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7 Simple Budgeting Strategies That Actually Work

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When it comes to starting a budget, we’re all looking for budgeting strategies that actually work.

Everyone’s financial situation is different, so one strategy may not work for you but another will.  The best way to find the right budget for your lifestyle is to try out the different choices.

Here are seven different budgeting strategies for you to consider.

1. The Envelope Budget

The envelope budget is great for beginners because it’s very simple.  Plus you’ll actually see and feel the money, which is helpful for many people to grasp budgeting.

How to use the Envelope Budget:

  1. Create one envelope for each expense and label the envelopes. (Groceries, Rent, Car Payment, Electric, etc.)
  2. Decide how much money is needed towards that expense per pay period.  Write it on the envelope.
  3. When you get paid, put the allotted money into each envelope.  If you have direct deposit, withdraw the cash to put in your envelopes.
  4. Make sure all of your money is split up and accounted for with envelopes.
  5. When the envelope is empty, you can’t spend any more from that category until the next pay period.

envelope budgeting strategy

This is a good budgeting strategy if you have a problem with nickel-and-diming your money away throughout the week.

If you have an envelope for Coffee, you’ll have to make sure it fits your budget.  If you can only have $20 in your envelope, when it’s gone that means no more gourmet coffees for the week.

If you receive unexpected money, you can always put it towards a savings goal or credit card debt.

2. Zero-Based Budgeting Strategy

The goal of the zero-based budgeting strategy is to have zero dollars left after paying everything out for the month.  That means every dollar is allocated to something.

With this method, you’ll need to know exactly how much money you have coming in, and what your actual expenditures are.  You may need to track your spending for a few months for a realistic view.

Be sure to include your savings goals, emergency fund, and your debt-repayments.

Then write down all of your income, subtract all of your expenses, and tweak until your total equals zero.

That’s all there is to that!

You might also enjoy: Acorns Offers Easy Investment Options For Beginners

3. Proportional Budget Strategy

For the proportional budget strategy, you’ll divide your expenses into three or four categories:

  • Needs
  • Wants
  • Savings
  • Debt Repayment

Most people using this method combine savings and debt repayment as one category, but I find it’s better to separate them.

proportional budgeting

Then, you’ll determine the percentage of your income to allocate to each category.

Nerdwallet suggests the 50/30/20 rule.  50% goes to needs, 30% to wants, and 20% to savings and debt repayment.

This allocation strategy may need to be tweaked to fit your lifestyle.  The key is to find a budgeting system that you will actually use.

4. Pay Yourself First Budget

The Pay Yourself First budget is perfect for those that have long-term savings goals.

First, determine how much money you can comfortably save from each paycheck.  Then, commit to putting that amount in savings before you pay anything else.  Hence, pay yourself first.

If you’re wanting to buy a house in a few years or saving for retirement, this budgeting method may be the one you choose.

5. Values-Based Budgeting Strategy

The values-based budgeting strategy is not for everyone.

If you’re serious about living a certain lifestyle or plan to retire early, this may be the right budgeting strategy for you.

You’ll prioritize your spending based on your values or goals.  So, you may need to cut corners on things that aren’t as important to you in order to have more money for the things you love in life.

For instance, you love traveling so you’re willing to stop spending on your Sunday brunch outings.  That leaves you more money left for travel.

Related Post: How To Save Money On Gas & Find Free Gas Cards

6. 60 – 40 Budget

This is another of the percentage-based budgeting strategies and it works great for a lot of people.

You’ll divide your income, starting with 60% of your pay after deductions for your needs.  Needs are considered things like housing, utilities, food, phone, etc.

The remaining 40% goes to your wants.  This could be divided 20% savings and the other 20% spending money, or however you want to allocate it.

If you’re not good at sticking to savings goals, this may not be the budget for you.

7. Line-Item Budgeting

Of course, there’s the tried and true line-item budgeting system.  This is the old-school budgeting technique that works for many households today.

line item budgeting strategy

You’ll create a spreadsheet in Excel and make a column for your monthly income and a column for your monthly expenses.  Fill in the line items as necessary with the amounts.

If you have fluctuating expenses, you’ll have to rework the budget for another category.

On the plus side, it’s easy to start using and easy to stick to.

Have You Created A Budgeting Strategy That Works For You?

Using budgeting strategies is important for your financial wellness and can help you meet your savings goals.  As you can see, there are a variety of ways to budget your money.

The most important thing to remember when choosing one is that it only works if you use it.

Have you tried any of these budgets?  What was your experience like?  Are there other budgeting strategies that I forgot to mention?  Please leave your answers in the comments section below.

Thanks for reading and please take two seconds to share this post on social media. It really helps me out.

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  • Nicolle

    Line-item budgeting is my go-to! Love it and really works!!!

  • This is SUCH a helpful article on budgeting strategies. My husband and I use the Every Dollar App by Dave Ramsey which has been worth every penny since there’s full transparency in all of our spending and saving. In addition, we meal plan which has been so effective in saving us money and avoiding food waste.

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