Contemporary budgets can be complicated and difficult to formulate and follow. It is a fact that not everyone is comfortable with detailed planning and a traditional budget might just not work for most of us.

Well, there is a simple and user friendly budgeting alternative.

I ‘am talking about the Balanced Money Formula proposed by Elizabeth Warren and Amelia Tyagi in their book, All Your Worth: The Ultimate Lifetime Money Plan. The Balanced Money formula is an alternative to traditional budgets which is based on your net income i.e. income after taxes.

The formula suggests that no more than 50% of your net income should be spent on Needs, it actually advocates that needs should amount to 35% of net income. The remaining amount, at least 20% should be devoted to savings while the 30% can be spent on wants.

Your needs constitute things you must pay no matter what. These include:

• Housing
• Food
• Utilities
• Transport

Wants are everything else that you can do without, but help to make life more comfortable. These include:

• Pay TV
• Eating out
•  Clothing beyond the basics
• Leisure

According to the formula, savings come last. Cash left after needs and wants have been catered for is set aside for the future.

The system is not only simple but it also helps one visualize if their finances are balanced.

Try it out today and see how it works.