Before you start hunting for a home, it is essential that you get a pre-approval for your mortgage loan. It is a necessary step for everyone looking to buy a home despite their financial status. When you approach a lender for a loan, they check your credit history, and if they are satisfied, they will […]
Our Top Three Budgeting Techniques
Budgeting can be a very difficult process, especially when you’re just starting your journey. After all, finding the perfect technique to suit you, your finances, and lifestyle can take more time than we expect. However, that is all part of the procedure, and it’s the same for most people. Unless you know exactly what you’re looking for, it’s nearly impossible to find the perfect budget right away. So, if you’re looking for a new budgeting method to try, here are some of our favourite techniques that you could turn into yours!
The 50/30/20 rule is a budgeting method where all of your finances are separated into three different sections. Your overall income is divided into 50%, 30%, and 20% to categorically split your spending. The largest chunk of the method (50%) includes the essentials. These are your necessary expenses, like living costs, bills, food, rent, etc. The second-largest portion (30%) is set aside for your desires. These are second to your essentials and may include expenses for hair cuts, eating out, cinema trips, and subscriptions. Finally, there is the remaining 20%. This amount should be saved. It is a sum of money which can be used in financial emergencies or any essential moment instead of borrowing a payday loan from a direct lender. However, if you find yourself struggling in an emergency with no funds to support you, borrowing could be an option to look at, click here for more information.
Zero Based Budgeting
A zero based budget is when all of your income and expenses are justified and no part of your finances are uncategorised. Every new budget begins with zero, this means that you are starting from scratch. Therefore, nothing carries over into the new balance when the previous one has finished. However, this doesn’t necessarily mean you are spending all of your money. It just means you are left with £0 at the end, meaning you won’t be falling into debt.
The Envelope Bugdeting Method
The envelope method is a simple, more basic approach to budgeting. Your income is separate and categorised into multiple envelopes for different outgoings. When a person’s weekly or monthly wage arrives, they would typically convert their funds into cash and complete the process physically. This way, they’re able to create a routine and keeps the process simple. Following this, you would organise a set amount for each category and use the money within the envelope throughout the month. Overall, this method prevents overspending as you only have an exact amount to use for a set duration.