Budgeting is a fine art, and like art, there are many ways it is done. Some people use a ledger book while others prefer a software package like Quicken to help sort out their finances. There are even young families across the globe still utilizing a yellow legal pad and pencil to shape their weekly budgets. Just like the many ways a budget is prepared, there are also different types of budgeters. Below are a few examples and the pros and cons of each.
The Preparer is someone who gets ready to put together their budget right after the last one is completed. A likely user of a financial software package, the Preparer has categorized every expense and income they can think of. When it comes time to put together the next budget, the Preparer knows what goes where, eliminating any questions on what is available for clothing, groceries, or incidental spending.
Pros: There is a name for everything in the Preparer’s budget, meaning there are no leftover funds usable for inappropriate spending.
Cons: Because it all has a place in a Preparer’s budget, there is no wiggle room for unexpected expenses. Of course, the Preparer has an emergency fund stocked with three to six months of household expenses, alleviating potential issues.
The Improviser also embarks on a budget plan; however, every dollar may not have a specific location. While the necessities are separated out, the Improviser also has a category named Spending in their ledger. According to the Improviser, this is where the remainder of their funds go for ‘just in case’ situations like emergencies, unforeseen expenses for groceries or fuel, or that last minute anniversary dinner they completely forgot about.
Pros: The Improviser is flexible. While having numerous categories on their ledger, they are willing to move funds around to make sure enough is available for what is needed during the budget period.
Cons: Improvisers are more susceptible to being without funds if a real emergency comes to pass, meaning they will need to unnecessarily dip into their savings account.
The Lingerer has the budgeting software, but they haven’t installed it on their computer. Willing to spend now and record later, the Lingerer may take several days or weeks to record their receipts and determine what is available for items like rent, mortgage, groceries, or utilities. If their bank account balance is looking low, the Lingerer replenishes it from their savings account or other fund used as an investment toward their future.
Pros: At least the Lingerer thinks about putting together a budget and eventually looks at their receipts.
Cons: The Lingerer is the most likely candidate to dumbfoundedly scratch their head when attempting to figure out where all the money in their savings account went. They’re also the prime suspects to slap their forehead in idiotic frustration when they finally record their receipts and realize where all the money went. When this occurs, the Lingerer quickly becomes the Preparer.