Not everyone enjoys thinking about their personal or family finances. For many, money can be a stressful, complicated issue. More than half of U.S. households maintain some form of a budget and it is an incorrect assumption that only those faced with financial strain are motivated to budget their money. Creating a budget may seem daunting but with a little time, effort, and willingness to examine your habits, any household can create one that works for their particular needs.

Whether you live paycheck to paycheck or have substantial excess at the end of the month, there are many good reasons to budget your money. Financial benefits may include reducing or avoiding debt and meeting short- or long-term goals. Just as important are the self-improvement opportunities that a budget analysis may offer. Evaluating what your money is spent on, how much is spent, and where, may shine light on personal habits that inspire you to change your consumption patterns.  

Narrowing down your goals may help with the next step: choosing the best method or budgeting tool to fit your needs. One of the most common methods is the 50/30/20 rule. First, start with the dollar amount you take home each month. 50% of that number goes to your needs (rent, utilities, food, transportation), 30% is allotted for wants (hobbies, dinner with friends, streaming services), and 20% goes to savings. This method is not ideal for those with very low or very high incomes, but can serve as a simple framework that ensures some money goes into savings.

The zero-base method’s intention is to account for every dollar you take home each month.  Subtract your spending from the amount you take home and the difference should be zero. That doesn’t mean you “spend” every dollar; as with any budget plan, both long & short term savings should be included. Although the zero-base method is more time consuming to create, it can take the stress out of your finances by planning ahead and knowing where every dollar is going.

Finances and money can be an interesting, and complicated, issue in households. Being aware of your emotional and psychological relationship with money, your spending and consumption habits, your motivations and weaknesses can improve your personal finances, even if your budgeting method is informal and requires only mental space.