10 Types of Personal Budgeting Methods.

Just hearing the term “budgeting” often makes people cringe and look for any other chore or task that they can keep busy with. But budgeting doesn’t have to be painful or boring. Every person is different, so the type of budgeting that fits them best will be different. Here are 10 types of personal budgeting methods you can try out and see what fits you. 

What is Budgeting? 

Another way to look at the idea of budgeting is to call it prioritized spending. By prioritizing your financial goals and spending, you can then track your spending to ensure your spending matches your priorities. 

The purpose of budgeting is to give you information about how you spend your money. Many people feel that budgeting is restrictive or that you are “failing” if you spend more than your budget. 

That is not the case!

If you find that you are continually overspending in certain categories, it is information that you need to either make lifestyle changes to control the pending in this category or adjust the amount of your budget category to account for your preferred spending. 

By taking the information you receive from overspending in one category, you can make changes to your budget to decrease spending in another category so you can spend more in this category. 

Budgeting is flexible and personal to you, so make it work for you!

What is the best budget?

The best budget is the one you will use! Seriously. I have seen people do great budgeting using an app, a spreadsheet, or even a pencil and paper. 

If spending long nights at the dining table, diligently categorizing every expense with a pencil isn’t your cup of tea, then try an app-based variable spending budget instead. You don’t need to change your habits to fit a budget. Find a budget that works with your habits. 

Here are 10 different types of personal budgeting methods that you can mix and match to fit your budgeting needs. You don’t need to only pick one, and you are not committed to one forever. Try them out for a few months and make changes if there are parts that don’t work for you. There are many other types of personal budgeting methods that you can try out! If a traditional method doesn’t work for you, then feel free to make up your own! 

10 Types of Personal Budgeting Methods 

50/30/20 Budget.

This budget is more of a loose framework for spending. It categorizes all of your spendings into needs, wants, and savings. The guideline is that you should spend:

• 50% of your net income on your needs
• 30% of your net income on your wants
• 20% of your net income on savings

The nice thing about this budget is once you set it up, you only have to track 3 budget categories. It is also flexible. If your need spending is consistently in the 40%-45% range, then adjust your savings up by 5% so that you are saving a little more. 

If this sounds like an interesting budget for you, Nerd Wallet takes a deep dive into how to use this budget for you. 

This budget doesn’t account for debt separately. Debt repayments, either mortgage debt, student debt, or consumer debt, are considered part of the needs category. If you have significant debt, you can adjust this so you are calculating your percentages on your net income after debt repayment, rather than just your net income.  

Saving first or paying yourself first.

I have talked about the “pay yourself first” budget strategy before, but you can also use the strategy for your budget. Essentially, it works backward to figure out how much you are “paying yourself” or sending to savings first, then required spendings like rent and other monthly bills, and then you are free to spend whatever is left on your wants. 

Nerd Wallet dives deeper into this idea if you think it may work for you. This is a good option if you are focused on growing your savings and are less concerned about your budgeting in each specific category. 

Zero-based budget

Dave Ramsey is the big promoter of this method, and it basically works like a business budget where you start with your income, and then budget every dollar of your income to either be spent, pay down debt, or save. So at the end of the month, you have zero dollars left and can start over with a fresh paycheck. 

There are several apps based on this budgeting idea, including You Need a Budget. If you decide to go with this method, I would pair it with an app to help you with the tracking. This is one of the more involved budget types because we are looking at each dollar and ensuring it has a job.

There is a more detailed post about zero-based budgeting here and how it may work best for you.

Variable spending budget

Variable spending budget focuses on budging for the expenses that change from month to month and expenses that can be controlled. There is no need to track a budget category for your rent because that amount only changes once a year when a rent increase happens or if you move. Rather than spending time focusing on these fixed expenses, they advocate focusing on the controllable variable expenses like groceries, eating out, fun spending, etc. 

This can be done in any of the budgeting methods, but there is one app that is specifically designed to budget for this. Fearless Finance app focuses on what they call grocery spending and flex spending to allow yourself to keep an eye on your daily frequent spending that can sometimes be sneaky in adding up. 

The No-budget budget

Yes, having no budget is also a type of a budget! Often this is used by people who have paid off their debt and are comfortably saving for retirement already. Essentially, they are occasionally checking their credit card spending and bank account balances to ensure things seem reasonable. 

This can be a risky strategy if you don’t have a good handle on your spending in relation to your income. I recommend that you spend a few years using another tracking budgeting strategy so you can become very familiar with your personal spending habits before you stick to this method. 

Cash spending budget

This budgeting strategy became popular with Dave Ramsey’s zero-based budget. As a part of the zero-based budget, you would convert your daily spending habits into cash and use that as a visible reflection of where you are at in your budget. 

This has great psychological benefits. It is easier to see and respect that you have spent your eating-out budget when the envelope of cash is empty, rather than just seeing a line or number on an app. 

