How to budget: A simple, flexible method for everyone

Creating a budget can seem overwhelming.

The categories often used to classify our expenses are too numerous to count — transportation, utilities, business, education, entertainment, financial expenses, food, gifts, and so on, plus all the subcategories within them.

On top of that, we don’t always spend the same amount per month in each category. We might need $200 in our electronics budget one month for a new smartphone purchase, but none the next month. We might need $20 in our health budget one month and $220 the next.

Since we can never be that exact and consistent by category, and since the overall goal anyway is to stay within one’s means, over the five years that I’ve covered personal finance (during which I paid off debt and saved up enough money to start freelancing), I have come to prefer a simplified method of budgeting that uses the 50/20/30 guideline of budgeting (or numbers tailored to your situation) in which a certain percentage of your budget is allocated to certain large categories, and weekly allowances to keep you on track.

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