How to figure out the best budget for you

One of the pitfalls of personal finance is that it’s easy to get caught up in the idea that there is a “right” way to do things. This can spill into budgeting, even though the way you budget is likely to be as personal as any other aspect of your life.

Before you decide what budgeting strategy is likely to work best for you, think about your relationship with money so that you can get a feel for what will help you stay on track.

Understanding your money personality

In the last few years, there have been many experts labeling money personalities based on some of the habits that characterize consumers’ spending. Here are some recommended different budgeting strategies based on the way you interact with money:

1. Spender: “This is someone who has enough money, but likes to make big purchases,” . Rather than getting caught up in nickels and dimes, the spender might budget according to percentages. Setting up a system where 20% might go to savings, 30% might go to housing, and so on, depending on priorities and preferences.

2. Saver: A person , which focuses on control over money. “The saver might use a detailed Excel spreadsheet to keep track of accounts daily.” The saver is always watching the spending and looking for ways to cut costs.

3. Shopper: “This is someone who spends emotionally and might be in debt,”. “The best type of budget for them might be an envelope budget.” When the money is gone, it’s gone. An envelope budget forces you to pay attention each time you spend, since it is usually a cash-based system.

4. Planner: When you’re a planner, you see your money as a means to your end goals. You look ahead, directing your resources to where they will do the most good to help you in your lifestyle now and later. 

5. Investor: “An investor is usually very money savvy,”  “They might not even need a budget, or they could use a combination of the aforementioned methods to stay on top of things.” The investor uses money to make money, and often plans ahead, incorporating earnings from interest and investment returns into the plan.

Sticking to your budget

There’s nothing wrong with experimenting a little bit with your budget to see which strategy most appeals to you. At the very least, it’s important to have some way of ensuring that you don’t spend more than you earn each month.

One of the problems with sticking to a budget, is that many people don’t acknowledge the realities associated with their money habits. “Once you figure out your money personality, the best thing to do is accept it,” . “If you know you are a shopper, you are aware that sometimes you spend on things you don’t need.”

Just being aware of that can help you place safeguards in place with your budget. Before you rush into budgeting, take the time to review what matters to you. Track your spending for a month or two so you can identify your major spending categories — or even discover money leaks that you would like to plug.

Once you’ve done that, you can figure out your money personality, and even consider changing it if you aren’t happy.“Fortunately, if someone isn’t happy with their personal money style, it just takes a little self-awareness and perhaps a good budgeting method to turn it all around.”


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