Budgeting For Dummies

Chapter 6

The Pay-Yourself-First Budget

IN THIS CHAPTER

Putting together a pay-yourself-first budget

Checking out the advantages and disadvantages of using a pay-yourself-first budget

Tackling situations where this budget may or may not be right for you

Budgets usually focus on your expenses. You always want to make sure you have your bases covered while still providing room for fun and for your financial goals. But because you concentrate on your expenses rather than your goals, you don’t always accomplish those objectives. It happens to everyone, me included. I often tell myself that anything I have left over after I pay my expenses can fund my goals, but then I spend everything because I forget about my plan. Sound familiar?

If you struggle with meeting your financial goals, both short-and long-term, the pay-yourself-first budget may be the answer. The pay-yourself-first budget, sometimes known as reverse budgeting, makes your financial goals a priority by focusing on them first rather than your expenses. Whatever you have left is what you then use to cover your fixed and variable expenses.

By zeroing in on your goals first, you make sure they get covered no matter what. You ...