Which Budgeting Method Should I Use?

Which Budgeting Method Should I Use?


May 13, 2025 | Marlon Wright

Which Budgeting Method Should I Use?


Budgeting can be one of the most effective ways to take control of your finances, but with so many methods to choose from, it can be hard to know where to start. The right budgeting approach depends on your financial goals, spending habits, and personal preferences. Here’s a guide to some of the most popular budgeting methods to help you find the one that fits your lifestyle.

The 50/30/20 Budget

The 50/30/20 method is one of the simplest and most popular budgeting strategies. It allocates 50% of your income to needs, 30% to wants, and 20% to savings or debt repayment. This straightforward approach is ideal for beginners because it provides a clear structure while allowing some flexibility for discretionary spending.

a person using a laptop on a bedSincerely Media, Unsplash

Zero-Based Budgeting

Zero-based budgeting (ZBB) is a more detailed approach where every dollar of your income is assigned a specific purpose. The goal is to “spend” all your income on paper before the month begins, including savings and investments, so that your income minus expenses equals zero. This method is great for those who want a high level of control over their finances.

Advertisement

The Envelope System

Made famous by financial guru Dave Ramsey, the envelope system is a cash-based approach that forces you to stick to your budget by physically separating funds for different spending categories. Once an envelope is empty, you can’t spend any more in that category until the next budgeting period. This method is particularly effective for people who struggle with impulse spending.

The Pay-Yourself-First Method

This method flips traditional budgeting on its head by prioritizing savings. You set aside a predetermined amount for savings and investments as soon as you get paid, then live off the remainder. It’s a great option for those focused on building wealth or reaching specific financial goals quickly.

Tima MiroshnichenkoTima Miroshnichenko, Pexels

The 80/20 Budget

If the 50/30/20 approach feels too restrictive, the 80/20 budget might be a better fit. It allocates 20% of your income to savings and allows you to spend the remaining 80% as you see fit. This method is simple and flexible, making it a good choice for those who find detailed budgeting overwhelming.

Advertisement

The No-Budget Budget

For those who hate traditional budgeting, the no-budget budget is an alternative that focuses on automating savings and limiting discretionary spending. Instead of tracking every dollar, you automate your savings and debt payments, then spend the rest guilt-free. It’s a low-maintenance approach but requires strong discipline to avoid overspending.

The Values-Based Budget

If you want your spending to align more closely with your personal values, this approach might be for you. It involves identifying what truly matters to you—like travel, education, or family experiences—and directing your financial resources accordingly. It’s a more emotional approach to budgeting but can be highly motivating.

Kampus ProductionKampus Production, Pexels

The Reverse Budget

This method is essentially the opposite of zero-based budgeting. Instead of assigning every dollar a job, you first determine how much you need to save each month to reach your goals and then spend the rest as you like. It’s a good option for high earners who want to avoid financial micromanagement.

Advertisement

Choosing The Right Method For You

The best budgeting method is the one you’ll actually stick with. If you’re detail-oriented, zero-based budgeting might be a perfect fit. If you prefer simplicity, the 50/30/20 or 80/20 approaches are worth considering. And if you struggle to resist impulse buys, the envelope system might be just what you need.

Combining Methods For Flexibility

Many people find success by combining elements of different methods. For example, you might use the envelope system for discretionary spending while following a 50/30/20 structure for your overall budget. Don’t be afraid to experiment until you find the approach that works best for you.

Photo By: Kaboompics.comPhoto By: Kaboompics.com, Pexels

Tracking Your Progress

Whichever method you choose, make sure to track your progress regularly. Use budgeting apps, spreadsheets, or even pen and paper to keep an eye on your spending and adjust as needed. Regular check-ins can help you stay on track and reach your financial goals faster.

Advertisement

Final Thoughts On Budgeting

Finding the right budgeting method can take some trial and error, but the effort is well worth it. A good budget can reduce financial stress, help you build wealth, and give you the freedom to pursue your passions without constantly worrying about money. So pick a method, give it a try, and start building the financial future you want.

You May Also Like:

How To Achieve Financial Freedom

How To Live Big On A Small Budget

Wasteful Expenses That Are Keeping You Poor, According To Warren Buffett

Sources: 1, 2, 3


READ MORE

Zero-Based Budgeting: A Different Way Of Looking At Your Finances

Whether you're struggling to budget or are needing to start budgeting and are looking for a new approach, zero-based budgeting could be a different approach that will have you looking more honestly at your finances.
March 12, 2025 Jack Hawkins

You've Just Inherited Over A Million Dollars, What Now?

Any inheritance, although coming with a (sometimes) painful loss, is a great opportunity to invest your money into yourself in some way. Whether that's a vacation, a new home, or in your future. What if you inherited over a million dollars? Here are our suggestions for the unexpected multi-millionaire.
May 2, 2025 Jack Hawkins

You're Probably Spending Too Much On Grocery Bills. You Can Save Money With Some Simple Tricks.

Groceries aren't getting any cheaper. But the way you shop could be quietly costing you more than it should. Ready to keep your cart full and your budget intact?
May 7, 2025 Peter Kinney

These Items In Your Grandma’s House Could Be Worth A Fortune

Whether you're clearing your grandma's house after she's passed on or simply decluttering, there are so many vintage items worth big bucks that most people just throw away. Do some research before discarding anything that may have some value. You could be throwing out thousands of dollars worth of vintage valuables.
March 10, 2025 Jack Hawkins

Your 2025 Retirement Checklist

If you've finally hit 65 or 70 and think this will be the year you'll retire, congratulations! But before you take that monumental step of giving up work for good, here's your must-do retirement checklist.
January 10, 2025 Jack Hawkins

If You'd Bought These Stocks, You'd Be Rich Now

Nothing in the stock market is guaranteed. It's a gamble—and even the people that know the most and understand it the best often lose lots of money. But there is also the opportunity to make lots of money if you make the right choices/guesses/get lucky. Like if you'd bought any of the following stocks...
December 11, 2024 Jesse Singer


Disclaimer

The information on MoneyMade.com is intended to support financial literacy and should not be considered tax or legal advice. It is not meant to serve as a forecast, research report, or investment recommendation, nor should it be taken as an offer or solicitation to buy or sell any securities or adopt any particular investment strategy. All financial, tax, and legal decisions should be made with the help of a qualified professional. We do not guarantee the accuracy, timeliness, or outcomes associated with the use of this content.





Dear reader,


It’s true what they say: money makes the world go round. In order to succeed in this life, you need to have a good grasp of key financial concepts. That’s where Moneymade comes in. Our mission is to provide you with the best financial advice and information to help you navigate this ever-changing world. Sometimes, generating wealth just requires common sense. Don’t max out your credit card if you can’t afford the interest payments. Don’t overspend on Christmas shopping. When ordering gifts on Amazon, make sure you factor in taxes and shipping costs. If you need a new car, consider a model that’s easy to repair instead of an expensive BMW or Mercedes. Sometimes you dream vacation to Hawaii or the Bahamas just isn’t in the budget, but there may be more affordable all-inclusive hotels if you know where to look.


Looking for a new home? Make sure you get a mortgage rate that works for you. That means understanding the difference between fixed and variable interest rates. Whether you’re looking to learn how to make money, save money, or invest your money, our well-researched and insightful content will set you on the path to financial success. Passionate about mortgage rates, real estate, investing, saving, or anything money-related? Looking to learn how to generate wealth? Improve your life today with Moneymade. If you have any feedback for the MoneyMade team, please reach out to [email protected]. Thanks for your help!


Warmest regards,

The Moneymade team