Budgeting 101

Creating a budget is pretty simple, once you find a solution that works with your lifestyle. Here are the most basic methods. Within each, there’s room to customize until you find what works for you.

Activity-based

These systems are popular and simple. Set goals for the end of the month, including savings and major purchases, and work backward from there. For example, if you need clothes for your new job, add that amount to your predictable expenses like bills and savings. What you have leftover goes to variable expenses like food and entertainment or rolls over to the next month.

Percentage-based

If you need or want maximum flexibility (if, for example, you rely on tip-based income), try this system. Just choose a percentage for each of three or four broad categories (like bills, food, and savings). Spend that percentage however you like within that category. If you want to go out for your friend’s birthday, then you eat cereal for the rest of the month. If your favorite cause has a fundraiser, then donate instead of save. Run this weekly or monthly, and change the percentages as needed.

Zero-based

The strictest method, this is a great tool for achieving major financial goals, like getting out of debt or saving for college. Track your spending for a few months to see how you naturally spend, then create categories and plan the next month down to the penny, including savings and “miscellaneous.”

Taylor Nissen

Sticking to your budget? That’s a different story. Just remember that if you have a misstep, it’s not over—just get back to it as soon as you can.

“Managing a budget may seem scary, but having it all in writing makes it so much easier! If you divide your monthly income into categories like groceries, gas, donating, etc., your money will have a place to go. Self-discipline is the key to managing money and helps prepare for adulthood.”– Taylor Nissen, Polk State College, Winter Haven

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