What is reverse budgeting?

While practicing this method, first calculate your savings goal and on its basis, set an amount to pay yourself along with meeting your daily necessities.

This budgeting method works on the principle of 'pay yourself first'. Here you try to save money before spending it. You can set up 2 accounts. The first one is the primary account for covering your daily expenses. The second one is for your savings. After you get your paycheck, you can transfer your money into separate accounts on the basis of your saving goals. This way you won't be able to exhaust your savings.

Reverse budgeting focuses on savings rather than focusing on expenses. Simply calculate how much you need to save, make those savings automatic every month and then spend as per your requirement from the remaining amount.

It is advisable you try to start this budgeting technique by saving 20% of your income. If not possible, set aside at least 10% of your income and then plan your expenses with the remaining amount.