Balancing a budget is a vital step in the budgeting process, but it’s only the beginning. To become a better budgeter, you want to make sure you have balanced spending in the three areas of money management: 1) needs 2) wants and 3) savings. You can do that by looking at your spending percentages, or assessing how much of your income is going toward particular expenses. This is the “pie concept”. Imagine a pie. Let’s say the pie represents your income and the slices of that pie represent the expenses in your life. You don’t want certain slices to be too large or it will prevent you from achieving money balance.
For example, if you are spending 80% of your income on your house, how are you paying for other things in your life or saving for the future?