Before You Start

Before you start budgeting, analyze your situation. Do you have many debts? Do you have a low credit score? Now determine your goals. Do you want to save for a car or a house? Do you want to pay off debts? Do you want an emergency fund? Your budget will help you fix your situation and reach your goals.

Note that whatever budget type you choose, until your credit score goes up, it will be hard to get credit anywhere. So, in case of an emergency, consider an online loan. It can help out in your time of need, and you can fit the payments in any budget.


The 50-30-20 budget splits your income in three and tells you where your money should go. Fifty percent of your income will go towards your needs. That includes housing, transportation, utilities, groceries and the minimum payments required on your debts. Thirty percent will go towards your wants. Your wants are non-essential expenses like restaurants, gym membership or cable. If you are short in the “needs” category, you can use money from the “wants” category. The remaining twenty percent will go towards extra debt repayment and savings.


Envelope budgeting might be old fashion, but it still works. It is especially useful for people who cannot control their spending. Make envelopes for every category: rent, groceries, electricity, gas, entertainment and so on. Take the money out and put it in these envelopes. Leave your savings in your bank account and do not touch it. Pay all necessities as soon as you have the money in your hands. For all other categories, once the envelope is empty, you stop spending.


The reverse budget focuses on your saving goals. First, put aside the money for your saving account, retirement or emergency fund. Then, pay your fixed expenses like rent, car payments, and utilities. Now comes other necessities like groceries and gas. What is left is your spending money.


The five-category budget says it all. It splits your income into five categories. Thirty-five percent of your income goes for housing, fifteen percent for transportation, twenty-five percent for living expenses such as utilities, groceries, and other wants, ten percent for savings and fifteen percent for debt repayment.

What Will You Choose?

So, what budget type will you choose? Which one is best suited to your lifestyle? The hardest is the first step. Once you start, the rest will follow, and before you know it, you will be budgeting with style.