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Creating a budget is essential to anyone hoping to increase their savings and reach their financial goals. While you may have a basic idea of how to create one, in reality there are several budgeting methods to chose from — it’s not a one-size-fits-all approach.

If you’re ready to rethink how you budget, here are five popular budgeting strategies to consider:

Budgeting By Category

This a very traditional way to budget — set a specific budget for each of your individual spending categories. After determining your monthly income, everything from your mortgage and utilities to fun and entertainment gets a budget. While simple on the surface, there are many factors to consider when determining each budget. You may want to start with your necessities and savings goals first before setting up budging for dining, shopping, etc. The latter will also be based on your lifestyle; if you love to go out to eat, your restaurant budget might be higher than others, but then you might want to consider having a lower budget for groceries and entertainment to make up for it.

The 50/30/20 Rule

A popular budgeting method is the 50/30/20 rule, which is good for people who don’t want to get into the nitty gritty of tracking several spending categories. Here, after calculating your net income each month, you divide it into just three categories: needs, wants and savings/debt. 50% of your income should go into needs or necessary expenses, such as housing, utilities, groceries, transportation, etc. 30% goes to your wants, aka the fun stuff such as dining out, vacations, shopping, subscriptions, and entertainment. Finally, 20% should be put toward your savings or paying down debt.

Pay-Yourself First

The budgeting approach is best for those who want to make building savings or paying down debt a key goal each month. Instead of putting wants or the fun stuff first after budgeting necessities, you can prioritize “paying yourself” first by putting money into your retirement or your emergency fund. Paying down debt is also effectively paying yourself in the long run as you’re working toward freeing up cash by paying off your student debt or credit card bill.

Zero-Based Budget

Simply put, with this budget method, you calculate your income each month and then spend or save every dollar you make with purpose, so that your income minus expenses equals zero. People who like this method track every single purchase they make so that they don’t go over their cash inflow each month. Any leftover cash goes into savings so that your net cashflow is always zero. This can be a very strict method, so it’s always best to factor in some room for unexpected expenses.

Budgeting With Cash

Also known as the Envelope Method, here you make the majority of your purchases with cash. With cash, it’s harder to go over budget as you have a hard limit, compared to using a debit or credit card which makes overspending easier since your cash is intangible. While you can just take out cash each month and spend it accordingly, many set aside cash in different envelopes for each spending category. For example, if your budget for groceries is $500 each month, you’d put $500 in an envelope and take it with you every time you go to grocery store.


These are just some of the many ways you can create and stick to your budget. There are many more to explore to find the right one for you and your family’s lifestyle and goals. No matter which budget method you choose, USB’s Spending Insights can make tracking your spending even easier. Download the app today to get started.


Learn more about Spending Insights here. You can also stop by any of our branches and speak with a friendly, knowledgeable banker to help you start a savings and budgeting plan today – find a branch.

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