Different Budgeting Approaches (R) Rated
I have good news for you. There isn’t just one way to approach your budget. In case you’re not familiar with what a budget is, check out this post. Once you’re comfortable with the idea of a budget, it’s time to understand the different approaches to budgeting.
To keep it simple, I’m going to explain two different budgeting approaches. I will then, of course, relate the different approaches to something more familiar. Ok, so for the first approach to budgeting, you can keep things in general buckets. For example, take a look at this:
|Food & Supplies||$400|
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In This Example
general buckets are used. Rent may include your rent plus rental insurance. The utilities would include electric, phone, water, and other similar expenses. Ultimately, the total of $2,900 should add up and match your take home pay for the month. While a bit general, this approach works.
The second approach to budgeting is a detailed approach. Let’s take a look at this one:
|Electric, Gas, Water||$300|
|Food & Supplies||$400|
|Memberships/Subscriptions (e.g., Netflix, Gym, etc.)||$100|
You Can See
that the total amount spent is still $2,900. The difference is that the second approach provides more detail about where your money is going. Because there is more detail, it becomes easier to see where things don’t go to plan…in case that ever happens. The downside to a more detailed approach is that it does take a little more time to update and maintain.
Let’s relate the different budgeting approaches to something a bit more illicit. Some people out there enjoy taking a gummy and/or smoking a joint. They are aware of the things going on around them but tend to be pretty chill about stuff. Think of this as the general bucket approach to budgeting. Chill, enjoyable, and still have an awareness of what’s going on.
Alternatively, and purely from what I’ve heard, cocaine on the other hand amps people up. They have tons of energy and can get focused and/or obsessive about things. This is more aligned with building a detailed version of your budget. Vigilant, focused, and very aware of what’s going on.
Now for the official disclaimer. I do not, am not, and will not advocate drug use. I’m purely drawing a comparison based on third party knowledge (so don’t get all worked up that the reference to drugs is in this post – they do exist, are real, and people use them). Ok, I’m glad that’s out of the way.
Just in case you need a Diet Planner too!
on which approach to budgeting you take is yours. The general buckets approach is better than not having or tracking your budget. The more detailed approach can provide more insight to your spends, but it does require a bit more time. Neither way is, “right”. I just encourage you to pick one and use it vs. not having a clue as to how much and where your money is going!
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