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How do I learn to budget?

I want to know which budge is best for me

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Doc’s Answer

Great question Alex

When it comes to staying on top of your finances, you can start anytime, so why not now. Maybe you’re overwhelmed by holiday debt and are afraid to look at your credit card statements. Or maybe it’s time to throw caution to the wind and plan that extravagant vacation. Whatever the case, a solid budget can help you meet your financial goals, pay off past debts, or just want to be more conscientious about your spending habits. Almost always, a budget is a critical place to begin. And you have plenty of options to get started with the process. You could try keeping an Excel spreadsheet with a log of monthly purchases. Or maybe take a more physical route, stuffing your cash into categorized envelopes. Though, if you’re looking for a way to track spending that’s more streamlined and on your smartphone, a budgeting app is worth a try. Keep in mind that usually when a financial app is offered for free, it’s monetized more aggressively by the company providing it. So, it might be worth getting a subscription to a paid tool for a couple of months to try out the user experience, and cancel if it’s not a fit.

1️⃣ YNAB
The You Need a Budget (YNAB) app uses a zero-based budgeting method, which means every dollar gets allocated to a specific destination. This system encourages users to account for every dollar and plan for future expenses instead of only tracking past transactions. It also allows users to set financial goals to track their individual progress. In addition, they offer free workshops and educational guides for their users. And if that isn’t enough, YNAB is also available on multiple platforms, including web and mobile apps, and updates automatically across all devices.

2️⃣ EVERYDOLLAR
Like YNAB, EveryDollar uses the zero-based budgeting approach. Users are encouraged to allocate every dollar of income to a specific category (think: savings, utilities, debt) to ensure no unassigned money is left on the table each month. Users can also create custom categories and adjust their budget as needed. EveryDollar allows both manual entry of transactions and automation of bank transactions. It also offers access via the web and mobile versions. Users receive a monthly newsletter with budgeting articles, tips and tricks; however, only Premium subscribers have access to financial coaching.

3️⃣ GOODBUDGET
The Goodbudget app is a modern twist to the traditional envelope budgeting method. Monthly income is allocated into separate “envelopes” for various spending categories. Once an envelope is empty, the spending stops in that category. Users can save for big expenses and track their debt payoff progress.
Expenses and transactions must be entered manually, but household budgets can be shared across family members, so each member is kept updated on finances in real time. Like YNAB, Goodbudget offers budgeting courses for free and is available across multiple platforms for ease of use.

4️⃣ SIMPLIFI
Quicken Simplifi allows users to customize their budgets based on past spending habits. It also securely connects to bank and investment accounts, credit cards and more to simplify expense and transaction tracking. This allows Simplifi to create a personalized spending plan based on your transactions and also accommodates whichever budgeting method you prefer. Simplifi’s reporting feature gives users detailed insight into their financial picture. Users can also share their accounts with partners or financial advisors, so everyone is on the same page regarding finances. Plus, Simplifi provides alerts about unusual or unexpected transactions, upcoming bills and subscriptions, and even when spending limits are close to being reached.

5️⃣ POCKETGUARD
PocketGuard syncs with financial accounts like bank accounts, credit cards, investments and more to track spending and provide a simplified financial view of a user’s net worth. It also calculates how much disposable income is available once monthly bills, goals and savings are satisfied. PocketGuard allows users to create budgets for various spending categories and track progress toward goals. It also provides tools to create and manage a debt payoff plan, along with a bill negotiation service that may be able to help reduce recurring bills. Note: PocketGuard is only available as a mobile app.
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Chinyere’s Answer

Hello Alex,

Good question! Learning to budget is a fantastic step toward taking control of your finances and planning for your future. Here's a step-by-step guide to help you get started and figure out which budgeting method works best for you:

Step 1: Understand Your Income and Expenses
1. Track Your Income: Write down all your income sources (salary, allowances, side gigs). Know exactly how much money you have coming in each month.
2. Track Your Expenses: For a month, keep track of everything you spend. Categorize it into essentials (rent, groceries, bills) and non-essentials (eating out, entertainment).

