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8 Easy Budget Styles That Will Get You Out Of Debt

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They say to never bring up politics or religion in social settings, but try bringing up budgets and you’ll realize that perhaps budgeting should be added to that list, too.

Some people will roll their eyes at you, and some will cut their eyes at you — piercing your soul with a million invisible daggers. Others will be a little too excited, diving into the discussion, ready to share their advice. 

Then there’s those of us who fall somewhere in between the budget-advocates and budget-deniers.

In the in-between, you understand there are benefits to creating a budget, but you just can’t shake the feeling that a budget’s sole purpose in life is to stop you from living your best life now.

Take me for instance. I knew having a budget was the wise thing to do, but I didn’t like the thought of it because I didn’t want to be held accountable for every dollar I spent. I wanted to spend when and how I wanted, without anyone (or a budget spreadsheet) telling me otherwise. #MindYaBusiness

But with time and after many financial disasters (#FACEPALM), I realized that perhaps what needed to change was my perspective.

CHECK OUT How to Create a Budget in 7 Super Simple Steps to learn more about the basics of budgeting

8 Easy Budget Methods

It’s important to know every budget method is not equal and that there isn’t a one-size-fits-all money management system.

You really have to come to grips with who you are, the way you function, your financial responsibilities and your financial goals.

All these things will help you determine the best budget system for you and your season of life (because what might work for you today may not tomorrow).

For instance, I suck at money when I have cash on-hand. I will blow through a stack of twenties before I even realize it. Hard cash systems equal destruction for me.

But, perhaps you’re the kind of person who needs to tangibly see and touch your money. Perhaps that’s a simple factor that helps keep you in line and organized. So, something like the envelope system might work for you.

Speaking of budget systems, let’s jump into the top 8 budget methods that can motivate you to change:

Photo by Pepi Stojanovski on Unsplash

1. Envelope System/Cash-Only

Income Level: Any
Best Suited For: Credit/debit card swiping addicts (you swipe them things like they ain’t got no limits), and/or those who like to have control over every budgeting category
Not Well-Suited For: Those who don’t like to have physical money on-hand, and/or don’t do well with manually keeping tabs on how much cash has been spent

What: The Envelope System/Cash-Only Budget is exactly what it sounds like – you only use and carry cash for your spending money.

This budgeting strategy can come with some pretty hard learning curves for some (*raises hand*), because once you run out of cash, there aren’t any credit cards to come in and save the day.

How: So, where do the envelopes come in? Whether you use envelopes, boxes or various areas under your mattress, the point is to separate your money into different categories.

For instance, if you have $200 allotted to your transportation category each month, then you’d stuff $200 in an envelope labeled “transportation.” Same goes for every other category (i.e. groceries, personal spend, etc).

WANT TO DIGITIZE THE ENVELOPE SYSTEM? Try out Mvelopes budgeting app today!

2. 60% Solution

Income Level: Mid-High Income
Best Suited For: Someone who likes predictability, desires to save more, likes money to play with, and has low debt
Not Well-Suited For: Anyone with high debt

What: This method utilizes percentages rather than specific dollar amounts to manage your money (some expense tracking is necessary).

60% of your income goes toward “committed expenses.” So essentially, all of your bills are supposed to be taken care of with just 60% of your income. This includes your mortgage, groceries, car payments, insurance, cable, cell phone, etc.

40% of your income goes into four different 10% allotted categories:

  • Retirement: 401K, Roth IRA, etc.
  • Short-term Savings: money to be used within the course of a year. So, this can include upcoming vacations savings, bigger purchases, or irregular expenses. This money is kept in a separate account so you can easily transfer funds to your checking account as needed.
  • Long-term Savings: emergency fund, investment money, etc.
  • Fun Money: dining out, clothes, entertainment, etc.

How: Simply take your total monthly income and calculate what 60% and 40% of your income is. Use the 60% to pay your committed expenses and divide the 40% four ways and put each fourth toward it’s designated category.

Notes: You may have caught on, but if 60% of your income isn’t able to cover all your bills, you may need to put this option on the shelf until you can either pay off enough of your debt or you increase your income.

3. 50-20-30 Method

Income Level: Any
Best Suited For: Someone who likes predictability, likes straight forward budgeting, and/or doesn’t enjoy budgeting
Not Well-Suited For: Money micro-managers

What: This method is cut and dry, and easy to maintain. Your income is split in three ways — 50% goes to monthly needs, 20% goes to savings, and 30% can be spent however you feel.

