Five Different Ways To Budget: Find What Works For You

Finding what works for you is very important when budgeting. It will help you stay consistent and reach your financial goals. If you find budgeting daunting, it may be due to how complex it seems and the discipline it requires.

The good news is that there is no one-size-fits-all solution. The key is finding a budgeting method that suits your lifestyle, personality, and financial situation.

Here are five different ways to budget so you can find the method that works best for you:

Zero-based budget

A zero-based budget ensures every dollar has a purpose. At the beginning of the month, allocate your income to different expense categories, including savings and investments, until you have zero dollars left. This method is perfect for those trying to be intentional with their money and ensure every dollar is accounted for.

A few examples of expense categories are rent, utilities, food, debt, savings, fun money, entertainment, pets, etc. Everything you spend on needs to go under a category on your budget to ensure you are planning for it. If you find that you do not have money to cover everything you spend money on, you need to increase your income or decrease your spending.

Reviewing your bank statements is a great way to know everything you spend money on.

The envelope system

The envelope system is a cash-based budgeting method in which you allocate a specific amount of money to different spending categories and place that cash in envelopes. Once that cash is gone, you can’t spend any more in that category until you get paid again. This method is ideal for those who struggle with overspending and want a practical way to manage their money.

For example, if you budgeted $100 for entertainment for two weeks, you know you only have $100 cash to spend. Using your credit card is not an option.

You can build the self-trust to stay within your budget and reach your financial goals. In the future, you can always use credit cards to earn points or miles once you know you stay within budget and can pay your credit in full as soon as possible.

The 50/30/20 budget

The 50/30/20 budget divides your money into three categories: 50% for needs, 30% for wants, and 20% for savings and debt repayment. If you are determined, you can switch to 30% savings, debt repayment, and 20% wants. This method provides a balanced approach to budgeting, allowing you to cover essentials, enjoy discretionary spending, and work towards your financial goals.

This approach will help you stay within budget and avoid inflating your lifestyle. When increasing your salary, the first thought is to upgrade cards or move to bigger homes, but if you keep inflating your lifestyle, you will never be able to get ahead financially. Instead, this budgeting method will always allow you to cover your needs while reaching your financial goals.

The pay-yourself-first budget

With the pay-yourself-first budget, you prioritize savings and investments before covering other expenses. When you receive your paycheck, you allocate a portion to savings, retirement accounts, or investments. This method is perfect for those who want to prioritize long-term financial growth.

This budgeting method allows you to dream and focus on yourself first!

Spend a day dreaming about where you want to be in five or ten years and creating a plan to achieve those goals. Having your goals at the forefront will motivate you to stay on track. Do not worry about how you will get to the finish line; allow yourself to dream. Focus on the small milestones that add up to the greater goal.

The value-based budget

The value-based budget focuses on spending money on what truly matters to you. Identify your core values and allocate your income toward those priorities, cutting back on expenses that don’t align with them. This method helps you create a budget that reflects your personal goals and values.

Spending often happens because you feel peer pressure or allow “expectations” to dictate your spending. Perhaps you value a massage more than going out to drink. Anchor on what is important to you and what fills your cup. It is not about saying “no” to all spending but spending in alignment.

There is no right or wrong way to budget. Budgeting is based on what works for you. It depends on your financial goals, spending habits, and what you find manageable.

Choose one method and experiment for two months. If it does not work out, switch to a different one until you find what works for you.

Allow yourself to make mistakes, review the budget, and make changes. Automate as much as possible to spend less time reviewing your budget every time you get paid. When you start taking on the role of budgeting, you can spend 15 minutes every time you get paid and one hour every quarter reviewing your goals and seeing if you are on track.

Happy budgeting!

When we work together:

• I help you become comfortable managing your money to reach your financial goals
• I help you understand how your past money wounds show in the way you see and feel around money
• I help you create a plan that you can follow and create the belief that you are good with money

If this resonates with you, I invite you to work with me! You can change the trajectory of your life and build a life you have never seen your family experience. Book a sales call.

I cannot wait to be part of your journey!