Popular Budget Models: Reactive
Learn how reactive budgeting offers a flexible, low-stress way to manage your money. This video introduces approaches like the anti-budget and “pay yourself first” method, where you prioritize key goals and spend the rest with awareness. Perfect for those who find traditional budgeting too rigid. Instead, learn a system that focuses on simplicity and adaptability.
Transcript
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for some people the detailed planning of
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prescriptive budgeting works best but
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for others that level of planning may
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not be needed or may feel uncomfortable
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reactive budgeting allows for maximum
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flexibility and emphasizes simplicity in
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the budgeting
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process reactive budget plans plan for
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your most important spending priorities
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and everything else is
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discretionary this can be a highly
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successful approach while you're in
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college especially if you have limited
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income and limited expenses that you're
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responsible for while in school
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the anti-budget budget is one reactive
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approach you identify a single category
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that is most important and take care of
1:00
that first then the rest of your
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resources for the period are used as
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needed until they're gone
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where other budget models emphasize
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comprehensive planning and categorical
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spending allocations the anti-budget
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budget focuses on general spending
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awareness pay yourself first budgeting
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is an example of this approach before
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anything else is spent you pay yourself
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by allocating money to your savings and
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for your
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goals start by identifying what's most
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important to you financially
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maybe you have a living expenses first
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budget or a study abroad first budget or
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a debt repayment first budget whatever
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you choose the anti-budget budget
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defines a spending allocation for that
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singular priority and leaves everything
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else open for use with the reactive
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budget approach you keep an eye on how
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much you've spent and you adjust your
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behaviors or you react as needed based
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on what you have
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remaining reactive budgeting is low
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stress maximum simplicity approach to
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budgeting it requires some planning to
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make sure you're working towards your
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goals and some time to check your bank
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accounts regularly but beyond that it's
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just an increased awareness of your
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spending behavior and a commitment to
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live within your
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means but this approach can lead to
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overspending and financial stress if
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you're not paying attention this is
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especially true for people who are
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developing their personal organizational
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strategies and may struggle to keep a
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close eye on purchases and bank account
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balances choose a budget method that
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makes sense to you based on your
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personal preferences your resources your
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spending behaviors and your financial
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goals once you have a general idea of
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the budgeting tool you want to use craft
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it to meet your needs if your goal is to
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enforce discipline into your spending
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behaviors or increase your awareness of
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your spending habits consider a
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prescriptive model if you know you're
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already keeping spending within your
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means but you want to prioritize
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financial goals a reactive approach may
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work well for you
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you'll know you have a useful budget
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tool when you reflect on using it and
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can confidently and honestly tell
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yourself "I know where my money is going
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and I'm satisfied with my choices my
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spending is aligning with my needs wants
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means and
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priorities and I'm making progress
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towards achieving my financial goals."
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If you can't respond in those ways yet
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keep working on your budget plan and try
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something
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new but a
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warning your budget won't be perfect
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budgets are iterative and ongoing
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approach the entire process knowing you
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will be creating a plan that will need
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regular updates and frequent
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re-imaginings
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no two budgets are the same and even
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more importantly no two months of your
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budget will be the same your budget
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approach can and should change over time
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as your needs behaviors and goals change
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this is even more important while you're
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a student a dynamic budget is a
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financially savvy budget strive to be
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financially savvy