A budget plan is a great way to keep track of your finances no matter where you are in your financial journey. Having a budget plan can help you pay off debt, save for a purchase, or take control of your money. Choose a budget type that works best for you! Here are 4 different budget plans to help you get one step closer to your financial goals. 

50/30/20 Budget 

Since it’s simple and flexible, the 50/30/20 plan is ideal for beginners. Start by separating your net income (income after-taxes) into 3 categories: 

• 50% for needs. This includes basic necessities like housing, food and transportation.
• 30% for wants. Depending on lifestyle, this can range from spending on clothes, restaurants, concerts and much more.
• 20% for savings, investing or debt repayment. This includes paying down debt or saving into an account. This may also include putting money toward investing. 

The 50/30/20 plan is best for those new to budgeting who want a balanced, easy-to-follow framework. Keep in mind these are general numbers and guidelines, and it's important to be flexible and adjust accordingly. For instance, a car repair may increase your needs budget to 55%, which may result in lowering your wants to 25%. The 50/30/20 can be a great way to get into budgeting if you’ve never tried it before.

Envelope System

An envelope system is a cash-based budgeting method. In this system, different envelopes represent spending categories like groceries, entertainment, and travel. Start by labeling your envelopes, then set aside a certain amount of cash into each category. Once you use it all, spending in that category stops. 

For instance, a student-at-home receiving $500 in their student account could choose to categorize their funds like this: 

• Personal: $200
• Restaurants and eating out: $100
• Entertainment: $100
• Gas: $50
• Savings: $50 

An envelope system is best for people who struggle with overspending and want a way to limit their expenses. 

Zero-Based Budget

In a zero-based budget, you assign every dollar of your monthly income to a specific purpose. Whether you spend, save or invest, you use your money until the budget balances to zero (although, it’s safe to include a buffer zone in case of unexpected expenses). This method requires detailed planning and tracking, but offers excellent control over your finances. 

Here's what a zero-based budget would look like with a monthly income of $2,500: 

This method of budgeting is best for people who want full control over their money and are willing to track expenses closely. 

Pay-Yourself-First Budget

This approach emphasizes saving by allocating a portion of income to savings and investments before covering other expenses. Also known as “reverse budgeting,” paying yourself first places importance on saving first versus expenses. 

First, determine your savings goal. Decide what amount you want to save and how long it will take you to get there. Next, automate your savings to reduce the extra step of manually transferring money. Set up an automatic payment from your checking account or direct deposit to transfer money directly into your savings account. 

For instance, a person with a biweekly income of $1,500 can choose to automate 20% towards their savings. In this scenario, the 20% or $300 goes directly into the savings account and the person would start their budget at $1,200. 

This plan works best for those looking to save quickly or focus on building wealth. 

Each budget plan offers distinct advantages, and the right one depends on your financial goals, habits and preferences. By learning these options, you can spend your money wisely month to month wisely. Choose a budgeting plan that aligns with your lifestyle and unique situation. This helps you stay financially on track.

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