At the end of the month, do you wonder where all your hard-earned money went? If yes, you need to learn a budgeting model. It might seem overwhelming, especially if you’re just starting out. But budgeting doesn’t have to mean sacrificing your lifestyle or giving up all the fun stuff. It’s just setting up a plan to save money from your salary while spending on things you want. Here’s how to budget money for beginners.

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1. The zero-based budget

With a zero-based budget, you allocate every rupee you earn until there’s nothing left unassigned, aiming for a total of zero at the end. If you earn ₹50,000 each month, you start by listing out every expense until the entire sum of ₹50,000 is assigned to a purpose. Here’s an example:

Rent: ₹15,000

Groceries: ₹7,000

Utilities: ₹2,500

Transportation: ₹3,500

Savings: ₹10,000

Dining Out/Entertainment: ₹5,000

Miscellaneous: ₹7,000

This approach ensures you’ve accounted for all your expenses, and any money left over can be allocated to savings or investments.

But here’s the catch, if you are a freelancer or someone who doesn’t have a fixed monthly income, this might not be the budgeting model for you. However, if you love structure and clarity and want to know exactly where every rupee goes, this model is ideal. This budget is also good for anyone working toward specific financial goals, like paying off debt or building savings.

2. The ‘pay yourself first’ budget

This method prioritises saving money from your salary and also investing. You first set aside a portion of your income for your future and then budget for everything else with what remains.

Like with a ₹50,000 income, you can start by setting aside 20% of it, which is ₹10,000, for savings and investments. Then, use the remaining ₹40,000 for your other expenses. This approach is perfect for those with debts or loans to pay or those who struggle to save consistently. If you’re saving for something specific, like a holiday or an emergency fund, this approach can be very effective.

3. The envelope system

In this budgeting model, you allocate money into separate envelopes for each expense category. Once an envelope is empty, that’s it. You’ve reached your spending limit in that category until next month. For example, if you put ₹5,000 in your grocery wallet, that’s all you can spend on groceries that month. This approach helps you stick to your spending goals.

If you are prone to overspending, then this system works quite well as it makes each spending decision more deliberate by physically counting the money. However, it can be a bit of a hassle to carry cash for everything.

4. The 50/30/20 rule

This budgeting method divides your income into three categories: needs, wants, and savings. It’s the perfect budgeting method to save money from your salary as it gives you control over where you spend your money. So, if you earn ₹50,000 a month, here’s how it will be divided:

50% needs: ₹25,000 goes to essentials like rent, groceries, utilities, and transportation.

30% wants: ₹15,000 can be spent on entertainment, dining out, shopping, or hobbies.

20% savings and debts: The remaining ₹10,000 is for savings, investments, or debts.

This method works especially well if you want to save enough money without having to trace every minor expense. You can also tweak this method according to your needs. If you don’t spend ₹15,000 on wants, you can allocate 20% to wants and 30% to savings and debts, making it a 50/20/30 rule. However, if you have huge debts or loans to pay, this method can be unrealistic.

5. The no-budget budget

This is a flexible way to budget money, especially for beginners. If your primary purpose is just to save money and not track your expenses, this will work well for you. With the no-budget budget, you decide on a savings amount upfront, say ₹20,000, and set it aside first. Then, you’re free to spend the remaining ₹30,000 on whatever you need or want, without strict categories. If you’re not a spendthrift, this approach is perfect for you.

6. The 80/20 rule

This is similar to the 50/30/20 rule but even simpler. The 80/20 rule divides your income into two main sections: savings and spending. With an income of ₹50,000, you save 20%, that’s ₹10,000, and spend the remaining 80%, or ₹40,000, as you like on both needs and wants.

This system is easy to follow and lets you handle essentials, entertainment, and everything else with just one bucket. People prefer this method as it doesn’t force you to decide between wants and needs as the line can be blurred sometimes.

Remember, budgeting isn’t a one-size-fits-all process. So, try a few methods before landing on the one that suits your lifestyle best. Whichever budget you choose, all these will help you save money from your hard-earned salary.

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