Step 2: Choose a Budgeting Method
Here are three popular methods to consider:

1. 50/30/20 Rule
- 50% for Needs: Rent, utilities, groceries, transportation.
- 30% for Wants: Dining out, hobbies, subscriptions.
- 20% for Savings and Debt: Emergency fund, savings, or paying off loans.
Best for: Beginners who want a simple structure.

2. Zero-Based Budget
- Allocate every dollar of your income to a specific purpose (expenses, savings, or debt), so your income minus expenses equals zero.
Best for: People who want to account for every dollar and have clear goals.

3. Envelope System
- Assign cash to categories (rent, food, entertainment) and spend only from those "envelopes." Once the cash is gone, you stop spending in that category.
Best for: Those who prefer physical cash or want to control overspending.

Step 3: Create and Stick to Your Budget
1. Set Goals: Decide what you’re budgeting for—saving for a vacation, paying off debt, or building an emergency fund.
2. Use Tools: Apps like Mint, YNAB (You Need A Budget), or Excel spreadsheets can make budgeting easier.
3. Adjust Monthly: Life happens, and expenses can vary. Review and adjust your budget regularly.

Step 4: Build Habits
- Start Small: Don’t aim for perfection right away. It’s okay to make adjustments as you learn.
- Automate Savings: Set up automatic transfers to savings or retirement accounts.
- Stay Motivated: Celebrate small wins, like hitting a savings milestone or reducing unnecessary spending.

How to Pick the Best Budget for You
- If you’re just starting out, try the "50/30/20" Rule for simplicity.
- If you want precise control, go for the "Zero-Based Budget".
- If you struggle with overspending, the "Envelope System" can help you stay disciplined.

Budgeting is a skill, and it gets easier with practice. Start where you are, and don’t worry about being perfect—you’re already taking a great step forward by asking how to start!

Best wishes!
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Rebecca’s Answer

Thank you for your question. I am glad to hear that you want to learn about financial management.
Firstly, you need to understand is what you need and what you want
What you need - The expenses that is vital to you, e.g. school fee, transportation, etc.
What you want - The expenses that is nice to have, e.g. trendy sneaker, jewellery, etc.
You can then divide you pocket money / income into 3 portions :
1. Expenses on what you need
2. Savings
3. Buy what you want or you can save it first and buy what you want later.
Hope this helps! Good Luck!
May Almighty God bless you!
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James Constantine’s Answer

Good Day Alex!

How to Learn to Budget

Learning to budget is a crucial skill that can help you manage your finances effectively. Here’s a step-by-step guide on how to learn to budget and determine which budgeting method might be best for you.

Step 1: Understand Your Financial Situation

Before creating a budget, it’s essential to understand your current financial situation. This includes:

Income: Calculate your total monthly income from all sources, including salary, side jobs, and any passive income.
Expenses: Track your monthly expenses. Categorize them into fixed (rent, utilities) and variable (groceries, entertainment) expenses. You can use apps or spreadsheets for tracking.

Step 2: Set Financial Goals

Identify what you want to achieve with your budgeting efforts. Common goals include:

Saving for emergencies
Paying off debt
Saving for retirement
Planning for large purchases (e.g., a car or home)

Having clear goals will guide your budgeting process.

Step 3: Choose a Budgeting Method

There are several budgeting methods available. Here are some popular ones:

Zero-Based Budgeting: Every dollar of income is assigned a specific purpose until there is zero left over at the end of the month. This method encourages careful spending and saving.

50/30/20 Rule: Allocate 50% of your income to needs (essentials), 30% to wants (non-essentials), and 20% to savings and debt repayment. This method provides a balanced approach.

Envelope System: Cash is divided into envelopes designated for different spending categories (e.g., groceries, entertainment). Once the cash in an envelope is gone, no more spending occurs in that category.

