I’m going to reveal the easiest budgeting method for 2023? I use this budgeting method myself and I am well on my way to my financial goals. There are lots of strategies out there for budgeting and saving money.
50/30/20 for example – popularized by Senator Elizabeth Warren, in her book “All Your Worth: The Ultimate Lifetime Money Plan”, where 50% of your income is spent on needs, 30% on wants and 20% saved.
Or how about the “Pay Yourself First” budget plan? With this easy budgeting method, you decide how much to allocate to your savings, apply that first, and then whatever is left, you spend how you like. Simple.
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My strategies are based around previous experience – and as such I have come up with the easiest budgeting method for 2023 for me. It’s based on a little trial and error where I have worked out what I need to keep my family comfortable, what I want to save or invest and then trying to adapt my salary to fit that.
That’s not to say my ideas are visionary or previously unheard of.
As with all things financially related, finding something that works for you is far more important than religiously following a plan devised by others, no matter how easy it is.
As a side note, it’s important to absorb as much advice on any subject that you can, keep the parts that are relevant to you and that will work for you, and discard the parts that won’t. A certain amount of trial and error might result in better outcomes too so be ready to experiment a little.
With that here is the outline to the easiest budgeting method for 2023.
On pay day for my day job, I immediately invest a percentage of that money. It’s a small amount, around 10% or so to begin with. How is this made up?
Half of this 10% comes straight out of my pay before I even see it and is invested into a workplace pension which my employer matches in contributions. That basically means I get 5% of my salary completely free). 5% of my salary, actually gets me 10% invested for my retirement.
Once my pay hits my account, I have automated actions to move another 5% into some investments that I have with InvestEngine and a further 5% into a goes into a separate account that I keep for holidays and birthdays. So that’s 15% so far.
After that, my wife and I contribute around 40% of our income to our “house account” each. This looks after, food bills, energy bills, subscriptions to services, looking after our child’s needs in terms of clothing, expenses, and any money we spend for activities with him. All things that go into the daily running of our home, basically. There is usually some left in this account at the end of a given month so it just stays there for occasional things that crop up like car servicing or emergencies.
The Fun Zone
The remaining 45% is my own, to do with as I see fit. I think that’s it’s really important that my wife and I retain our own pots of cash to spend how we want. It’s our earned money after all. This may sound a somewhat silly statement, but I’ve known couples who have completely shared bank accounts and it has often led to disagreements and arguments about how much should be spent and we don’t want any grief there! As I said, we both contribute to a house account so keeping some for ourselves isn’t an issue.
I generally don’t spend too much money as it goes – when I do it’s generally because I need something. A new coat, for example. A new computer because the one I have has finally given up the ghost. New socks. A sandwich. Well, not too many of those. While running my £31 for 31 days for food challenge in January, my eyes have really been opened to trying to find ways to cut down food bills and spending in general. Anyway, the point is I’m pretty protective about how I spend my 45%.
Your Money Represents Your Time
Given that my day job represents my main income, the money I have is a direct representation of how I have invested my time. This is why I don’t want to waste money. I want it to mean something. I want it to count. In many ways I want to respect the value of my time. I think this idea can be applied to anyone in any occupation earning any given salary. Respect yourself enough to respect your money and it’s value.
And We Go Again
At the end of the month, whatever I have left over from that month, is invested. Whether I choose to top up my Vanguard investments, buy some stocks, overpay the mortgage or make some kind of investment in myself in terms of education or training, depends on a given month, but I always do something. Then when I receive my next payslip, the whole thing starts again.
So that’s how I do it.
However you do it, life’s finances will probably be more manageable with some kind of budget plan. It’s a sure start to making sure you have money in the bank at the end of the month. If you need some free templates to help you get started there are some available over at https://www.dailydealsblog.co.uk/free-stuff.