Find the Budgeting Method That’s Right For You

Managing spending and saving can be an ongoing challenge, regardless of how much money you make. Creating a budget is often the first step toward taking charge of your money and having enough left over to save and invest. A number of budgeting methods are workable options, with each method offering various advantages that can be appealing. But which method is right for you? Whether you prefer the old-fashioned hard-copy spreadsheet method or you like the idea of seamlessly tracking your spending on a mobile app, implementing a budget is an effective way to manage money, track spending, and start build your savings.

Envelope System

Dave Ramsey developed the cash-only envelope system as a way to allocate specific dollar amounts for different categories of spending. For example, if you budget $100 each month for restaurant spending, you would place this amount of cash into an envelope labeled “Restaurants.” As you proceed through each month and spend money on various expenses, you will take the money you set aside for that expense out of the envelope as you need it. When the envelope is empty, spending for that category is finished for the month. If you have cash left over, you can either reward yourself with extra spending or save it.

50-30-20 Budgeting Rule

The proportional budget model involves creating guidelines for spending and saving based on percentages of income. With the 50-30-20 model, you would allocate 50 percent of your income on needs such as groceries and other necessary expenses, 30 percent on discretionary spending to purchase wants, and the final 20 percent of your income for savings and to pay off debts. This budget model involves careful thought about the differences between needs and wants. It’s also helpful to adjust the ratios to fit your specific needs, perhaps decreasing discretionary spending and increasing the amount of money allocated for savings and debt.

Mobile Apps

Mobile apps have revolutionized the process of tracking spending. Apps are simple to install on mobile devices, making it possible to take budget information with you wherever you go. You can input account information, set spending parameters, and enter transactions as you make them. Mint is one popular mobile budgeting app, enabling users to create budgets, link accounts, and input transactions. Mint also shows warnings when expenditures approach spending limits.

You Need a Budget

The You Need a Budget (YNAB) method was created by Jesse Mecham in 2004 as a modified version of the envelope system. It focuses on one principle rule: give every dollar a job. At the end of the month, you will be able to look at your budget to see where every dollar went, whether it’s needs, wants, debt service, investment, or saving. Programs and apps are available that work well with this method, making it easy to sync transactions across all devices. Anyone interested in this budgeting method may benefit from taking a specialized YNAB course that offers full training to learn all of the philosophies of this budget strategy.

Prioritized Budgeting

Someone new to budgeting might begin with prioritized budgeting. With prioritized budgeting, you create a master list of monthly expenses, with the most important expenses at the top and the least important ones at the bottom of the list. This exercise is useful because it forces you to explore all of your expenses, assigning a level of priority to each. With the created list, you then allocate funds for each expenditure. If necessary, you can eliminate the least-important expenditures to make sure you have enough money for the important things.

Old-Fashioned Spreadsheet

Some people work best using a good old-fashioned spreadsheet. Using a paper or digital spreadsheet for budgeting involves recording every expense and transaction in a ledger and subtracting these amounts from your balance. It may be necessary to carry a notebook with you during the day to record your spending. You would then transfer the transactions to your spreadsheet each evening. It’s important to be disciplined with this method, writing down every expenditure and checking your calculations for accuracy.

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– California Residents: As of January 1, 2020, TitleMax of California, Inc., d/b/a TitleMax, no longer originates new loans in California. TitleMax will continue to service existing loans originated before January 1, 2020. California Finance Lenders Law License No. 603K014. Please see our California Resident Notice at Collection and Privacy Policy: Submit a Verified Consumer Request to understand what information we collect, disclose, or sell, to request that we delete your information, and/or opt out of selling by clicking Do Not Sell My Personal Information.

– In Georgia, TitleMax offers Title Pawns.

– Illinois Residents: As of March 23rd, 2021, TitleMax® of Illinois, Inc., d/b/a TitleMax, no longer originates new loans in Illinois.

– New Mexico Consumers: please see important New Mexico Consumer Information and Disclosures.

– In Nevada, title loans should be used for short-term financial needs only and not as a long-term financial solution. Customers with credit difficulties should seek credit counseling before entering into any title loan transaction. Ability to repay analysis with income documentation required.

– In Tennessee, TitleMax offers title pledges, and secured and unsecured Lines of Credit (“LOC”). Only one LOC account allowed per customer, inclusive of other lenders. LOC customers are subject to a periodic income (and collateral, if applicable) review/validation.

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1 Title-Secured Loans, Secured LOCs and Title Pawns: Maximum loan amount in Mississippi is $2,500. Maximum loan amount in Tennessee is $6,500, assuming customer qualifies for and accepts both the Pledge max of $2,500 and Secured LOC max of $4,000. Minimum loan amount for title-secured loans in South Carolina is $601.

Must be at least 18 years of age (19 in Alabama). Account approval requires valid government-issued ID, a credit inquiry, and a motor vehicle appraisal. Certain other eligibility requirements and terms & conditions apply. Loan/LOC/Pawn amounts vary by states and product. LOC customers are subject to a periodic collateral review to maintain credit limit.

Proof of income documentation and ability to repay analysis is required in Missouri, Nevada, some Texas locations, and Utah.

Refinancing is not available in Mississippi or Tennessee.

2 In-Store Personal Unsecured Loans: Must be at least 18 years of age (19 in Alabama). Account approval requires satisfaction of all eligibility requirements, including a credit inquiry. To apply, bring in proof of income (dated within the last 30 days), active bank account details (dated within 45 days), proof of residency, a void check, a valid government-issued ID, and in AZ, a valid AZ vehicle registration in your name. LOC customers are subject to a periodic income review/validation to maintain credit limit.

Unsecured loan/LOC products not available in all stores or states. Minimum/maximum loan/LOC amounts vary by state; not all loan amounts available in all states. Max loan/LOC amount for first time borrowers is $1,000 ($500 in AZ). Returning customers with a good payment history may qualify for higher amounts, currently up to $2,500 in most states. Without SSN or ITIN: Max loan is $300. Certain other terms and conditions may apply.

3 Online Personal Unsecured Loans/LOCs: Must be at least 18 years of age. Account approval requires satisfaction of all eligibility requirements, including a credit inquiry. To apply, you must provide proof of steady income (within 30 days), valid and verifiable bank account (statement dated within 45 days), a voided check, valid and active email address and telephone number, valid SSN, valid government-issued ID, and you must reside in the state in which you are applying (currently AZ, DE, KS, MO, MS, SC, TN, TX, UT or WI) and provide proof of residency. In AZ, must present valid AZ vehicle registration in your name. LOC customers are subject to a periodic income review/validation to maintain credit limit.

Minimum/maximum unsecured online loan amounts vary by state: SC min is $610. Maximum unsecured online loan/LOC amount for first time borrowers is $1,000. Returning customers with a good payment history may qualify for higher loan amounts, currently up to $2,500. Certain other terms and conditions may apply. Unsecured online loan products and amounts not available in all states. TN customers: Only one LOC per customer, inclusive of other lenders.

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