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Which of these popular budgeting methods is right for you?

Which budgeting method is right for you?

Budgeting can seem daunting, but don’t worry! You’re not alone in your desire for a more secure financial future. In fact, over the years many people have devised different budgeting methods to help them spend less and save more. 

We’ve examined five of the most tried and tested budgeting methods out there and had a look at their various pros and cons. So, have a read and see which would work best for you! 

1. The 50 30 20 rule

This is one of the most popular budgeting methods out there. It breaks down your income into three, easily divisible categories, which are each allocated a certain percentage of your pay. 

50 percent of your income goes toward necessary expenditures, things like housing and bills. 20 percent is then assigned toward your financial goals, be this saving for the future or paying off debts. The remaining 30 percent is for you to spend however you see fit. 


This budgeting method’s biggest strength is its simplicity. If you’re just getting started with budgeting, the 50 30 20 rule might be for you. It gets you thinking about your spending in the right ways since it divides your income necessary expenditure, want-based spending and goal-based costs.


This budget doesn’t fit with everyone’s finances. In fact, it probably doesn’t work for most people. What if you live in an inexpensive area? You probably won’t need 50 percent of your income to go towards your housing and bills. What if you don’t earn a great deal? It’s likely over 50 percent of your income would then go toward the necessities in life.

There’s also the problem of categorization. Food should be counted as necessary, right? Well then, does the cost of eating a restaurant fall into this category? Probably not. How about grocery shopping for items that you don’t need but want? It can get pretty tricky dividing things up once you get into the nitty-gritty of it all.


Overall, the 50 30 20 rule isn’t a fantastic way of going about budgeting in the long run. That said, however, it’s a good place to start and gets you thinking about your income and spending in the right ways. We wouldn’t recommend it as a long term strategy, but you’ve got to start somewhere! 

A desk with a phone, tax forms and a coffee on it.
Photo by Kelly Sikkema on Unsplash

2. Zero-based budget 

Zero-based budgeting is the idea that your income minus your expenses equals zero. Hence the name.

Now, this doesn’t mean you have to go out and blow all your money. In this case, “expenses” includes everything that you spend, invest or save.

Essentially, zero-based budgeting is just giving every dollar that you earn a specific role, leaving you with no money unattributed at the end of each month. Because of this, you are able to create a new budget each month taking into account any changes in your income or expenditure.


The main upside of this budget is the flexibility. If you know you will earn more than usual in one month, you still have to give this extra income a purpose. This drastically reduces the chances of frivolous spending, as you’ll know where each dollar is going. On the flip side, if you have a lot of additional expenses in one month (e.g. around the holidays), then you can adapt your budget to account for this.


The fact that you have to make a new budget each month is also one of this budget’s major downsides since this can be very time-consuming. If you want to follow this method carefully and precisely, it can really eat up your time and energy. This tedium may, ultimately, lead to you resisting creating your monthly budget. And that’s obviously no good.

The other downside is predominantly for people with irregular incomes. If you don’t know exactly how much you will be earning in a month, it’s almost impossible to follow a zero-based budget for obvious reasons. It’s almost inevitable that you will end up overspending or have some surplus income left over.


If you have a set monthly income and time to spare, then this budget could be really great for you. It allows you to keep careful tabs on exactly where you’re spending your money and ensures that your thoughtless spending is kept to a minimum. However, for those of you with irregular incomes or without the time and energy to make a budget each month, the zero-based budget is probably not for you.

3. Envelope budget 

a hand holding an envelope.
Photo by erica steeves on Unsplash

Envelope budgeting is one of the more old-school budgeting methods. Essentially, you split up your expenses into different categories, label envelopes with these category names and then put cash into each envelope, in line with your budget.

The next part is crucial. Only spend what is in the envelopes. When an envelope is empty, your spending in that category is done. So use your cash wisely! 


Envelope budgeting is great if you tend to be undisciplined with your spending. If you’re honest with yourself and the process, this method can make it pretty hard to overspend since you only have what is in each envelope. 

Another great benefit is this method gives you a clear vision of your spending. It’s one thing to check in on your online bank statement, but it’s a totally different ballgame when you have your cash in front of you. Watching those bills disappear one by one makes it painfully apparent how much you’re spending.


Having all this money around, however, can cause several problems. 

For one, it can be a bit unnerving having your monthly budget in cash since it leaves it more exposed to loss or theft. Secondly, while envelope budgeting is great for keeping an eye on how much you’re spending month to month, within each month it can be tricky to keep track of how much you have spent from each envelope. Counting the bills in each envelope regularly is time-consuming and can get frustrating. 

