The pay yourself first approach to budgeting is less precise. With anything less specific, it does leave more room for error.
A conventional budget involves writing down your expected expenses every month and tracking them every month.
If you are in a situation where you do have some disposable income to save, invest, or pay down debt, then you can simplify the way you manage your finances every month.
Having a baseline will allow you to determine the current gap between income and spending to develop a plan.
Step 1: Track Your Spending
This will be the key to success if you use this approach. Of course, you won’t get this perfect at first, but getting started is the key.
This will be the key to success if you use this approach. Of course, you won’t get this perfect at first, but getting started is the key.
This method will require that you have a gap in your income and spending.
When you first start, you may not have much if anything in the “saving/investing” or “spend the rest” category.