You’re making a decent income but for some reason you can’t seem to save.

At the end of each pay cycle, you wonder where your money went and resolve that next time you’ll have some cash left over for savings.

But then the same thing happens over and over again until, finally, you reach the point where you want to stick to a budget.

Wealth Planning Partners director Amanda Cassar said budgeting helps you get into the mindset that managing your money can help you down the track rather than just helping you meet your immediate needs and wants.

“I often call it providing for your ‘future you’. Each pay packet isn’t just for now, you also have to look after your future self,” she said.

So what budgeting method is best for beginners? Well, it depends on your personality and there are pros and cons for each.

The spreadsheet method

This involves tracking every dollar you spend and exactly how you spent it, so you can get the most accurate picture of your money habits.

But, let’s get real, it probably will only be sustainable if you are a details person who loves a good spreadsheet.

Ms Cassar said while the most accurate method is to track every single expense, most people don’t have the stomach for such a strict budget.

“For the A-types it’s brilliant, [but] most people’s eyes will glaze over, they’ll lose interest and they’ll never budget again if they do it [that way].”

The cash envelope method

This could work if you’re the type of person who hates the feeling of handing over physical cash for purchases (but granted, this isn’t actually an option in some stores, thanks to COVID).

To use this method, choose some broad categories to divide your money into – like food, transport, utilities and entertainment – then withdraw your total amount to spend and distribute accordingly.

In theory, it’s a simple way to save, because any cash you have left over can easily be put aside. But you might just be tempted to pilfer cash from your bills envelope to cover a splurge.

“It’s not so great for people who aren’t disciplined and steal from the envelopes thinking, ‘I really don’t want to cook, it’s Friday night, I’ll just take the money [for takeaway] out of the [car] rego’,” Ms Cassar said.

But it is a useful way to start budgeting for beginners because it gets you into the habit of slowly putting money aside for annual expenses like car registration and insurance.

“It’s very good to start getting a grip on the fact that just because a bill isn’t due, doesn’t mean you shouldn’t be putting aside for it.”

Ms Cassar said some people find using a partial version of this system useful, whereby they have envelopes for quarterly and annual bills and keep the rest of their money in their bank account.

Sub accounts method

This is an electronic version of the cash envelope system where you have separate accounts for each category.

Keeping your cash in the bank makes it easier to review exactly how you spent your money but the temptation is still there to transfer money out of one sub account into another even when it is not in line with your budget.

Ms Cassar said most banks don’t charge fees for sub accounts and you can divide the money between your accounts automatically each time you’re paid.

Barefoot Investor method

In his popular book, The Barefoot Investor, author Scott Pape suggests rather than splitting your money into specific categories, you should divide your cash into more general buckets.

Under this method, you have separate accounts – one for expenses (60 per cent of your income), another for savings to do things like get rid of debt or pay off your mortgage (20 per cent), a further account for short-term splurges, like eating dinner out (10 per cent), and another account for longer-term goals like holidays (10 per cent).

He also suggests having a separate emergency account with a different bank to your other accounts.

“If you’ve never done any of this [budgeting] before and you want to just adopt that, as a starting point it can be a really great way of just getting into the habit of making some savings,” Ms Cassar said.

“Where the envelope or the sub account system works better is that you know your exact figures.”

What about apps?

There are plenty of budgeting apps around to help you organise your money, including MoneyBrilliant, Goodbudget and Pocketbook.

Some of the major banks also have their own apps to make it easy to see where your money is going.