6 Best Budgeting Methods That Work

You've tried all the budgeting methods, or at least, that's what it feels like! There are so many different types to budgeting and it is not a one-size-fits-all.

So how do you choose which budgeting method to try out? Do you feel like your current budget doesn't need any tweaking and you're doing fabulous? When was the last time you really looked at your budget and what you are spending?

Keep in mind, these budgeting methods below can help you. Maybe just try it out for one month and see if you are able to save more money or put more money towards debt!

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Best Budgeting Methods To Implement

Zero-Based Budgeting

We use a mix of this one and the half-payment method. Zero-Based budgeting is where you start with your income (whether bi-monthly or monthly), and deduct expenses until you reach 0.

You need to use a register or an app to track your bills if they come out of your account automatically. I can't stress enough how important it is to keep track of your bills that come out of your account.

I've seen so many people in the banking world overdraw their account because they failed to account for an automatic payment. DON'T let that be you!

Advantages to Zero-Based Budgeting

You have everything dialed down to a T along with how much you will put toward savings and debt.

Zero-Based Budgeting will keep you away from taking on more debt!

Disadvantages to Zero-Based Budgeting

• You can overextend yourself if you are not careful and possibly overdraw your account if you did not account for something.

• It is rigid and sometimes hard to maintain!

Half-Payment Method

My family uses this method since we get paid every two weeks. It's easier than having one huge mortgage payment come out of one check.

How this looks is you split all your bills in half and deduct it from each paycheck. Simple, right?!

Well, mostly simple. What we do is split the big ones: mortgage, tithing, and insurance in half and allocate it to each paycheck. Then whatever bills are due around that time, we have those come out of that paycheck.

We have done this long enough that we are actually one month ahead on our mortgage!

Advantages of the Half-Payment Method of Budgeting

• You could possibly get ahead on your bills if you are paid every other week. When you get paid every other week, you actually get 26 paychecks in a year instead of 24!

• This way will not overextend you where you end up broke after one paycheck and have an abundance in another.

Disadvantages of the Half-Payment Method

• You could accidentally spend the money that is currently in your account if you are not keeping good track of the half-payments.

• If some of your bills are too big, you might have to do more of a 60/40 budget rather than 50/50

50/30/20 Budget Method

This method divides your income into three different categories and puts a percentage to them.

50% Needs

30% Wants

20% Savings

This one gives you a little more freedom than the other ones because you get to decide what goes into each category, to an extent. So you would take your income and divide it up into 50% needs, which would cover things like food, housing, utilities, transportation, etc.

Then 30% would include your wants like streaming services, eating out, shopping, etc.

The last 20% of your income would go toward saving. You can include pre-tax savings in this as well if you want and have access to an employer sponsored retirement program.

Advantages of 50/30/20 Budget Method

• This option doesn't take a lot of planning each month. You simply make up your budget once and maybe tweak it every now and then based off new items that come up, then you are set!

• Great for beginners who are starting out with their budget

Disadvantages of the 50/30/20 Budget Method

• This wouldn't work if you don't make a lot of income or if you make a lot of money. For example, if you earn $100,000, that would be about $30k a year in wants. Now, you COULD do that, but I wouldn't recommend that. It would be a lot better to put most of that into savings or debt repayment!

• If you live in a high-cost area like I do, it may be hard to keep the needs category to only 50%.

Envelope System

The envelope system is where you use actual physical cash for each of your budget items (the ones that don't automatically come out of your account). Get this great envelope wallet to stay organized! I personally have this one (in black of course) and I love that it came with so many categories to choose from!

After you are paid you would take out the remaining money after your bills are paid in cash and distribute it among your pre-determined envelopes.

Here is an article that elaborates how to use the cash envelope system.

Advantages of using Envelopes to Budget

• You know exactly how much money you have in a certain budget category so you are less likely to overspend.

• You can think of your envelopes as mini saving challenges to save up for bigger purchases.

Disadvantage of using Envelopes to Budget

• When you are out of money in that envelope, you have to stop spending in that category.

• This one can be hard if you are married and share expenses. Inevitably, one person will forget the envelope or not have it while the other person needs it and then end up using a debit card to cover the expense. So in short, this one can be hard to manage the "what if's".

Reverse Budgeting Method

Not gonna lie, I hadn't really heard about this one until I started researching some other methods of budgeting! But then I realized I've actually done this in the past, I just labeled it as "pay yourself first" rather than reverse budgeting.

Essentially, reverse budgeting means you pay yourself first. Need to put some money toward debt? Great, pay that now. Want to build up a certain amount in your savings account? Transfer that as soon as you get paid.

Advantages of the Reverse Budgeting Method

• Paying yourself first will make it feel like you're accomplishing something. You'll get excited when your savings account goes up every month or that debt payment goes down every month.

• By prioritizing savings or debt payments, you are more likely to see the big picture and focus on your goals

Disadvantages of the Reverse Budgeting Method

• If you put too much toward savings or debt, you might not have enough left over for your actual bills.

Traditional Budget

Traditional budgeting is simply taking what you get paid, minus all your expenses, and what's left over is what you get to play with for the month/pay period.

If you go with this budget, I highly recommend that you include "savings" as an expense, otherwise you might get to the end of the month and forget to do that.

Advantages of a Traditional Budget

• It is so SIMPLE! This is literally the easiest out of all the budget methods that I've mentioned.

• You won't have to tweak it as much unless you get paid different amounts each pay period/month.

Disadvantages of a Traditional Budget

• This type of budget doesn't give you any real motivation to save or put more toward debt repayment due to its simple nature.

• You could get in a rut because you're not looking at your budget as often as other budgeting methods.

What is the number one budgeting method?

Truly, the number one budgeting method is the one that absolutely works for you and/or your family. I have tried out all of these budgeting methods and more over the years and finally came to a mish-mash of budgeting methods.

Choose one method for the upcoming month and put it on paper. This month I'm going to try XXX. Then see how it works for you. Trust me, you'll know pretty darn quick if it doesn't! I've tried the percentage method before and found that does not work for me at all.

The main thing is to make sure and start your budget. If you haven't yet, I recommend getting my free budgeting bundle so you can start as soon as possible. You will get 5 pages that will help you in your budgeting journey, including the half-payment method.

Important items to remember

1. Make sure and manage your budget each month to account for any upcoming expenses. This is not a time to set it and forget it! Yes, you might have some bills that come like clockwork each month, but did you remember the haircut that your kid needs? Is it time to sign up for softball, basketball, you name it?

2. This is not a one-size-fits-all budget. What works for me might not work for you, and that's okay! Find which type of budget method works well and stick with it.

3. Don't give up on budgeting all together when you have a bad month. Learn from any mistakes and move forward.

4. Last but not least, get my free budget bundle and start creating your budget today!