Budgeting, Money Mindset

Top 3 Budgeting methods

When starting out, budgeting can seem overwhelming. Fortunately, there are methods out there that are tried and true. However, one size does not fit all. That is why there are different methods, for different people, in different situations. I’m going to go over what I think are the Top 3 Budgeting methods out there. Hopefully it can help get you on track with your budget as well.

Trying to budget and feel lost?

  • So you have calculate your income and expenses, but now what? You want to use your money to its maximum potential. How do you even do that? Start by adopting or using a budgeting method. It puts clear guidelines on how to spend and/or save your money.

Is this normal?

  • Many people will go over their income and expenses just to see if it covers everything. Then it’s easy to get stuck. I personally remember when starting out, I calculated all my expenses and then thought, now what? Does the rest just go into savings? Do I spend it? In my experience, if you don’t have a plan for it, you end up spending it. This is where budgeting methods come in. You get to choose the road map you want to take with your money. It gives guidelines and direction for questions like: How much do I put towards savings? How much do I spend towards my wants? My needs?

Top 3 Budgeting Methods

Here are the top 3 budgeting methods used. They are not the only ones out there, but they are a good place to start.

Method 1: Cash Only

Cash only method involves allocating a set amount of cash to each budget category for the month.

Once the cash is gone – it’s gone.

How you do it is, you take cash out of the bank for expenses that you would typically pay debit/credit/cash with. Then you divide up the money into different category envelopes, such as:

  • groceries
  • clothes
  • gas
  • eating out
  • spending money

Method 2: 50/20/30

This method involves spending 50% of your after-tax income on your needs, 20% on your “goals” and 30% on your “wants”. This method is great because you know where your money is going and you can see if you’re overspending in a specific category. It also simplifies budgeting. There are only 3 categories, so you’re not bogged down with small details.

This consists of the following:

50% needs:  These are the things you have to pay for.

  • mortgage
  • grocery costs
  • insurance
  • utilities

20% goals: This is for your financial goals and “future you.”

  • 401K
  • Roth IRA
  • Emergency Fund

30% wants: These are things that make your life nice, but you can live without.

  • Clothes
  • Eating out
  • Going to the movies
  • Gym

Method 3: Zero Based

This is where you give every single dollar a purpose in your money plan! You start with your take-home pay, and then you budget down each individual category until you have nothing left. You get to decided where each dollar goes.

  • Start with listing your monthly income.
  • List your expenses (Include essentials, savings, giving, month specific expenses (Christmas, birthday, etc.)
  • Then take your income and minus your expenses it should = zero.

What if you have extra money? Yay! Celebrate, then find a way to put that money to work (Pay off debt, emergency fund, Roth IRA, etc.)


  • Start by picking a budget method that resonates with you. Give it a try for 3-4 months and see what happens. If it’s not a good fit, adjust or try a new one. Just make sure you give your self time to adjust before jumping to a new method.
  • If you are still working on getting yourself out of debt, please click HERE to get my “7 Secrets to Paying off Debt” for FREE.

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