There’s also the problem that not everywhere takes cash these days, and that it’s likely that you do a decent amount of your shopping online. This will cause problems if all you have is cash.

Person holding a credit card, paying for something online
Photo by on Unsplash


The envelope budget works really well if you need to be a little strict with yourself, but as we mentioned, this budget is old-school and as such, it’s a little behind the times in some regards.

If this sounds like a method that might work for you, but you’re worried about the downsides of having to use cash, there are several apps and online tools that may help. Check out Goodbudget, for example, a piece of budgeting software that is helping bring the envelope method into the 21st century! 

4. Value-based budgeting

With value-based budgeting, you don’t divide your expenses into categories based on a predetermined rule (like the 50 30 20 rule) or your current spending patterns. Instead, you split them up based on their importance, or value, to YOU. This is unlike any of the budgeting methods that we examine in this article.

Obviously there are certain things you’re going to have to pay for, like housing and food, but how much you value them depends on how much you should spend on them. For example, if you’re a foodie, and eating out is truly your passion, then your food budget is going to be higher than someone who just sees food as fuel. If you’re a homebody then you should be spending more on your housing than someone who just sees their apartment as a place to rest in between activities. Get it?


This method’s main strength is that it’s heavily personal. It can be much easier to stick to your budget if you understand why your budget looks like it does. Basing your budget on your values makes it easier to accept that you will have to make compromises on certain things since you know that your money is going toward something of more significance to you.

Aside from the financial aspect, we found that coming up with a value-based budget gave us an insight into ourselves that we otherwise may have missed out on. We don’t know about you but previously, we have struggled to find the time to just sit, make a list and rank what we value in life.


As with any budget that is personal to you, value-based budgeting can be rather time-consuming. Firstly, it can be pretty tricky to work out exactly how much you value something in relation to something else, as a percentage. Do you value vacations five percent more than you value eating out, or is it closer to 10 percent? Also, your values are likely to change over time, which means redoing your budget.

A busy restaurant with a deer head on the wall and fairy lights hanging from the roof.
Photo by Jessica Tan on Unsplash

Moreover, while you will likely end up using your money better, this system may not actually reduce your spending since your financial goals could be fairly low on your value list. This may not be your goal, and that’s absolutely fine. But it’s just something to keep in mind.


If you’re looking for a personalized budget that will give you a perspective not just on your spending, but on your life, then this could be the budget for you! It is, however, not for everyone since it’s time-consuming and you need a clear idea of exactly what you value, and how much you value it.

5. Pay yourself first budget

This method is super simple and puts an emphasis on your financial future. All you need to do is work out how much you earn each month, and work out how much you want to save or to put toward any financial goals you may have. The rest is then yours to split between your necessary expenses and what you want to spend your money on.


Its main strength is simplicity. There’s absolutely no need to break down percentages or switch up your budget each month. Sure, you have to initially sit down and work out how much you want to be saving each month. But beyond that? You can just set it and forget it! The amount you’re saving doesn’t have to change each month, although it can, so you can just hone exactly how you want to be spending the remaining money.

It also means your financial future is secure since you’re prioritizing your savings or debt overall expenses. This is quite rare for a budgeting method, so if this a priority then this could be the technique for you.


The pay yourself first method, that said, is not without fault. For one, it is somewhat dependent on how much you earn. It’s all well and good to have a great financial vision and lofty ideas of how much you want to save, but if that leaves you with five dollars then you will obviously need to reevaluate. 

Equally, whilst this method allows you a lot of freedom to spend how you see fit, this freedom isn’t for everyone. Some people turn to budgets to help them create a bit of structure in their spending. 


This method is great for people who are prioritizing their long-term financial goals but don’t want to spend too long planning. As mentioned, however, you will need to ensure that your income will cover you. But if it does, then go for it! For those of you with less money coming in or those that are seeking a bit more structure, we suggest turning to one of the other budgeting methods for your financial planning needs.

Personal finance is… personal

So there you have it, five different ways to take care of your finances. It’s all about finding whatever works best for you, and you alone. One of these budgets might be brilliant for one person and terrible for the next. If you’re going to try out one of these budget methods, remember that if it doesn’t work out then you can always try another!

If you’re just looking for a way to cut back on your spending, then we recommend you try out Ting. We’re a pay for what you use cell service provider, which means that if you want to pay less on your cell service one month then you totally can! You can also keep your usage on track by setting up alerts and caps on your talk, text and data. So if this sounds like something you’d be interested in, see if you can bring your device over to Ting today!