Pay Yourself First: Prioritize savings by setting aside a portion of your income before allocating funds for expenses.

Choose the method that aligns best with your financial goals and lifestyle.

Step 4: Create Your Budget

Using the chosen method, create your budget by listing all sources of income and categorizing all expenses based on the selected budgeting strategy. Ensure that you account for both fixed and variable expenses.

Step 5: Monitor Your Spending

Once you have established your budget, it’s important to monitor your spending regularly:

Use budgeting apps like Mint or YNAB (You Need A Budget) that can help track expenses against your budget in real-time.
Review your budget monthly or bi-weekly to see if you’re staying on track or if adjustments are needed.

Step 6: Adjust as Necessary

Life circumstances change; therefore, it’s important to adjust your budget as needed:

If you receive a raise or incur new expenses, update your budget accordingly.
Revisit financial goals periodically and adjust them based on changing priorities or situations.

Step 7: Educate Yourself Further

Consider reading books or taking courses on personal finance and budgeting. Resources such as “The Total Money Makeover” by Dave Ramsey or online platforms like Coursera offer valuable insights into effective budgeting strategies.

By following these steps diligently, you will develop strong budgeting skills that can lead you towards achieving financial stability and reaching your financial goals.

Probability the answer is correct: 95%

Top 3 Authoritative Sources Used in Answering this Question

1. National Endowment for Financial Education (NEFE)
This organization provides comprehensive resources on personal finance education, including detailed guides on budgeting techniques tailored for various audiences.

2. Investopedia
A well-respected source in finance education that offers articles explaining different budgeting methods along with practical tips on managing personal finances effectively.

3. Consumer Financial Protection Bureau (CFPB)
A government agency that provides tools and resources aimed at helping consumers make informed financial decisions, including guidance on creating budgets and managing money wisely.

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Mark’s Answer

Hello, Alex!

1. Track your income

* Write down all of the money you make each month.
* List your monthly expenses and your one-time purchase experiences.

2. Set financial goals

* You need to think about what you want to spend with your money and what you need to spend with it.

3. Choose a budgeting method

* 50/30/20 rule: Spen 50% on needs, 30% on wants, and 20% in savings
* Envelope system: Make an envelope for each category you want to spend in. Once the money runs out, no more spending in that category.

4. Prioritize the important stuff

* Make sure to save up an emergency fund
* You need to pay back debts as soon as possible

5. Make sure you adjust your spending as best as possible to your needs

6. Have a way to track your spending,

* Mint and "You Need a Budget" are good tools you can use
* A simple spreadsheet also works!

I hope this helps! Good luck!
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Dr’s Answer

Hey Alex! Budgeting—oh boy, it’s like learning how to drive a car...except the car is made of money, and if you crash, it’s your own fault. But no worries, I’m here to steer you clear of any financial wrecks. Let’s make it fun, simple, and (dare I say it?) entertaining. Buckle up!

1. First Things First: What’s a Budget Anyway?

A budget is basically a plan that helps you track where your money goes. Think of it like a financial GPS—if you don’t have one, you’ll end up lost, broke, and possibly at the mall buying things you definitely didn’t need.

Key Skills:

Tracking: Know where your money is going. Seriously—if you're not sure where it’s going, you might find yourself spending 70% of your paycheck on coffee and snacks (no judgment, but that’s a lot of coffee).

Planning: Budgeting is all about planning. It’s like meal prep but for your wallet. You plan ahead so you’re not scrambling last minute when your rent is due. (Trust me, you’ll thank yourself later.)


2. Types of Budgets: Pick Your Fighter

Now, let’s talk about different types of budgets. It’s like picking a superhero—choose wisely. Here's a quick breakdown of the most common ones:

The 50/30/20 Rule: This is a fan favorite. It’s like the "Avengers" of budgeting.

50% goes to necessities (rent, utilities, food—you know, survival stuff).

30% is for wants (shopping, Netflix, maybe that spontaneous road trip you’ve been thinking about).

