A simple budget is a straightforward plan for managing income and expenses to ensure spending stays within limits and savings goals are met. Typically, it involves tracking income, listing fixed and variable expenses, categorizing spending, and allocating funds accordingly using simple methods like the 50/30/20 rule—50% for needs, 30% for wants, and 20% for savings or debt repayment.
Steps to Create a Simple Budget
- Calculate your monthly net income (take-home pay after taxes and deductions).
- List all monthly expenses, including bills, groceries, transportation, and discretionary spending.
- Categorize expenses into needs, wants, and savings/debt.
- Allocate portions of your income accordingly—for example, using the 50/30/20 method.
- Track your spending regularly and adjust as needed to stay within the budget.
Simple Budgeting Methods
- 50/30/20 Rule : Allocate 50% of income to necessities, 30% to wants, and 20% to savings or debt payoff.
- Envelope System : Use cash envelopes for different spending categories to limit expenses.
- Zero-Based Budget : Every dollar of income is assigned a purpose, so income minus expenses equals zero.
- Pay-Yourself-First : Prioritize savings first, then allocate the rest to expenses.
Many apps and tools, such as SimpleBudget and budget planners, can help track and manage a simple budget offline or online without requiring complex inputs or access to bank accounts. This approach helps anyone, regardless of financial literacy, gain control over their money through a clear, easy-to- follow structure and helps avoid overspending or surprises in monthly finances.
