10 Budgeting Methods To Help You Take Control of Your Money

Despite the recent strength of the economy, the majority of American’s are still struggling financially.

Although a number of factors are likely at play, and the financial health of American’s won’t be solved with one thing alone, one financial habit that would significantly help many is relatively simple to implement.


While a recent Debt.com survey found that 93% of Americans believe everyone should budget, only about 67% actually do. Furthermore, of those who don’t budget 39% said it was because they don’t make enough money and another 22% said it was because budgeting is too time-consuming. A further 16% said they don’t budget because it didn’t help them when they tried.

While it’s true that budgeting requires some effort, it is a crucial tool that significantly increases your chances of improving your financial health.

If you are one of the roughly 70% of Americans who are struggling financially, you need a budget.

The good news is that not all budgeting methods are created equally. It’s called personal finance for a reason, and you need to find a budgeting method that works for you.

To get you started, we’ve put together a list of 10 budgeting methods to help you take control of your money, along with who might find success with each.

It’s time to take control of your money. It’s time to find a budgeting style that works for you.

10 Budgeting Methods to Help You Take Control of Your Money

Traditional Budgeting

First up is what most think of when they think of budgeting: the traditional budget.

Essentially, you list all your income and expenses, then find the difference between the two. Hopefully, when all is said and done there is some money left over. Once you know what you’re spending and where, you can set goals for what you want to spend in each category and track your spending moving forward to ensure you stay within your goal.

The traditional budget allows you to know exactly what you’re spending and where, and to track your spending in each category throughout the month.

Who Should Use a Traditional Budget?

Traditional budgeting is most effective for those who are detail-oriented and want to know exactly where they stand. It’s also best for those who have the time and willingness to track every dollar they spend.

Zero-based Budgeting

Aside from the traditional budget, there are a wealth of other budgeting methods to help you take control of your money.

First up is zero-based budgeting.

With zero-based budgeting the goal is to allocate every dollar you make so that your balance at the end of the month is zero. In other words, all the money you make every month will be going to expenses, savings, or debt repayment.

If you happen to come in under budget in one category, then you’d simply reallocate that amount to another category.

Who Should Use Zero-based Budgeting?

Zero-based budgeting is best for those who are detail-oriented, able to hold themselves accountable, and who have the time to track their spending for the expense categories. It is also good for those new to budgeting and those looking to save more, as savings can easily be built into the budget before any spending occurs.

50-30-20 Budgeting

Next up is the 50-30-20 budgeting method.

This method simplifies budgeting by providing a rule for how much of your income you should allocate to just three categories: needs, wants, and savings/debt.

Thus, this method tells you to allocate 50% of your income to needs (housing, food, minimum loan payments, etc.), 30% to wants (entertainment, eating out, travel, etc.), and 20% to savings/debt (retirement savings, debt above minimum payments).

This method provides a realistic, balanced look at how you should be allocating your spending. How you choose to allocate spending within the three categories is up to you as long as you stay within the percentages.

Who Should Use 50-30-20 Budgeting?

Those who are busy and big-picture thinkers might benefit most from 50-30-20 budgeting. This method keeps budgeting simple because you only need to track three categories. It also offers flexibility to shift spending within categories from month to month.

80-20 Budgeting

For those who really want to keep things simple there’s the 80-20 budgeting method.

This method is just like 50-30-20 but even easier. With 80-20 budgeting, you allocate 20% of your income toward savings and the other 80% to everything else. Around 10-15% of the savings should go toward retirement while the rest should go toward an emergency fund or other long-term savings goal.

No need to track every dollar spent, simply take 20% of your pay and put it toward saving then spend the rest however you want.

Who Should Use 80-20 Budgeting?

This budgeting method is best for those who want or need to keep their budgeting goals simple. It would also be best for those using this method to have their spending under control and to have a surplus of income. If you’re struggling to pay all your bills every month or to control your spending this budgeting method is probably not the best way to help you take control of your money.

Cash Envelopes

Yet another of the budgeting methods to help you take control of your money is the cash envelope system.

Cash envelopes allow you to physically dole out your monthly income for various categories because you’re literally using cash and envelopes. Simply label an envelope for each category, then put however much money you’re allocating to that category in cash. When the money is gone from that category it’s gone, and you must wait until the next month to spend more in that category.

This method can be especially helpful for staying within spending categories such as groceries, eating out, or entertainment. It presents a physical and concrete representation of your money.

Who Should Use Cash Envelopes?

Cash envelopes are great for those who are hands-on and who prefer to see and touch items. It’s great for impulse spenders who need that concrete physical representation to curb their spending. Cash envelopes are also great for those who have struggled with credit card spending.

Budget Calendar

A calendar is a great visual representation of your life that makes your schedule easier to manage.

Making a budget calendar does the exact same thing for your finances, making them easier to manage by helping you keep track of incoming money, payment amounts, and dates.

Using either a traditional or digital calendar, add your expected income on the dates you expect them. Next, add in all your monthly bills on the dates they are due and in the expected payment amounts. You can also add in savings and when those savings will come out of your checking account.

