Setting a budget is one of the first steps to gaining control of your finances, but it can be challenging.
When it comes to budgeting, theoretically there’s no right or wrong way to do it. Ideally, you’ll succeed as long as you’re tracking your expenses and income in some way.
However, if you’re still struggling to manage your budget, the actual issue may lie with your budgeting system, rather than your execution.
There’s no one-size-fits-all answer when it comes to spending and saving. With so many different ways to budget, it may take time and some trial and error to find the method that works for you.
In this guide, we’ll explore some unconventional budgeting methods that can be effective alternatives to traditional budgeting. By understanding exactly where your money is going, you can effectively take control of your finances.
Let’s begin!
1) Reverse Budgeting
If you want to prioritise your savings goals in your budget, the reverse budgeting method is an effective technique.
Begin with calculating your total income. However, instead of subtracting your recurring expenses, set aside money for your savings goals and any investments first. Next, put aside money to cover your bills and debt. What’s left is money that you can use for discretionary spending or general wants.
The reverse budgeting technique helps you build a strong financial foundation and ensures you have enough savings to cover unexpected expenses. However, if you still find yourself struggling financially amid an emergency, an emergency loan can help.
With the assistance of an online lender like Salad Money, you can access the money you need through their fair and affordable personal loans. These loans can help you bridge the gap when any unexpected costs arise.
2) The Envelope Method
It may seem a bit traditional, but putting your cash in an envelope instead of a credit card can help you cut down on unnecessary spending. If you’re more of a visual learner, this technique is very effective.
The idea behind this method is that you’re likely to spend less when you see money physically leaving your wallet. With envelope budgeting, you put cash into envelopes for different categories of spending.
The trick to success with this technique? Avoid being tempted to skim off the cash in another envelope, unless you’re willing to spend less in discretionary areas of your budget. Once an envelope is empty, you’re done spending in that category.
If you want to spend more in that category, you’ll need to wait until you get paid again or budget out your remaining money.
3) The Anti-Budget
This budgeting method combines the bucket budget technique with the reverse budget technique.
According to this idea, you develop set proportions of how much you want to save and spend. For example, say you create an 80/20 budget. In this scenario, you put 20% of your monthly income towards savings and the remaining 80% towards whatever you want to spend it on.
This budgeting method is not as rigid as other techniques as you can change the proportions (80/20 to 70/30, or 60/40) depending on your specific financial goals.
4) Bi-monthly or Weekly Budgeting
You may find this budgeting method helpful if you get paid bi-monthly or weekly.
Each time you receive your monthly paycheck, you need to create a budget to determine where that money will go.
A downside of this technique is that you can’t include all your monthly expenses in the same budget. For example, if you need to pay rent every month, it will only appear in one of the weekly budgets every month.
5) Combination Budgeting
When it comes to budgeting, there’s no one correct way to do it. No rule says you can’t combine multiple budgeting techniques to create one that works for you.
If you want to use the envelope budgeting technique to avoid overspending, and the reverse budgeting method to prioritise savings goals, you certainly can!
Budgeting is a personal practice. You can go about it however you like so long as it allows you to become more comfortable with your money and manage it effectively.
To Sum Up
Budgeting can be a challenging process, but achieving your savings goals and realising financial freedom make it more than worthwhile.
While the standard budgeting methods may be effective for many, there’s so much more to it beyond traditional budgeting and the standard 50/30/20 method.
If you’re struggling to manage your income with these methods, experiment with some of the above unconventional budgeting techniques as well. Each of the above techniques takes a unique approach to budgeting and saving and challenges you to look at your money and spending habits differently.
One of the best aspects of budgeting is that if something’s not working out, you can always modify or switch methods to suit your needs. By keeping your budget flexible and forgiving, you will be able to effectively manage your money.
