A Vanguard video (https://m.youtube.com/watch?v=1nprZjV_6FM) refers to 4 budgeting methods
- the envelope method
- the pay yourself first method
- 50/30/20 method
- zero based budget method
Which one is your favourite?
Edit: non-text version with a 5th method: https://www.lendingtree.com/student/simple-budget/
I’ve been utilizing “pay yourself first” for over a decade and it works for me. I preset my saving and investing goals which are set to auto deduct from my accounts, I have recurring bills on auto pay, then everything else remaining is fair game to spend guilt free. Could I invest more if I spent less on luxuries? Yes, but then I should have factored that in at step one then redone the exercise again for the following month with less obligated money remaining.
That being said, I do see the value in a formal budgeting solution since at the moment I only track my savings/investments and have a large blindspot to my expenses.
I largely do the same, but I also track expenses mostly to understand our spending, not control it. I use Tiller to dump our expenses into a spreadsheet and then assign them relevant categories. I then review spending trends and if something looks off, and my wife and I discuss options to optimize it.
For example, I noticed our restaurant spending was going up, so we set a goal to try cooking new foods and that helped. It didn’t feel like we were sacrificing, just adjusting our lifestyle a bit to be more in line with our goals.