If you've ever struggled with sitting down and doing a budget, you're not alone.

Beth, 39, who studies full time and has two kids, was in the same boat.

"I never feel I know whether I'm doing it right or wrong. I just do a bit of a spreadsheet at home, and I never know whether I've got everything included," she said.

So she asked the ABC to investigate budgets as part of our personal finance series.

The key with budgeting is to start out with some goals

The three budgeting methods include: cash envelope, balanced money formula and traditional. ( ABC News: Andrew Harrison )

When it comes to budgeting, it's important to find a method that works for you.

"The key is to do something that works and you're going to stick to," Melbourne-based financial planner Anne Graham said.

Other questions you asked: "My husband and I are not good at basic budgeting or managing our money. Please help" — Lindsay from Blue Mountains

"My husband and I are not good at basic budgeting or managing our money. Please help" — Lindsay from Blue Mountains "Can you please advise on budgeting best practice?" — Peter from Melbourne

"Can you please advise on budgeting best practice?" — Peter from Melbourne "Do you have a budget planner for adults" — Hans from Bendigo

"Do you have a budget planner for adults" — Hans from Bendigo "I need to budget better and save. I am a single parent and want to give my son a family home but can't seem to get enough money behind me!" — Trisha from Rockhampton Do you have a question about money you want answered? Let us know

Whichever budgeting system you choose, it can be really useful to spend a couple of weeks doing a money diary, where you list everything you spend — from big bills to coffees.

This gives you a useful overview of where your money is going and where you might be able to cut down on any expenses.

Financial planning lecturer at Griffith University Di Johnson says it's also important to set some goals.

"It gives a purpose to those potentially uncomfortable conversations with spouses or children and really helps to reinforce the reason you're doing a budget," she said.

So, we've looked at the pros and cons of three common methods you can use to do a budget.

1. The cash envelope method

Under the cash envelope method, people are encouraged to put cash in envelopes for different expenses. ( ABC News )

This system dates back to the 19th century, but these days it's more useful for daily expenses, since we tend to pay for our big bills like housing electronically.

"I like the cash envelope method, it's old-school, it's visual, it's tactile — you can feel it — it resonates with people and if the cash isn't there then you can't spend it," Ms Graham said.

Essentially, you divide your expenses up into as many categories as you like.

For example, you'll probably have one for groceries, eating out, fuel, children's sports, etc.

Then, after accounting for your online bills, you take out what's left in cash and put them into the relevant envelope.

For instance, you might put $160 into your groceries envelope, $50 into the fuel envelope, and so on.

That way, when say, you go to the supermarket, you take the groceries envelope with you.

But Ms Graham says if you're using this method, you have to be careful you don't steal from one envelope to pay for non-related expenses.

"I think having cash there might be a temptation — the temptation is I'll just take $50 from the groceries one for my night out on Friday and I'll put it back." she said.

"But you never put it back."

Once the cash is gone — it's gone. You can't buy anything else.

Dr Johnson says this method might work for some people, but it's not necessarily the best option.

"We need to look at the reality of how people manage money," she said.

"The reality is most things are online these days, including how we pay our bills."



The pros:

Simple to use

Simple to use Will physically stop you overspending

The cons:

Cash isn't traceable if it's lost or stolen

Cash isn't traceable if it's lost or stolen Not earning any interest

2. Balanced Money Formula

The balanced money formula involves spending 50 per cent on your 'needs', 20 per cent on 'savings' and 30 per cent on 'wants'. ( ABC News: Andrew Harrison )

This budgeting method was popularised by Elizabeth Warren, a US politician who is now running for president, who previously was a prominent academic in consumer law.

The idea is to take your income, and spend 50 per cent on your needs, 20 per cent on savings and 30 per cent on wants.

So, what does that mean?

Needs are things you can't live without — so your mortgage, or rent, bills, school uniforms, groceries, petrol, healthcare etc.

Savings might be your super account, your emergency fund, or extra debt repayments.

The balanced money formula method was popularised by Elizabeth Warren. ( Reuters: Yuri Gripas )

And wants are the fun things — stuff you could survive without, if you had to. So holidays, takeaway and entertainment.

In Australia, you might have heard a similar method created by The Barefoot Investor, Scott Pape.

He recommends a slightly different breakdown that includes 60 per cent for daily expenses.

Some people even set up a number of bank accounts and automatically transfer money into each one to make it easier to follow the percentages.

Ms Graham says it's a bit like a 5:2 diet.

Wants are the fun things — stuff you could survive without, if you had to. ( ABC News: Nic MacBean )

"It's one of those mental mode things — it comes back to whatever works for you," she said.

"If my rule is, I eat less calories two days a week and I can do what I want on the five, you can do that with your money as well. I'll save this much, but I can spend the rest."

But she warns to prioritise your savings first.

"We always do the 'pay yourself first' approach — if it's appropriate, increase your superannuation, increase your loan repayments before you spend on other things."

The pros:

It's a 'big-picture' budget with just three or four categories to worry about

It's a 'big-picture' budget with just three or four categories to worry about It's all online

The cons:

There's also room for overspending with this method

There's also room for overspending with this method You might borrow from 'needs' to satisfy 'wants'

You might borrow from 'needs' to satisfy 'wants' Multiple bank accounts might mean you're not offsetting any debt

3. A traditional budget

This method requires you gather up all your paperwork and fill out your income and expenses. ( Flickr: Dave Dugdale )

A traditional budget can be useful for looking at your spending habits in detail.

The corporate watchdog ASIC has a great financial capability resource available here, which includes a budget template.

It lists all the necessary categories and you don't have to worry about annualising expenses — it does those calculations for you.

Gather up all your paperwork and fill out your income and expenses, it then calculates whether you spend more than you earn, or have any money left over.

"The first step to budgeting is know what your income is and where your money's going and make the decision on whether or not you want to continue spending your money in that way," Ms Graham says.

Don't make it so tight that you won't be able to stick to it. It has to be reasonable.

But Ms Graham warns you can't set and forget.

"It's one thing doing a budget. You have to go back and check against it — what doesn't get measured, doesn't get managed. Here's the budget, here's what I actually spent, am I on track? If I'm not on track what changes do I need to make?" she said.

And don't expect to be perfect when it comes to budgeting.

"It's not about feeling guilty if you don't stick to it in every line item, it's about having some plan and some way of trying to wrestle back control even if things are really tight," Dr Johnson said.

The pros:

A detailed picture of what your spending habits are

The cons:

It can be time-consuming to write the budget, and to stick to it

Finally, if you do the calculations and realise you're actually spending more money than you earn, and going into debt, it's worth getting some help from a financial counsellor.

They're free and independent. The national debt hotline is your first port of call, available on 1800 007 007.

This article contains general information only. It should not be relied on as finance advice. You should obtain specific, independent professional advice from a registered financial planner in relation to your particular circumstances and issues.