Thu. Mar 23rd, 2023

12 Effective Budget Strategies To Try

Budgeting is an important personal and professional skill. Whether or not you manage a budget in your current role, you might need to in a future position. Learning effective budgeting strategies now can help you manage your own finances and improve your financial skills for future work opportunities. In this article, we explain what a budget strategy is, offer a list of effective budget strategies to consider and provide tips for maintaining your budget.

Related: What Is a Budget?

What is a budget strategy?

A budget strategy is a formal approach to managing a specific collection of funds. Many individuals use budget strategies in their personal lives to ensure their expenses don’t exceed their income. Others use budgeting strategies to help reach financial goals, like purchasing a new car or saving a certain amount for retirement. Many professionals also use budgeting strategies at work to help ensure their department or organization can pay for all its expenses and potentially invest in future opportunities.Upload your resume on IndeedLet employers find you when you create an Indeed Resume

Related: Why Budgeting Is Important (Plus 7 Benefits of Budgeting)

Effective budget strategies to try

You can try several different budgeting strategies to see what best aligns with your goals and needs. Review this list of 12 effective budget strategies to see which one will help you reach your financial objectives:

1. Subtraction budgeting

Subtraction budgeting is one of the simplest forms of budgeting. To use subtraction budgeting, simply add up all your monthly expenses and then subtract that total from your overall monthly earnings. The amount you have leftover is what you can use for savings and entertainment.

2. Cash budgeting

Cash budgeting, also known as envelope budgeting, asks you to use actual cash for purchases and expenses rather than managing digital currency. Having cash often helps those who have trouble imagining their money in digital form track it more easily.

With a cash budgeting system, rather than putting your paycheck into your bank account, you actually cash it and use the physical bills and coins to pay for your expenses. Some people put the specific amount of cash they need for expenses like rent and utilities into sealed envelopes until they pay those bills, so they’re not tempted to spend it on other things.

3. Proportional budgeting

With a proportional budgeting strategy, you divide all your expenditures into three categories—savings, needs and wants. From there, you determine which percentage of your income you want to go dedicate to each of these categories and divide your income up into those categories accordingly.

4. Two bank budgeting

Using the two bank budgeting strategy, you pay yourself before paying any other expenses, which allows you to add to any savings plans or purchase any desired items. One effective method of this strategy is to open a checking account in which you deposit your paycheck.

Then, set up an automatic transfer from that account to a secondary bank account, leaving a small portion of your paycheck behind in the original account. Live off the money in your secondary account and leave the savings from your original account for emergencies or other purchasing goals.

5. Automatic budgeting

Automatic budgeting takes advantage of built-in budgeting systems provided by banks. Set up automatic bill pay and automatic transfers to ensure you pay all your expenses on time and meet your savings goals without having to make any actual payments or deposits.

6. Online or app budgeting

There is a multitude of online systems and apps that can help you track your spending and effectively create a personalized budget that meets your goals and needs. Consider using one of these programs to help you establish a unique budgeting system specifically for you and your spending patterns.

7. 50/30/20 budgeting

The 50/30/20 system is a traditional budgeting strategy that uses pre-established ratios to help you manage your money. Essentially, with this strategy, 50% of your income should go to needs like rent and utilities, 30% should go to wants like dinners out and other entertainment and 20% should go towards savings and paying off any debt you might have.

8. Multi-account budgeting

The multi-accounting budgeting system is a digital version of the cash envelope budgeting strategy. Using this system, you open multiple bank accounts, each dedicated to a specific expenditure or savings goal. You can use automatic transfers to send the appropriate amount of money to each account and automatic bill pay to ensure you pay your necessary expenses on time.

9. Zero balance budgeting

A zero-balance budgeting approach is another traditional strategy that focuses on ensuring you have enough of your income set aside to cover your necessary expenses. With this approach, you create a list of every expense you have and how much money you need each month to pay those individual expenses.

10. Savings and emergency budgeting

For those interested in maximizing their savings, a savings and emergency budgeting strategy is especially effective. With this method, a certain percentage of your income goes into a general savings account you can use for specific purchasing goals like a house or a car, while another percentage goes into an emergency fund for unexpected expenses like a car repair or loss of a job.

11. Prepaid debit card budgeting

A strategic budgeting approach for those who dislike carrying cash but struggle to curb their credit card use is the highly effective prepaid debit card budgeting strategy. It functions as a combination of the cash envelope system and the multi-account budgeting strategy, but with the use of pre-paid debit cards for daily expenses rather than using actual cash or a credit card or debit card tied to a bank account. This ensures you cannot overdraw your account and spend outside of your means.

12. Priority budget

A priority budget entails determining your own specific priorities rather than relying on predetermined priorities set by others. You make a list of all your expenses and spending priorities and arrange them in the order that’s most important to you. From there, you can determine how much money you want to dedicate to each category.

Related: How To Manage a Budget

Tips for maintaining your budget

Deciding on a budget strategy is an excellent first step in effectively saving your money. Ensuring you follow the guidelines established in your budget will help you meet your short- and long-term budgeting goals. Use these tips to help you maintain your budget:

  • Track your spending. One of the best ways to maximize your budget is to track your spending and see where you can make changes to meet your short- and long-term financial goals.
  • Review and update. Regularly review the budget you’ve created to ensure you’re spending within the limits. Update and change your budget as needed to reflect spending patterns and changing goals.
  • Establish realistic goals. Ensure the goals you set for your budget are realistic and attainable. Consider using the SMART goal setting system to help you create effective financial goals.
  • Use tools: Use tools like apps and online money trackers to help you get a clear sense of your spending and saving.
  • Stay motivated. Regularly remind yourself why you’re using a budget by looking at your long-term goals to help you stay motivated to save rather than spend.
  • Reduce your credit card use. It can be easy to overspend with a credit card. If you tend to accrue unnecessary credit card debt, consider using cash or debit cards instead to keep you from spending more money than you currently have.


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