50% of your total income pays for your monthly needs like rent/mortgage, food, utilities, healthcare costs, etc.
20% is “saved.” If you have debt, then outside of an emergency fund, this portion of your income should be paying down your debt.

The remaining 30% can be spent on whatever you wish. BUT before you go on a shopping spree, know that “whatever you wish” includes cable, internet, a night on the town, clothes, etc. Might be shocking, but cable and internet are luxuries, not necessarily necessities.

How: Write out your total monthly income. Bust out a calculator and calculate what 50%, 20% and 30% of your income is. Live your life.

4. Reverse Budgeting/Pay Yourself First Budget

Income Level: Any
Best Suited For: Savings-lovers
Not Well-Suited For: Those who love to have a nice sized spending budget

What: Budgeting that is centered around your savings goals rather than your fixed and variable expenses

How: Write out a list of your savings goals – including both short and long term. If your retirement fund or emergency fund’s aren’t at the top of your list, then plop those two right on top of your list.

Then from the remaining goals choose what you want to start building toward now. Finally, decide how much you can realistically put towards each of those goals every month.

You still need to focus on paying your bills, but ultimately following this budget method may leave you with less spending money – because after you put away savings and pay your bills, you may not be left with much. #Discipline

Photo by Jack Harner on Unsplash

5. Zero-based Budget

Income Level: Any
Best Suited For: Money micro-managers, enjoys money planning and tracking
Not Well-Suited For: Those who need a bit of wiggle room in their budget

What: Made famous by Dave Ramsey, the zero-based budget gives every dollar from every paycheck a “job.”

So, every dollar that goes in your bank account is accounted for and there is absolutely no wiggle room (so for all my wigglers out there, this may not be for you). That doesn’t mean every dollar is spent, because some will be assigned to your savings accounts.

How: Write down your total monthly income and your regular monthly expenses. Write down any seasonal expenses (i.e. birthdays, Christmas, car registration, etc.). 

Now subtract your income from your expenses. Anything left? If so, give it a “job” — like assigning it to savings (i.e. retirement, 401K, etc.). The goal is for the equation to come to zero. If your expenses exceed your income, then you’ll need to get creative and think of ways to cut back on expenses or increase your income.

6. The “No Budget” Budget

Income Level: Higher income
Best Suited For: Someone allergic to budgets and disciplined
Not Well-Suited For: Lower income, avid over-spenders

What: This method doesn’t require you to track your expenses on a monthly basis (hooray!). The goal is to maintain your monthly expenses and savings so you can automate the process and know exactly how much will be deducted from your bank account.

Everything left (after paying your bills and putting money in savings)? You’re free to blow.

How: Calculate your monthly expenses. Automate paying your bills. Determine how much to save from the remaining balance. Automate the transferring of that amount to your savings. Spend the remaining balance however you want.

7. Values-based Budget

Income Level: Higher incomes
Best Suited For: Frugal, disciplined, savings-lover, dislikes money tracking, clear values
Not Well-Suited For: Undisciplined, dislikes saving, no clear values/passions

What: A budget based off of your values rather than specific categories.

How: Write out the values you’re wanting to spend your money on. So, if you value photography, write it down. If you love to travel, write it down. Whatever does not end up on your list you simply don’t spend your money on (from what’s left after paying your bills).

8. Create Your Own Budget

Income Level: Any
Best Suited For: Someone who feels there isn’t one methods that fits their life well
Not Well-Suited For: Someone not willing to do the research and take the time to come up with a functional and realistic plan

What: Combining various traits of several budget methods to create a budget that works best for you.

How: Figure out what you want out of your budget – what are your goals? Learn the different options the best budget methods offer – supplied above. Take parts of whichever methods you feel best meet your personal needs. Create and stick to your budget.

Final Thoughts

Ultimately, a budget is like a road map. If you desire to reach a particular financial goal, a well-planned budget can help guide you there.

If the thought of making a budget causes you to cringe, change your perspective. Budget’s don’t have to be life-suckers, they can be the guiding force to empowered spending.

In the end, whatever budget method you choose, give it your best shot. Getting out of debt, buying that home you’ve been dreaming of, or traveling for a month every year – it’s all possible. If you want to, you can. So, make a budget and stick to it.

Happy Budgeting!

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