1. The Traditional Budget
The traditional budget is the one that comes to most peoples' mind: 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'd ideally spend within each category, such as groceries, gas and entertainment.
This can be a great budgeting technique for people who are detail-oriented or who are optimizers. It tends to not be 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 breakdown your expenses into only 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, for example, but in reality, the fruits and vegetables that 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 that you should save (put at least 10-15 percent away for retirement and the rest away for emergencies, buying your next car in cash, home repairs, and other long-term savings goals), but 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'd open multiple savings accounts, each one nicknamed with a specific goal, like "trip to Paris" and "future car repairs." Then you'd 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.
At that point, you auto-draft money each month from your checking into your multiple savings accounts, each earmarked for your different goals. 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," per se, but it's worth mentioning: many people -- particularly those who want to create a more traditional line-item budget -- use software, tools and apps in order to automate their financial tracking. Programs like Mvelopes, You Need a Budget and Mint.com can help you track your spending within a variety of categories, so you don't need to maintain a paper-and-pencil ledger. Click here for a list of some of the most popular budgeting software and programs. More »
