4 Budgeting Strategies that Really Work (2024)

As a financial writer, I’ve had the opportunity to try out dozens of different budgeting strategies throughout the years. Whether it’s digital tracking systems, spreadsheets, or even paper methods, I’ve tried it all.

While some were total flops, there were several systems I tested that worked for me. Eventually, I narrowed down my budgeting strategy to just one system. To find what works for you, you have to gain a deep understanding of your habits and your goals.

The trick with budgeting strategies is that you have to find what works best for you. That being said, when evaluating various budgeting strategies, I do so with the assumption that most people want a few key things from their budget – they want it to be accessible, easy to use and update, realistic, and they want the ability to custom it to their own preferences. Knowing that criteria, I set out to find the 4 best budgeting strategies that really work.

1) The 50/30/20 System

The 50/30/20 budgeting system is essentially just a guideline on how to split your earnings each month. According to this plan’s guidelines, you should be spending approximately 50 percent of your take home (aka after tax) income on needs, such as rent or mortgage, bills, and minimum debt payments.

The next 30 percent of your take home pay should be spent on wants, such as new clothing, gym memberships, or supplies for your hobbies. These are things that are nice to have, but they aren’t imperative in order for you to survive.

Lastly, 20 percent of your take home pay should be used to repay your debt and to meet your savings gals. For instance, if you have a hefty amount of credit card debt, you can pay more than the minimum on your loan. Or, if you’re saving heavily for your emergency fund, you can pull funds from this percentage.

2) The Cash Envelope System

The cash envelope system is a classic budgeting tool. Those who use it seem to swear by its effectiveness, while others claim it to be more of a hassle than anything else. Regardless of where you think you stand, there’s no doubting that the cash budgeting system has been wildly successful for many people across the world, which allows us to put it on this list.

With the cash envelope system, you spent mostly with cash instead of credit or debit card. At the beginning of each month, you pull out the cash you need for each of your spending categories and put it in an envelope. For instance, you might decide you have $400 to spend on groceries in any given month, so you put that into an envelope on the first of the month. Whenever you go to the grocery store, you pay cash out of that envelope.

The cash envelope system works well for people because they can always see how much money they have left when they go to make a purchase. Once the money in an envelope is gone, it is either gone for good, or they have to pull it from another spending area.

If you are wary of credit or debit cards, or tend to overspend with plastic in your hands, the cash envelope system might be for you. However, for people who like to earn points from credit cards or who like to keep track of their spending habits digitally, you might find that the cash envelope system is a little too old school for your liking.

3) The Digital Approach

If you’re someone who likes to have all of your finances in one place, then Tiller might be the digital option for you.

Tiller is the only app and website that securely connects your accounts (bank accounts, credit card accounts, etc.) and puts all the information into one Google Sheet. It takes the step of manually consolidating and formatting your data out of the process, which can be time-consuming even for those who are spreadsheet-savvy. They also have budget templates you can take advantage of, so no need to build one from scratch.

Tiller is running a special where you can try your first month for free, and after that, it only costs $4.92 per month, allowing you to try before you buy.

4) The Old School System

Hey, there’s no shame in your game if you prefer old school spreadsheets as a means to budgeting. In fact, even the fanciest of systems rely on spreadsheets to track your spending.

With the old school budgeting system, you create a cap for every area of spending for each month. You create a column in a spreadsheet for the “budgeted” amount, or what you planned to spend, versus another column for what you actually spent.

If you are interested in starting your own spreadsheet budget, get a copy of our free budget spreadsheet template.

Related:

• How to Create an Automated Budget Using Tiller

Do you budget? If so, what strategy do you use? Have you tried other budgeting strategies?