The downside in today’s modern world is most everything is paid for with a debit or credit card. There are even places you can’t pay with cash. A friend just went through this. She budgets cash for groceries, eating out, and coffee for her family. She wanted to simplify things and transition to using Walmart grocery delivery so she didn’t have to take trips to shop in the store. Well, you can’t pay for grocery delivery in cash! So, she made some changes to her habits and now uses her debit card for weekly Walmart grocery deliveries. 

Monthly or continuous budget

Doing a continuous budget means you budget for one month at a time, and make changes to the next month’s budget. These changes are based on your spending for the current month and what you know is upcoming in the new month. 

A great example would be utilities. In my area, we run sprinklers for our lawn in the summer. My water bill will be $70 a month from October to May, and then will jump to $200 a month for June through August, and is usually about $100 in September. Knowing this pattern, I will adjust my budget in the summer months to accommodate this expected increase. 

This can look like adjusting your dining out and entertainment budget for the month if you know you are taking a long weekend trip or increasing your pet budget if you know your pup has a vet appointment during a month. 

App-based tracking

Apps are some of the most popular options for tracking spending. Most can be linked to your checking account and credit card account so they automatically track and categorize spending for you. That’s way better for me than spending hours manually tracking it myself! 

One downside of this method is the spending information gathered by the app is only as good as the classification in the app. Stores like Target or Amazon may be hard to classify properly when you purchase vitamins one time and then splurge on a new pair of shoes the next trip. 

So if you use an app, set aside a few minutes to review your spending each month and ensure that expenses are properly tracked so you can get the best information from your app. 

There are a ton of popular apps out there right now. The cost and usefulness of the apps can vary significantly, so check out a few and see what feels the most user-friendly to you. 

One of my favorites is You Need a Budget. This app is subscription-based and costs either $14.99/month or $98.99/year. The app includes access to a computer-based dashboard and an app to allow you to track spending, debt repayment, net worth growth, and overall financial goals.  

A new option I found recently is an app from Fearless Finance. This app focuses on your variable spending, rather than spending time tracking fixed (or mostly fixed) expenses like rent, or utilities.

The app focuses on tracking grocery spending and “flex” which includes your fun spending like eating out, entertainment, coffee, etc. This would be tracking the 30% of your income in the “wants” section using the 50-30-20 budget. 

They charge based on the number of banking or credit card accounts linked to them, and it is free for the first 3 accounts. Each additional account is $1.99 a month. So this encourages you to focus your spending on 3 accounts and consider closing any accounts you are not using! 

Spreadsheet-based tracking

Spreadsheet-based tracking is a very popular method for many people because once you have the information in the spreadsheet, it can be manipulated and analyzed in many different ways to make decisions. This method can be tedious and time-consuming. Remember, that the best budget method is the one you will use, so if entering data isn’t for you, then find a way to automate this or use an app! 

If you don’t have a budget spreadsheet, you can find a ton of templates available online. Some are free, but often they contain limited features and are not well designed. Etsy has a ton of options available as a digital download for less than $10 you can use for years. Plus, you can customize them a bit if there are other budget categories or analyses you want to do. 

Two of my favorite fellow budget nerds are also selling budgeting and tracking spreadsheets on Etsy. 

Whitney Hansen of The Money Nerds podcast has a full financial dashboard that also includes a template for budgeting (as well as a ton of other fun money things!). For a one-time purchase of $15, you can use this year after year to track and archive your financial progress.  

Girls who Budget is another shop I have found consistently high-quality spreadsheets in. They offer a ton of spreadsheets from debt payoff trackers for less than $2 to full financial dashboards. Everything is under $25 and comes in a quick download of Google Sheets. I love this one-page simple budget spreadsheet for $5.16 that can be used every month.  

Pencil and paper

Maybe this is the method that you remember your parents using when you were a child. This had received an upgrade over the last few decades. Many people use colorful worksheets to show weekly totals on “fun” spending or have bright pages in their bullet journals. 

Most people don’t use this method to track every single transaction, but it can be helpful for people who are trying to get a single category under control. Using public accountability (like a tracking sheet on the fridge for weekly takeout spending) and putting it in a place you see frequently is a great strategy to help you break a bad habit or start a good habit. 

If you want some inspiration getting started, look on Etsy for some low-priced digital downloads that can help get you started. This Bullet Journal budget kit is only $2.49 and can be reused many times.  

This is a 21-page finance planner pack that can cover budgeting and a whole other host of finance goals. It is reusable and printable for only $6.80

Which budgeting method should I choose?

Any of them! Doing any budgeting or spending tracking is better than not doing any. By watching your spending and ensuring you are spending money where you see the value, you are able to prioritize spending, building wealth, and paying off debt. Any of these types of personal budgeting methods are great places to get started with budgeting. 

Be patient with yourself! Try out the budgeting method you choose for a few months and see how it goes. If you can tell it is not working for you, take some time to identify why. Maybe it is too much data entry, or it classifies things wrong, or it doesn’t match up with your paychecks. Once you have identified the issues, see what you can do to make it work for you or look for a new strategy that addresses these issues. There are many types of personal budgeting methods to choose from! 

If you budget or track your spending, what method do you use? I would love to hear about your strategy in the comments below or any tips you have that make it easier for you!