How Many Budgeting Techniques Can You Choose From?

There's No One-Size-Fits-All Budget. Try These Options to Find Your Favorite.

Many people assume a "budget" is a cut-and-dry, one-size-fits-all regimen. In reality, nothing could be farther from the truth. There are dozens of different budgeting techniques that suit a variety of tastes. Here are some of the most popular options.

1
The Traditional Budget

Budgeting techniques to try

The traditional budget is the one that comes to most peoples' mind first. You list your income, list your expenses, and find the difference. (Hopefully you're earning more than you're spending.)

After that, you set goals for how much you want to spend in each category, such as groceries, gas, and entertainment.

This can be a great budgeting technique for people who are detail-oriented and who have more time. It's not so great for people who are "big-picture" thinkers, creative types, and busy people. More

2
The 50/30/20 Budget

The 50/30/20 budget is a simplified plan in which you break down your expenses into three categories: needs, wants, and savings.

50 percent of your take-home pay should go towards needs, 30 percent should be devoted to wants, and 20 percent should get put into savings.

Dividing needs from wants can be tricky. "Needs" include your only vital necessities. You might think that groceries are a need, but there are items that are "wants." For example, the fruits and vegetables you buy at the store are a "need," while the Oreo cookies you buy at the store are a "want."

Lumping them together under the broad umbrella of "groceries" causes you to co-mingle "needs" and "wants." More

3
The 80/20 Budget

The 80/20 Budget is even more simple than the 50/30/20. Under this strategy, you simply skim your savings off the top, and then freely spend the rest.

Twenty percent is the minimum you should save. You should put at least 10-15 percent away for retirement. You can use the rest for emergencies, buying your next car in cash, home repairs, and other long-term savings goals.

You can also modify this into the 70/30 budget, 60/40 budget, or even the 50/50 budget, depending on how aggressively you choose to save.

The beauty of this budget is that once your savings are cared for, you don't need to worry about where the rest of your money is going. This is also known as the Pay Yourself First budgeting method. More

4
The Sub-Savings Accounts Method

Here's a spin on the 80/20 budget: you can decide how much money you need to save by funneling your money into sub-savings accounts based on your goals.

You open multiple savings accounts and give each one a nickname based on specific goals, like "Paris vacation" and "future car repairs." Then you set a goal ($2,000 for the Paris trip by next January; $800 for future car repairs by this March) and divide the dollars by the timeline to see how much you should save each month.

Now you can auto-draft money each month from your checking account into your multiple savings accounts. Once you're done, freely spend the rest.

Online banks like SmartyPig allow you to create multiple sub-savings accounts and track your budgeting progress. More

5
Budgeting Tools & Apps

This isn't a budgeting "method," but it's worth mentioning. Many people, particularly those who want to create a more traditional line-item budget, use software, tools, and apps to automate their financial tracking.

Programs like Personal Capital, You Need a Budget, and Mint.com can help you track your spending within a variety of categories. You won't have to maintain a paper-and-pencil ledger. Click here for a list of some of the most popular budgeting software and programs. More