9 Easy Types Of Budgeting You Need To Try

Today we’re going to talk about different types of budgeting methods. Improve your money management skills with these effective budgeting techniques.

Whether you want to manage your personal or business finances better, the info below can give you valuable insights and practical tips to help you with your financial goals.

What is Budgeting?

We all have to start somewhere, right – so, why not at the beginning:

Budgeting is making a plan for your income and expenses. It means you need to decide what your financial goals are, then you can track your income and expenses, and make better decisions about how you spend your money and where.

Budgeting let’s you decide how and where you spend, get rid of expenses you don’t really need, and save money for your future.

Budgeting is the basis for your success with money. It gives you a clear view of your income and your expenses, which in turn allows you to make smarter choices with your money.

Anyone who wants to improve their financial situation will need to understand budgeting.

Here are some questions to ask yourself:
– How much money do I earn each month?
– What are my recurring expenses?
– Where am I overspending?
– How much should I set aside for savings and/or investments?

Traditional Budgeting Methods

Traditional budgeting methods are methods of budgeting that have been used for a long time and are tried and true.

They can give your finances more structure and can be tailored to your needs.

Let’s look at some popular traditional budgeting methods:

The Envelope System

The envelope system is a traditional budgeting method where you divide your cash into envelopes that are each labeled for different expense categories. Each envelope is for a specific part of your budget such as groceries, entertainment, or transportation.

This hands on method let’s you limit your spending to what’s in that envelope. It allows you to see exactly how much money is to be spent in each category and makes it easier to track your spending.

Zero-Based Budgeting

Zero-based budgeting is where every dollar is assigned a purpose, leaving no room for unnecessary spending. This method involves listing all your income sources and expenses, making sure your total income minus your expenses always equals zero.

When you account for every dollar this way, you get a clear understanding of where your money is going and that can allow you to make more informed decisions about your spending habits.

Pay Yourself First

This type of budgeting emphasizes the importance of saving by putting a portion of your income into savings before putting any into your other expenses.

When you prioritize your savings and set aside a specific amount each month, you can build an emergency fund that can work for long-term goals.

The Cash-Only Method

The cash-only method is where you only use cash for everything you pay or purchase, no credit cards or debit cards. This helps stop impulsive spending and makes you think about every bill and purchase.

By using cash in hand, you suddenly become more aware of the money you’re handing out, which can help you stick to your budget.

Sinking Fund Budgeting

Sinking funds are individual savings accounts for specific future expenses, like a trip or holiday gifts.

When you set aside small amounts of money regularly, you can build up these accounts and not feel the burn of overspending when the time to spend for them comes up.

Lifestyle Budgeting

Lifestyle budgeting is where you make sure your spending aligns with your values and goals for your future. When you evaluate your priorities and spending, you can put your money toward the things that matter most to you.

This will allow you to really think about how and why you’re spending, which leads to you living life within your means.

Tech-Savvy Budgeting Methods

In today’s digital world, tech has changed the way we look at our finances. These budgeting methods use apps and online tools to simplify and automate budgeting processes.

Spreadsheet Budgeting

Spreadsheets can be an very good tool for budgeting because they let you track and categorize your income and expenses digitally.

By creating a budgeting spreadsheet, you can easily see your financial situation and see areas where you can cut costs or save money.

Automatic Expense Tracking

Using apps or software that can automatically track your expenses can be an easy way to stay on top of your budget. These tools connect to your bank accounts and credit cards, categorize your transactions, and provide you some great insights into your spending habits.

By regularly keeping your eye on this info, you can make much better decisions and adjust your budget as needed.

Flexible Budgeting Methods

For those who prefer a more flexible approach to budgeting, there are methods that will allow for you to make adjustments based on any changing circumstances and goals.

50/30/20 Budgeting

The 50/30/20 budgeting rule is where you assign 50% of your income toward your essential expenses (like rent, utilities, and groceries), 30% goes toward personal spending (including entertainment, dining out, and shopping), and 20% goes into savings or debt repayment.

This method gives you a solid foundation for managing your money and also allows for discretionary spending.

Priority-Based Budgeting

Priority-Based budgeting is pretty much what it sounds like, it prioritizes your financial goals. Instead of following past spending patterns, you use your money based on what matters most to you.

This method encourages you to evaluate each expense, helping you spend your money more intentionally and reach your financial dreams.

Be sure to grab our free family budget worksheet to help you get started:

Finding the Right Budgeting Method for You

Choosing the best budgeting method for yourself means you’ll need to look closely at your financial situation, personal preferences, and specific goals. It’s very important to choose a method that fits your lifestyle and motivates you to stay committed.

It’s the same thing I said about losing weight – If I had chosen a diet rather than a lifestyle change I wuld never have lost the weight. Choosing a lifestyle change that I could do EASILY made all the difference. So keep that in mind as you choose the best budgeting method for you.

Your budgeting method should align with your unique circumstances and preferences. Find a system that gives you the confidence you can do it and makes you excited about your financial journey.

• Identify your financial goals and prioritize them.
• Determine your income sources and calculate your monthly income.
• Track your expenses and categorize them to understand your spending patterns.
• Choose a budgeting method that aligns with your goals and values.
• Set up a budgeting system that works for you, whether it’s digital or pen-and-paper.
• Assign your money to different categories based on your chosen budgeting method.

Make sure when you choose from the types of budgeting that we’ve outlined that you look at things like your income stability, how you spend money and on what, your tech comfort level, and willingness to be disciplined in your chosen method.

Experiment with various methods and make adjustments as needed to find the one that works best for you.