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Consumer Insite

October 24, 2023

The 8 Best Budgeting Strategies for Reaching Your Financial Goals

Many people find that introducing a budgeting system into their lives makes a positive impact on their finances.
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Advertiser Disclosure: Our first priority is to provide valuable information to help our readers gain insight into financial topics. Although we receive compensation from some of the brands listed on our site, we only highlight companies we believe can benefit our readers and their financial situations.

Living paycheck to paycheck is a common reality for many nowadays, and it can make reaching your financial goals infinitely more difficult. However, budgeting is a great way to achieve financial peace of mind as it helps pave the way for a solid financial foundation. With consistent budgeting, you build smart habits that will benefit you now and in the long run.

In today’s economic climate, developing the best approach for handling your finances and setting aside savings each month is more important than ever. Though there are a variety of ways people like to budget, what matters most is that you stick to a strategy that works for your personal financial needs. Here are nine different budgeting strategies to try to reach your financial goals:

1. The Different Types of Financial Institutions

Traditional budgeting is suitable for those who like to track every small detail of their budget in accordance with their expenses. Essentially, what this type of budgeting does is help you define your financial goals by quantifiable means. You’ll create a budget based on your current income streams and your list of expenses from the prior year (or prior few months). From there, you’ll modify the budget to account for variances in your expenses and income.. There are various items relating to income and expense items you should include to create your budget and document your financial goals. Those include:

2. The 50/20/30 Budget

This budgeting method dedicates half of your paycheck to essentials, 30% to discretionary expenses, and 20% to savings and debt. This approach is helpful for identifying your most essential expenses, but it only works if you have a certain amount of debt. So, if you have a high debt-to-income ratio, this may not be feasible for you. As such, it’s always essential that you assess your monetary needs accordingly and choose a budgeting option that works best for your current financial situation.

3. Pay Yourself First

  1. Start with your net pay.
  2. Develop a budget.
  3. Determine your savings goal and what you want to contribute monthly (either a percentage or a fixed dollar amount).
  4. Take that amount out first each month to put towards whatever paying yourself method you choose.
  5. Use the remainder of your monthly income to pay your fixed & variable expenses.

4. Zero-Based Budget

Zero-based budgeting is an excellent method for those who like to plan their finances out in advance and involves budgeting down to the very last dollar. This is an excellent budgeting method for those who have fluctuating income, such as freelancers or service workers, as it allows you to determine how much money you’ll need to make in order to meet your monthly expenses. Start your budget at zero, and add up how much you’ll need to cover each set expense, like rent, utilities, expenses, savings, etc. If you have any money left over after your monthly payments, you can use it for non-essential expenses or more savings.

5. “No” Budget Budgeting

The “no” budget budgeting method is exactly what it sounds like – you’re not required to follow a traditional budget or plan it in advance. Separate your savings and expenses, and if you have income left over each month, you’re able to do with that money as you please. There are various ways to go about this method, such as carefully monitoring your bank account after each expense, knowing the dates of all your recurring bills, and utilizing automatic transfers where you can for ease of payments. This budgeting method is good for those who like to keep a watchful eye over their finances and get a clear picture of their spending habits.

6. Values-Based Budgeting

Values-based budgeting is where you allocate your budget to what you prioritize the most in life, giving you a more personalized approach to your expenses and saving. This particular way of budgeting adds a layer of intentionality to your financial decisions, helping you create a life that is not only financially stable but also more meaningful and aligned with what truly matters to you. Perhaps you’re hoping to start a new business or trying to save up for your next adventure. In such cases, you’ll put the majority of what you spend towards the things you value the most, and the rest of your expenses will follow accordingly.

7. Envelope System

The envelope system involves using cash instead of a credit or debit card for your expenses. Each expense is categorized in a different envelope, and you allocate a set amount of money for each envelope. For many, using cash has a psychological component to it, as you’re watching the cash you have physically leave your hands. Once you’ve used all of your money in each envelope, that is when your spending is cut off. While this method is helpful for expenses you can pay via cash, it may not work as well for those who have several electronic bills.

8. Using a Budgeting App

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        Disclosure

        Our first priority is to provide valuable information to help our readers gain insight into financial topics. Although we receive compensation from some of the brands listed on our site, we only highlight companies we believe can benefit our readers and their financial situations. Consumer Insite has partnered with CardRatings for our coverage of credit card products. Consumer Insite and CardRatings may receive a commission from card issuers.

        Advertiser Disclosure

        Our first priority is to provide valuable information to help our readers gain insight into financial topics. Although we receive compensation from some of the brands listed on our site, we only highlight companies we believe can benefit our readers and their financial situations. Consumer Insite has partnered with CardRatings for our coverage of credit card products. Consumer Insite and CardRatings may receive a commission from card issuers.

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        Disclosure

        Our first priority is to provide valuable information to help our readers gain insight into financial topics. Although we receive compensation from some of the brands listed on our site, we only highlight companies we believe can benefit our readers and their financial situations.

        Advertiser Disclosure

        Our first priority is to provide valuable information to help our readers gain insight into financial topics. Although we receive compensation from some of the brands listed on our site, we only highlight companies we believe can benefit our readers and their financial situations.