Personal Credit Coach

Building Your Best Budget

Stephen Leifer - Wednesday, June 28, 2017

Budgets are not one-size-fits-all.  There are plenty of options out there and if you are able to find a system that works for you, even if you need to tweak it a bit to meet your needs, you are more likely to stick to it long-term.


Here are a few sample budgets, as well as information about who they are best suited for:


50/30/20 Budget


This budget allots the bulk of your earnings to your needs (50%), 30% to your wants, and 20% to paying debt and savings.  This is a great budget for those who are new to budgeting and younger people just entering the workforce.


Top-Down Budget


This budget is a more detailed version of the 50/30/20 budget and allows you to break down these percentages within each category.  This is great for people who have specific savings goals.


Bottom-Up Budget


This budget uses your daily expenses to determine your budget.  This is best for people who already have significant expenses, such as a mortgage or child care.  It can also help you get a handle on your spending.


Zero-Sum Budget


This budget focuses on saving as much as it does on expenses.  You invest in savings first and then assign the remainder of your money to other costs until you reach zero.  This takes a lot of work, but is great for people who are detail-oriented and have high fixed expenses.


Reverse Budget


The reverse budget is like the Zero-Sum Budget, but is more savings focused.  It is a good option for people who have a decent financial cushion and want to work on saving more.


Envelope Budget


With this popular method, you create an envelope for each category of your monthly expenses and put cash into that envelope when you get paid.  This budget is great for people who want to get control of their spending and if need be, it can be adjusted for those who prefer not to use cash.

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