While you don’t typically log every purchase you make, a budget calendar gives you a great picture of how much money is coming in and out and when. Making a budget calendar for several months out also helps you to plan and adjust as needed.

Who Should Use a Budget Calendar?

Budget calendars will be useful for those who are visual and like to see the big picture. They also provide helpful reminders of when to pay bills and will help you plan for future months. Making a budget calendar requires little effort and does not require you to track every purchase.

Pay Yourself First/Reverse Budgeting

Most budgets focus primarily on expenses, allocating anything left over to either savings or more spending.

Pay yourself first budgeting, also known as reverse budgeting, prioritizes savings goals instead. That’s not to say that necessary expenses are ignored, but rather that money is put toward savings before non-essential spending.

First, determine your necessary expenses for a typical month. Once you understand what you must spend, determine your savings goals and allocate how much money you can put toward them. Finally, set up your savings contributions to come out of your paychecks automatically. Eventually, you’ll adjust to not having that money available and will adjust your non-essential spending accordingly.

Make sure you start conservatively until you know you’ll be able to cover your necessary expenses as well as some non-essential ones. You can always increase your savings contributions.

Who Should Use Pay Yourself First Budgeting?

This budgeting method is relatively easy to implement compared to some of the others we’ve discussed and may be a good option for those who want a lower-maintenance approach. This method will also help you to save more and may help your reduce impulse purchases, as there will be less money to spend.

However, this method may not be best for those who have a lot of high-interest debt or who do not have any surplus income.

Priority-based Budgeting

Another of the budgeting methods to help you take control of your money is priority-based budgeting.

Priority-based budgeting is very similar to the pay yourself first budget, except in this case what you’re saving/spending for is based on what matters most to you and can change over time.

First, make a list of the things that matter most to you. Based on your list, you then allocate the money left after essential spending to those things you most value.

For instance, perhaps your main priority is to pay off all your debt. In this case, you would allocate a portion of your money to paying down debt above and beyond the minimum payments, then allocate smaller portions to other priorities.

Or, maybe your main priority is travel, in which case you’d put saving for travel at the top of your list and put money toward a travel fund every month, then allocate a little less toward other priorities.

Whatever is most important to you in life, a priority-based budget gives you the focus and flexibility to make it happen.

Who Should Use Priority-based Budgeting?

Priority-based budgeting is great for those who lack direction with their finances or who spend a lot on non-essentials. Creating a list of what’s most important will help you stop buying things that don’t really matter and ensure you’re saving/spending on what really does matter to you.

App Budgeting

While this next budgeting method isn’t significantly different than some of the methods already discussed, it is different in how it’s implemented.

If you’re not excited about tracking your spending, using a budgeting app might be a great way to help you take control of your money.

There are tons of digital budgeting tools out there that automatically track your spending for you. Most of them also allow you to set spending thresholds and make other customizations. Some budgeting apps even allow you to share your account with family so you can easily track your family budget.

Mint is a free digital budgeting tool that automatically updates as you spend so you can see where you stand in real-time. This app also provides free credit scores and credit score monitoring.

Some other popular budgeting tools include YNABEveryDollar, and Personal Capital.

Who Should Use App Budgeting?

Using a budgeting app is perfect for younger generations or anyone who prefers technology. These apps are also great for those who are busy or unable/unwilling to track their spending on their own.

Many of these apps also offer financial education and tips for improving your finances. Additionally, some apps (like Personal Capital) let you keep track of all your finances in one place by allowing you to connect and track all your accounts.

You can read this comparison of YNAB and Mint and see if one of them may be right for you.

Loose Budgeting

The last budgeting method to be discussed is loose budgeting.

Loose budgeting is when you know the ballpark numbers for your essential expenses, savings, and non-essential spending, but you don’t track exact numbers. It’s budgeting without really sticking to a budget.

The key with loose budgeting is making sure your income covers your necessary spending, savings, and non-essential spending.

Who Should Use Loose Budgeting?

If you roughly know where your money is going and you can cover all your spending, a loose budget might be for you. Those who are naturally frugal and dedicated to saving will likely be most successful using loose budgeting.

However, loose budgeting will not be a good strategy for those who can barely cover their essential spending, those looking to curb non-essential spending, or those who have a lot of debt and/or little savings.

Moral of the Story

Budgeting doesn’t have to be a laborious task, you simply need to find the budgeting method that will best help you take control of your money.

We discussed 10 main budgeting methods, each with their pros and cons, as well as who might benefit from using each.

For those who need more structure there’s traditional budgeting, zero-based budgeting, 50-30-20 and 80-20 budgeting, cash envelopes, the budget calendar, and budgeting apps. For those who need help defining their money goals there’s pay yourself first budgeting and priority-based budgeting. Finally, those who have their finances in order should at least practice loose budgeting.

If you’re one of the 33% of American’s not currently budgeting your money, take some time and see if one of these budgeting methods can help you take control of your money.

With so many different methods out there you’re sure to find something that works for you.


Jeff is a fan of all things finance. When he's not out there changing the world with his blog, you can find him on a run, a Mets game, or just playing around with his kids