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Paycheck Budgeting

Published December 28, 2018

Man bends over table paying bills with laptop, calculator, and smartphone. Glasses and a spreadsheet sit on desk.

If you have a full-time job, you’re spending 40 hours or more at your place of work every week. This is a substantial amount of your personal time. These hours can begin to feel wasted when you live paycheck to paycheck, making no progress towards paying off your debt or other financial goals.

Many believe that the problem will be fixed with a higher income. Making more money is always helpful, but you can turn your current salary into a positive with proper budgeting. From a complete overhaul to subtle shifts, there are methods to get your finances in order. With a dedicated budget, you can take steps toward a healthier financial situation.

50/30/20 Budgeting

If you’re new to budgeting systems, the 50/30/20 rule is a great place to start. This system separates your paycheck into three categories (needs, wants, and savings) and each is given a different percentage of your take home pay. 50% is allocated for needs, which includes things like house payments, groceries, and utilities. 30% is set aside for wants such as going out to dinner or vacations. The final 20% is placed into your savings account. This system is perfect for beginners because it sets proper spending boundaries that can be customized later to accommodate personal goals. For example: if eliminating debt is your primary concern, adding an extra 10% to needs from your wants will afford you more money for credit card payments.

Zero Sum Budgeting

For budgeters who are more detailed oriented, the Zero Sum system is for you. The basis of this budgeting system is that every dollar of a monthly income is accounted for and spent in the following month. For example, each dollar in June is spent in July. This concept may seem counterintuitive, but Zero Sum Budgeting considers putting money into a savings account as spending. To start, take comprehensive notes of your monthly expenditures over a few months to fully understanding where your money goes. Next, save up one month’s worth of income. Before the month begins, plan every aspect of your spending. All leftover funds are savings. Create a new plan each month to accommodate shifting needs like holidays. Your balance should be zero on the month’s last day, hence the name.

Budgeting apps

Not all budgeters require intensive overhauls of their spending habits. Sometimes all that is needed is increased mindfulness in how funds are allocated. Multiple smartphone apps help users keep a closer eye of their paychecks. Mint is an intuitive app connected to your bank’s credit and debit card. It keeps track of each transaction against budgeting parameters set by you. Bills can be paid directly through the app with reminders set, so you never miss another payment. If you’re more interested in savings, the Acorns app can help. Acorns rounds up every purchase made and invest it for you based on specifications set by the user. Money earned through these investments is then sent back to your account.

Need More help?

Getting your finances in order is often easier said than done. You’re not alone if you feel like your financial situation is out of control. Enrolling the help of a nonprofit credit counseling agency like CreditGUARD is a fantastic option to navigate this tough time. Our team of certified credit counselors can help you understand your finances through a detailed credit counseling program. If your debt is too much to handle, our nonprofit debt consolidation program can turn unwieldy monthly payments into a single more manageable one. It is never too late to be to take steps towards the financial future you want.

Call us today at 1-800-500-6489 to speak to a certified credit counselor and begin your journey.

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