating how much you will need for fixed expenses, like rent and utilities, and future savings goals. Automate payment on as much of those fixed expenses as possible and set up automatic deposits into your savings account. Whatever is left is what you have for variable expenses. 

Survival Budget

A survival budget is great for people who are struggling to make ends meet or have never had a budget. In this method, you will want to focus on paying your necessary expenses.  

First, figure out where your money is going. You can use a banking or budget app or create a spreadsheet. Then you’ll split your expenses into two categories: Must-Haves and Everything Else. 

Then you’ll try to cut areas of everything else to save money, find ways to cut down on existing bills, or get rid of “must haves” that aren’t really must-haves, like cable TV or streaming services. 

Having an emergency fund set aside can help ease the stress of a survival budget if you are experiencing job loss or another financial crisis. 

Incremental Improvement Budgeting

Already have a budget but want to improve? An incremental Improvement Budget may be the right option for you. Start by looking at your previous or existing budget and assess where most of your money is spent. Once you have that area identified, you’ll take these three action steps: figure out a way to control spending for that category, establish a way to measure spending, and decide where you want the money you’re saving to go. Putting a named goal to savings, like vacation savings or retirement account, will make you more likely to control and measure spending in that category.

Include savings in your budget - Image of a person adding a coin to a pile of coins with dirt and seeds

Start Building Your Budget

Once you’ve chosen a budget that works best for your lifestyle, it will be easier to stick to a budget and achieve your goals! No matter what your goals are, PCU can help you get there. We have several savings accounts and investment account options! Talk to one of our financial representatives to find the best savings account for you and your family. Visit any of our convenient Rockland and Bergen County locations in Nanuet, Orangeburg, or New City. 

Types of Budgeting Methods  Zero-Sum Budgeting  A budgeting method in which your income minus your expenses equals zero. Every dollar is accounted for    Cash Only Budget  Use just cash to pay for all your spending needs. This can help you avoid making unnecessary credit card purchases.    Reverse-Budgeting  Pay yourself first. Build your budget around your savings goals rather than focusing on expenses.    Survival Budget  Focus on paying your necessary expenses. Cut down on everything else.    Incremental Improvement Budgeting  Make incremental improvements to your existing budget.

More Budgeting Tips:

Budgeting for a specific occasion? Check out these blogs to help you budget for the holidays or a special event:

Thanksgiving On a Budget
Create And Stick to A Wedding Budget 
Valentine’s On a Dime
Three Apps to Help with Your Finances

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