Pay Yourself First or Zero Sum Budgeting System

There are multiple budgeting system out there and a lot of people use different budgeting system according to their comfort level. But also a lot of people don't do any budgeting, but budgeting is best for your financial discipline. As a beginner, it is recommended to use the 50/30/20 budgeting methods where 50% goes to needs like your grocery, rent, loving expenses, 30% goes to wants like buying a new phone, travel etc, 20% goes to savings.

PC: Pixabay.com

This is the best way to get started, because that means you have divided your income such that you can fulfill your dreams as well as save for your future goals. Now this is the begineer friendly budgeting methods, but there are other budgeting methods too like Pay Youself First and Zero Sum budgeting method. Both are different budgeting style and you should use any one of them based on your comfortable level.

Now let's go through these 2 budgeting methods and find out which one someone should use.

Pay Yourself First

In this budgeting method, you will be keeping some money aside for youself before paying any expenses or bills. Now this money can be used for savings, or doing ant activities or anything which you like. Mostly it should be used for savings itself.

This is best way to become disciplined as you will put some chunks of your income aside on the first day itself. And thus you have to keep your expenses low and have to manage from the remaining amount.

Zero Based Budgeting System

In this type fo budgeting system, you will be spending your money as the living expenses and then whetever is remaining at the end of the month should be saved or invested. To make your total income equals your expenses plus investment.

In this budgeting system, you should keep your expenses low so that at the end of the month you should be saving more.

Now these two budgeting system is quite different from each other, in the Pay yourself first you will save First and then pay for your expenses and in zero based budgeting technique you will pay for your living expenses and then save whatever is left.

If you know your expenses, then paying yourself first is best. But if you don't know your expenses or if it's dynamic in nature then Zero based budgeting is best.

Posted Using InLeo Alpha