Creating a budget isn’t a one size fits all situation. You have to find a process that keeps you motivated and on track to save — and ensure you aren’t deterred from your goals. There are several popular methods you can consider, each one catering to different preferences and financial situations.

Here are some well-known budgeting methods that are effective and relatively easy to implement. Consider the one that seems to work for you, and if it’s too much of a challenge, give another method a change. With a little hard work and commitment, you’ll find the process that works for your life — and start saving!

50/30/20 Budget
This method divides your monthly income three ways. 50 percent for essential needs (rent, utilities, groceries), 30 percent for wants (non-essentials like dining out and entertainment) and 20 percent for savings and debt repayment. This can include emergency funds, paying off debts or saving for goals. With a percentage dedicated each month, you can ensure you’re meeting all of your obligations, having a little fun and still setting aside some money each month.

Zero-Based Budgeting
This method accounts for every single dollar that comes in and every single dollar that goes out, with the goal of ending at the number zero. It involves careful tracking, as you allocate every dollar of your income and track every dollar spent, with the goal that your income minus expenses equals zero. This means every dollar has a purpose, whether it’s for bills, savings, or debt repayment, and can help you avoid frivolous spending on things that you don’t want or need.

Envelope System
It’s old-school but it works. This method is very cash-centric, as you designated cash for certain budget categories — think groceries, entertainment and gas — and place that money into labeled envelopes. Once an envelope is empty, you cannot spend any more in that category for the month. Add an envelope for savings, and at the end of the month, take that straight to the bank to deposit.

Pay Yourself First
You work hard for your money — so why not pay yourself first? Prioritize saving money by setting aside a fixed amount or percentage of your income right when you get paid. The remaining money is then used for expenses, ensuring that your commitment to saving comes first and is not an afterthought.

The 80/20 Rule
This is similar to 50/30/20 rule but simpler. Allocate 80 percent of your income to essential and non-essential expenses, and use 20 percent for savings and debt repayment.

Automated Budgeting
There are many budgeting apps and money tracking programs to help you automatically categorize your spending and savings — your bank might even have a program. Use these apps to track expenses in real-time. You can discover insights into where you might be overspending, and figure out where you can cut costs to make sure you’re saving or paying down debts.

Cash Flow Budgeting
This method stays close to the due dates of bills, rent and other expenses to ensure you have enough cash to cover expenses as they come due. When those are covered, you can easily look at your financial status and find small pockets of cash to set aside for savings or debt repayment.

Choosing the best budgeting method depends on your financial goals, spending habits, and personal preferences. Experimenting with different methods or combining aspects of several can help you find the approach that works best for you. Good luck!

DISCLAIMER – This content is for informational purposes only, and should not be considered advice of any kind. Pangea and its affiliates do not provide financial, investment, legal or tax advice.