How 5 Common Budgeting Styles Work

There are so many budgeting styles out there, how do you pick which one is best for you? Let us help you out! We’ve picked 5 of the most common budgeting styles that can work for a variety of circumstances. In the article below, we’ll outline how they work so you can pick the right one for you!


50/30/20 Method

This popular budgeting style requires that you divide your income into three parts. 50% goes to necessary expenses such as rent, groceries, transportation, utilities, etc. 30% goes to wants such as eating out and entertainment. And 20% goes to savings and investments. This method is perfect for those who want an easy way to keep track of their spending and save money without having to get too detailed with their budgets.

Something to keep in mind is that the percentages can be flexible based on your lifestyle and income! For example, it may take 60% to cover your necessary expenses. So you might change your wants to 20% and keep savings/investing at 20%.

Pay Yourself First Budgeting

This budgeting style is a fantastic method that helps you prioritize your savings and/or investment goals. You start by identifying the amount you’d like to save or invest each month. Then you’ll want to set up automatic transfers to a completely separate account for these goals. That way you can’t be tempted to ignore your own priorities! The money leftover after funding these savings/investment goals is then budgeted to cover all other expenses.

This approach ensures that your financial goals are top-of-mind, and you are less likely to overspend on non-essential items. ‘Pay Yourself First’ is an excellent way to build an emergency fund, save for a down payment on a house, or invest in your retirement. It also helps you to live within your means and avoid debt.

We know this style isn’t for everyone! Please keep in mind that it is best suited folks who have a stable, fixed income and often have a surplus of money each month.

Zero-Based Budgeting

For those who want more control over their finances, zero-based budgeting may be just what you’re looking for! With this style of budgeting, you assign every dollar you earn a specific ‘job’. That might be a bill, dining out, your self-care routine, or a specific savings account. At the end of the month, your net income minus your expenses and savings should equal zero, hence the name. No, you’re not emptying your bank account each month! It just means every dollar is strictly accounted for.

This method is great for people who want to have complete control over their finances and avoid overspending. It allows you to really hone in on where exactly your money is going each month and is a great way to ensure nothing slips through the cracks! However, it can be challenging for people with irregular incomes or expenses, and it requires constant monitoring and adjusting to make sure you stay on track.

Cash Envelope System

This style is a little more old-school, but it’s great if you’re looking for a higher level of discipline, or if you’re just not a fan of tech-based options! The envelope system involves using cash for all expenses. You’ll assign certain amounts of cash into separate categories to cover all expenses – groceries, bills, entertainment, ‘fun’ money, etc. Then you’ll divide it into individual envelopes for each category.

When it’s time to spend money on those items, you only use what’s in your envelope. And once it’s gone, it’s gone! It’s simple but effective if used correctly! If you struggle with impulse spending, then using cash envelopes could help keep your spending under control.

The 80/20 Rule

Finally, we have what some call “the anti-budget” which consists of following two simple rules. First, set aside 80% of your income for essential expenses like housing, bills, and groceries. Second, use the remaining 20% for whatever you want! That includes things like shopping, traveling, or pursuing a hobby. The beauty of this method lies in its simplicity – as long as you’re disciplined with the 80%, you have the freedom to spend your remaining funds as you please. This approach allows you to prioritize your needs while still enjoying the fruits of your labor.


When it comes to building a budget, there’s no ‘one size fits all’ solution. Rather, there are many budgeting styles available depending on your preferences and circumstances! Whether it’s 50/30/20 rule for simplicity; Pay Yourself First for prioritizing savings/investing; Zero Based Budgeting for extreme control over spending; Cash Envelope System for avoiding impulse purchases; or the 80/20 Rule for living stress-free – take some time to find out which works best FOR YOU!

**Our financial coaches are standing by and ready to help if you’d like some additional assistance! You can find more info on financial coaching here and you can sign up for this FREE service here.