Question

4. What are the pros and cons of using the different types of budget systems? Which one do you prefer?

Answer 1

Mental budget:

• PRO ⇒ easiest possible way of making a budget,
• CON ⇒ isn't very accurate.

Physical budget:

• PRO ⇒ quite simply, just place money on envelopes according to what things you should pay with them,
• CON ⇒ cannot keep a exact record.

Write down the budget:

• PRO ⇒ write down the budget on a notebook or an excel spreadsheet, writing down the budget helps to stick with it.
• CON ⇒ you need to permanently check and adjust your budget.

Accounting or Financial software:

• PRO ⇒ use software (e.g. Quicken) to help you create a budget that includes tax records and bank accounts.
• CON ⇒ it is more complicated and you need to pay for the software.