Budgeting might not sound like the most thrilling activity, but it’s a total game changer for your financial future. Whether you’re trying to save for a dream vacation, pay off debt, or just get a better handle on your spending, there’s a budget out there that will be a perfect fit for you. Here are 10 different types of budgets and how they work.
1. Zero-based budget
With a zero-based budget, every single dollar you earn has a job. With this budget, you take your income and subtract your expenses so that you end up with zero. You’re basically planning out exactly where each dollar goes, from bills to savings to your having fun money.
Perfect for: Detail-oriented types who want to track every penny. If you’re into structure and control and are maybe a little OCD, this one’s for you.
2. 50/30/20 budget
With this budget, you divide your income into three categories: 50% for needs, 30% for wants, and 20% for savings and debt repayment. It’s simple and flexible.
Perfect for: People who like a balanced approach without too much micromanaging. If you want simplicity with a dash of flexibility, give this one a try.
3. Envelope system
Take out cash for different spending categories and put it in envelopes labeled with each category. You can spend money in each category as long as there’s cash in the envelope. Once an envelope is empty, you stop spending in that category. It’s a great way to curb overspending. (This is also known as the ‘cash stuffing’ method since you’re basically stuffing cash into the envelopes!)
Perfect for: People who like dealing with real cash and visual learners. If you like to be hands-on, the envelope system is probably a great match for you.
4. Pay-yourself-first budget
Prioritize savings by setting aside money for savings and investments first, then allocate the rest for expenses. That way you can make sure you’re saving consistently.
Perfect for: Future-focused savers. If you’re looking ahead and building wealth and securing your financial future is a priority, this is the budget for you.
5. 50/50 budget
Also known as the half payment method, with this budget you split your monthly bills in half and pay them with each paycheck. This helps you manage cash flow and reduces the stress of large monthly payments.
Perfect for: People who get paid biweekly. If you get paid twice a month and want to smooth out your expenses, this method is ideal.
6. Reverse budgeting
Instead of budgeting for expenses first, you budget for your savings goals. Determine how much you need to save for your goals, then allocate the remaining funds for expenses. (You do, of course, have to make sure that you’ll have enough money to pay your expenses after you allocate whatever amount you put toward savings goals).
Perfect for: Goal-oriented savers. If you have big savings goals and want to prioritize them, reverse budgeting is an ideal strategy.
7. Priority-based budget
Figure out your top financial priorities, like paying off debt, saving for a home, or investing. Allocate your income based on these priorities before you pay for other expenses.
Perfect for: People with clear financial goals. If you know what you want to achieve financially, this budget helps you keep your eyes on the prize.
8. Anti-budget
This is the minimalist’s budget. You automate savings and essential expenses, and whatever’s left over is yours to spend as you like. This budget is all about less tracking and more freedom.
Perfect for: Minimalists and those who dislike detailed tracking (and rules). If you prefer simplicity and hate getting in the weeds with complicated details, the anti-budget is for you.
9. Expense tracking budget
Track every expense you have to see where your money is going. This helps you identify spending patterns and categories where maybe you can cut back.
Perfect for: Data lovers and people who need a spending reality check. If you want to understand your spending habits in detail, start here.
10. Traditional budget
List all your income sources and expenses in a spreadsheet or a budgeting app like Brigit. Allocate funds to each category and track your spending against your budget regularly.
Perfect for: Classic budgeters who like a little of everything. If you want a comprehensive and versatile budgeting method, the traditional budget is a solid choice.
How to find the best budget for you
With so many options, how do you choose the right one? Here’s a step-by-step guide to finding your perfect match:
1. Take a look at your financial goals
What do you want to accomplish with your budget? Whether it’s saving for a big purchase, paying off debt, or just better money management, knowing your goals will help you make the right choice.
2. Evaluate your spending habits
Take a look at your current spending. Are you a detailed tracker or a big-picture thinker? Do you prefer to use cash, credit, or digital payments?
3. Consider your income and expenses
How regular is your income? Do you have fixed or variable expenses? Some budgets work better with regular incomes, while others handle fluctuations well.
4. Test a few methods
Don’t be afraid to experiment. You can try out a couple of different budgeting methods for a month or two and see which one feels right.
5. Focus on flexibility
Your life and financial situation will continually change, so choose a budget that can adapt to you. Flexibility is key to long-term budgeting success.
6. Let technology help
There are tons of apps and tools to help you budget. Find one that aligns with your chosen method and makes tracking easy.