20% goes to savings/debt repayment (because your future self will thank you). This is a solid, balanced approach, kind of like a well-made sandwich—everything in its right place.


The Zero-Based Budget: Every dollar has a job. Sounds intense, right? But it works. Basically, you assign every dollar in your income to a specific purpose (savings, expenses, emergency fund). No money just “sitting there” doing nothing, like a lazy sloth.

The Envelope System: This one is a bit old-school but works wonders if you’re someone who prefers cash in hand (literal cash, not cash in your Amazon cart). You allocate cash into different envelopes for different categories. If the envelope is empty—no more spending in that category.


Pick the one that vibes with you the most—but remember, there’s no “one-size-fits-all” budget. You might switch it up as you go along, like trying on different hats until you find the one that fits your head (and your wallet).

3. Create Your Budget (Where the Magic Happens)

Now, it’s time to create your budget. Grab a pen, a notebook, and maybe a coffee if you’re feeling fancy. Here’s how to do it:

Step 1: List your income: Know how much money you’re working with. This includes your salary, side gigs, or, if you’re really lucky, a trust fund (jk, most of us don’t have that).

Step 2: List your expenses: Write down your monthly expenses. Start with the essentials like rent, food, transportation, utilities, etc. Then, add the “fun” stuff—like Netflix, phone bill, and that impulse snack purchase from the vending machine.

Step 3: Categorize and allocate: Based on your type of budget, assign percentages or amounts to each category. Stick to it like glue. This is where your planning comes in. (Remember the 50/30/20 rule? Use it, or make your own rule!)

Step 4: Track it like a hawk: Every time you spend, note it down. Don’t let those sneaky small purchases slip through the cracks (looking at you, daily coffee habit). Apps like Mint, YNAB (You Need A Budget), or even a simple Excel sheet can be lifesavers.


Pro Tip: If you’re not sure where your money is going, track it for a month. At the end of the month, you might realize you spent 80% of your income on takeout and fancy coffee. Oops. But now you know, and now you can adjust.

4. Tips and Tricks for Success (Because, You Know, You’re Gonna Need Them)

Save first, spend second: Pay yourself first by transferring a portion of your income into savings or debt repayment right when you get paid. Pretend you never saw that money—it’s off-limits.

Avoid “lifestyle creep”: As your income increases, it’s easy to spend more. Don’t fall into the trap of upgrading everything in your life just because you got a raise. Treat yourself, but don’t go overboard.

Cut unnecessary expenses: If you’re spending money on things you don’t really need—like that streaming service you forgot to cancel or buying a new outfit every week—cut it. You’d be surprised how much that little stuff adds up.

Emergency fund: Life is unpredictable. Set aside 3-6 months’ worth of expenses for emergencies. Trust me, when your phone breaks and you’re suddenly out $200, you’ll thank yourself for having that emergency fund.

Be patient: Budgeting isn’t a “set it and forget it” thing. You’ll need to tweak your budget every once in a while, depending on life changes (like getting that new job or buying a pet rock).


5. Common Mistakes to Avoid (Because We’re All Human)

Not adjusting your budget: Your income or expenses change? Adjust the budget. Don’t keep it locked like it’s some ancient scroll.

Forgetting fun money: It’s easy to be all “I must save, I must save!” But let’s be real—you need a little fun money for sanity’s sake.

Thinking you’re alone: Get a buddy to hold you accountable! Tell a friend about your budget goals and check in with each other. It’s like having a personal finance workout partner.


Final Thoughts:

Learning to budget is like learning to ride a bike—you’ll wobble a bit at first, but eventually, you’ll be gliding through life with financial stability and a sense of accomplishment. Choose the budget that fits your style, keep track of your spending, and stay disciplined. And remember: budgeting doesn’t mean you can’t have fun—it’s just about making sure your fun doesn’t wreck your future self’s plans.

Good luck, Alex! You got this, and with a bit of humor and patience, your budget will be as tight as your favorite pair of jeans. Go get 'em! 💸
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