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When your income and expenses are nearly the same, it's time to create a budget. Want to purchase something that you couldn't afford unless you charged it on a credit card? Budgeting would be the answer. Money is a personal thing, so there's not a one-budget-fits-all solution for those looking to make a plan. Discover four options for budgeting your bucks and be on your way to taking better control of your money.
1. Reverse Budgeting
Reverse budgeting can be appealing to anyone who just wants to save money and isn't too concerned about gaining insight into their spending habits. The system asks you to automatically transfer a certain amount of money to savings each month, and whatever is left over is yours to spend however you choose.
2. Envelope Budgeting
Cash is king when it comes to envelope budgeting. Set spending goals for various categories and label envelopes accordingly. Then, distribute your budgeted amounts into the corresponding envelopes. If your spending in one area exceeds the amount you allocated for it, the funds must be taken from another envelope (not your bank account) to keep your overall spending in check.
3. Down to the Dollar
Individuals looking to whip their budgets into shape with a regimented system might choose to track their spending down to the dollar. The system involves recording every expense with costs rounded to the nearest dollar, and some people like it because it gives extreme visibility to areas of overspending. Identifying the spending holes opens up the opportunity to fixing them.
4. Down to the Cent
It's a time-consuming type of budgeting, but it can be helpful for those who need to really get in touch with their spending. The motivation behind tracking all of your expenditures down to the cent is the same as tracking down to the dollar, but it's even more precise in revealing the areas for potential improvement.