In Focus – SCCCU Blog

Millions of people feel that budgeting is a chore they’d rather avoid, or they may feel overwhelmed by the need to wrap their arms around their money. But the good news is that the simpler your budget, the more likely you are to stick with it — and simple budgets can actually be fun!

Step 1: Get a Clear Picture of Your Money
Before diving into any budgeting method, you’ll want to step back and figure out where your money is going. This doesn’t need to be complicated — track your spending for a month or even just a week. You can use a notebook, a spreadsheet, or an app like YouNeedABudget (YNAB).

The goal here isn’t perfection — it's awareness. By knowing exactly how much money is coming in and going out, you can start to see patterns in your spending—both the good and the not-so-good.

Step 2: Choose Your Fighter
Finding a method that fits your lifestyle is the key to long-term budgeting success. Three of the simplest budgeting methods are:

1. The 50/30/20 Budget: With this method, you break down your income like this: 50% goes to needs (rent, groceries, bills), 30% goes to wants (dining out, entertainment), and 20% goes to savings and debt repayment. If your “needs” exceed 50%, adjust your “wants” category to cover the difference. Flexibility is the beauty of this system. You’re assigning broad categories, not tracking every single penny.
2. The Backwards Budget: This approach flips budgeting on its head. You start by saving for your goals through automatic transfers, paying your essential bills, and then spending what's left on whatever you like (guilt-free). It’s ideal for those who want a hands-off approach while prioritizing savings.
3. The Zero-Sum Budget: Every dollar has a job in this method. You assign every penny of your income to a category (needs, savings, wants) until you reach zero. It’s precise, which can help if you need more structure. It can be time-consuming in its quest for precision, though.

Step 3: Keep It Flexible
Budgets aren’t meant to be set in stone. Life happens — unexpected expenses will pop up, and priorities will change. It’s up to you to adjust your categories as needed. For example, if you have a big expense one month, like a car repair, then you’ll want to reduce your spending in another category to make up for it.
As Jean Chatzky, HerMoney’s CEO, shared, “A budget doesn’t have to mean creating a three-page spreadsheet and itemizing every single expense. It just means having a realistic picture of how much money is coming in, going out, and where it’s going.”

Don’t Forget To Track Your Progress (+ Tweak as Needed)
After a month or two, review your budget. Are you meeting your savings goals? Are you overspending in certain categories? Use this information to make small adjustments. For example, if you notice you’re spending too much on eating out, challenge yourself to reduce that category by 20% the following month. Even a single month of tracking can be eye-opening — and empowering!

Remember there is no such thing as the “perfect” budget that stays the same every single month. So, start with the basics and go from there. If you’re spending less than you earn and saving consistently, you’re already ahead of the game.