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I tried 3 budgeting systems to save more and spend less, and one cost me way more than the others

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  • I recently graduated from college and started my first job, and I needed a budget that works.
  • I read “Broke Millennial” by Erin Lowry and tried three recommended budgets.
  • Track every penny and zero-sum were my favorites, but the envelope system cost me the most.
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In January of this year, fresh out of college and weeks away from my first full-time job, I read “Broke Millennial” by Erin Lowry to help me plan my financial future. And it changed the way I thought about budgets. 

Throughout college, I’d used a budget that didn’t involve much more than putting as much as possible into my savings account and only spending the little money I left in my checking. It worked well for that period, but it wasn’t the most scientific. And when I suddenly found myself with more expenses, more responsibilities, and more money to manage, I knew it was time for a change.

Lowry wrote about budgets in a way I hadn’t seen before. She talked about trying various budgeting strategies, experimenting before settling into anything, and even incorporating specific strategies just for certain life periods or goals. 

I’d considered that my old way of budgeting was no longer useful, but it never occurred to me that I should “shop around” budgets to see which one allowed me to manage my money best. So I decided I’d try different systems for three months and see how my spending and saving changed with each one. 

1. The ‘tracking every penny’ system

I started with what I assumed to be a budgeting classic, and what Lowry calls “The Tracking Every Penny System.” The method works exactly the way it sounds: For the entire month of February, I recorded every single thing I swiped my debit card for. 

Everything from a $1 snack at a vending machine to the clothes at the thrift store I probably didn’t need went onto my spreadsheet. Outside of rent and other fixed expenses, I knew I didn’t want to spend more than $800. 

While at times it was tedious to input information into a spreadsheet every few days, I found the strategy extremely eye-opening. I thought I would feel restricted living with a budget that required near-constant monitoring, but I actually found it liberating. I liked that I didn’t have to manage a “grocery budget,” an “eating out budget,” or a “shopping budget.” Everything was just one sum I tracked. 

Ultimately, I spent less money using this method than any other month because I had a constant understanding of how much I’d spent and how much I had left to use. 

2. The envelope system

In March, I tried “The Envelope System,” a budgeting strategy that involves setting spending limits for various categories. Each envelope — physical or digital — is a specific spending category. For example, a grocery envelope, a bills and rent envelope, a fun envelope. You fund each one with a set amount at the beginning of the month, and that’s all you get. 

Based on my month of tracking every penny, I had a good idea of the broad areas my money went to. At the start of the month, I had five envelopes, and I funded each one with estimates based on my previous month’s spending. 

I learned very quickly this system was not for me. While I was able to stay under budget overall, I messed up each envelope’s budget multiple times and ended up spending more money this month than the last. 

I didn’t like that with each purchase I had to question if it was the right time or place to pull from that envelope. What if I needed that money later? Or, what if I didn’t and missed out on an opportunity now for nothing?

I could see this budget working for others, but for me, it felt too restrictive. Still, I don’t regret trying it, because at least now I know. 

3. Zero-sum budgeting

In April, I tried the “zero-sum” budget, which requires individuals give every dollar of their income a specific job. At the beginning of the month you write out everywhere you want your money to go with the goal of allocating every dollar somewhere. At the end of the month, you should have “spent” everything you earned (the caveat being “spent” can also mean putting money towards savings, retirement, or other goals). 

Overall, I found the system mostly useful. I liked knowing my salary was allocated in a well-rounded, complete way. However, I found myself getting caught up at times with the notion that I had to spend down an entire category. If I determined at the beginning of the month that I was going to use $100 on fun purchases, and then only spent $50, I felt “required” to buy more. 

Ultimately, I put any extra from any of the categories into my savings account, but I was surprised how much I felt compelled to stay exactly on budget even if it didn’t truly serve me. 

Trying different budgeting styles helped me learn more about myself

I’ve realized my ideal system is a combination of the tracking every penny method and the zero-sum budget. In the future, I plan on using something similar to the zero-sum budget for all fixed expenses and long-term goals, like investments and savings, but then just monitoring any other day-to-day expenses in a lump sum like the tracking every penny method. 

Despite having moments where I felt frustrated with one strategy or another, I feel so much more empowered after this experiment. Going forward, not only will I feel confident that I’m using my money to the best of my ability, but I know I’m managing it the best way for me, too. 

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