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4 Budgeting Strategies to Try

If you read last week’s post about how to start budgeting, but you’re still looking for more ideas on what strategies might work best for you, keep reading. I’ll go through a few common strategies as well as some tips to help you be more successful.

Lists are great, aren’t they?

  1. Zero-based Budgeting

  2. Envelope Method

  3. 50/30/20 Rule

  4. Pay Yourself First

Zero-based Budgeting

When you think ‘budgeting,’ my guess is that your head goes to this strategy. This is probably the most difficult and time-intensive budgeting strategy, which may be why so many people don’t budget.

The Process:

Create categories of spending for the next month and determine how much you’ll spend in each category. This may be easy to do for some of the big things, that don’t change like rent or debt payments, but it gets more difficult with items like groceries or utilities that you need, but can’t always accurately estimate.

Is This Strategy For You?

This strategy may work best for you if you’re looking to decrease spending in specific categories, like dining out or online shopping. However, it’s a tough strategy to start because of the up-front work it requires, and you need a degree of self control to make sure you actually don’t exceed your category budgets. If you’re super detail-oriented, like me, this strategy might drive you nuts.

Envelope Method

Any fans of Dave Ramsey out there probably already know about this strategy. Dave would recommend using only cash for this strategy, but there are some budgeting apps out there that will allow you to use the envelope method with credit cards (don’t tell Mr. Ramsey - he wouldn’t approve).

The Process:

This one starts out similar to the zero-based strategy in that you determine a target spending amount for each of your budgeting categories. Once you have an idea of how much you’ll allocate to each, you assign an envelope to each category and fund the envelopes with cash (or assign a dollar limit if you’re going the technology route). At the end of the month, if you have extra in your envelopes, you can use that extra to spill over into other categories or to save.

Is This Strategy For You?

If you mainly use cash (and happen to have envelopes on hand), this might be an easy one to implement - otherwise, you may either need to change your habits or download an app to get started (here’s a website to help you out with potential apps). The envelope strategy works well for people who are good at following rules. If you empty your ‘dining out’ envelope and just decide to refill it, you’re not going to be very successful with this strategy.

50/30/20 Rule

This one is also known as proportional budgeting, and the idea is that you split your income into 3 big categories: needs, wants, and savings.

The Process:

For easy math, let’s assume your monthly income is $10,000. With this strategy, you’d plan to spend $5,000 (50%) on needs, like housing, taxes, and groceries. $3,000 (30%) would be available for any wants, like dining out, shopping, or travel. The remaining $2,000 (20%) gets saved. You’re the master of your own destiny, so if you determine a different allocation works better for you, go for it! Just be careful not to decrease the savings too much.

Is This Strategy For You?

If you feel the need to cut back on frivolous spending overall and want to focus on savings, this might be a good option for you. I like it because it’s simple - just three broad categories, and no need to track down to the penny. This makes it much easier to implement than the first two strategies.

Pay Yourself First

You may have been told before that you should ‘pay yourself first.’ Also known as reverse budgeting, this strategy is the least ‘budgety’ budgeting strategy out there.

The Process:

Determine how much you need to save for the goals that you have, and automate it, either through your paycheck (your 401(k), for instance) or via automatic transfers to savings and investments. It’s that simple. The rest of your paycheck? Go ahead and spend it on whatever makes you happy (as long as you’re paying all your bills).

Is This Strategy For You?

I find that this strategy works best for people who spend every dollar in sight. If you look at your savings account and immediately imagine what you could buy with that money, you’re probably better off hiding that money from yourself automatically. This is also a good strategy for high earners - if you can afford to buy everything you need and most of what you want, you probably don’t need to limit specific categories and instead just need to focus on saving enough for your specific situation.


Keep in mind that budgeting is much easier if you keep your fixed costs low - this means limiting the amount of debt you take out, making sure you’re not overpaying for insurance, and keeping other living costs like rent/mortgage down. Limiting bigger spending moves the needle much more than making coffee at home instead of buying Starbucks.

At the end of the day, you need to start by figuring out your starting point - that means tracking your spending. Keep in mind that there is almost never a wrong answer when it comes to financial strategies; just focus on what works for you.


As always, keep in mind that you don't have to go it alone. Check out my website to see what it's like to work with me and reach out if you have any questions.

If you found this post helpful, help spread the word! Share with friends and family that you think may benefit as well. But remember, this is solely for educational purposes - it's not advice.

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