If you thought 2018 was the year you’d get ahead but you haven’t made sweeping changes so far, you are not alone. Most New Year’s resolutions fail within a few months.
But the year’s not over — yet. There’s plenty of time to change. Each month is a chance to start again.
Getting ahead financially requires self-restraint, good decision-making and a serious plan. Try these four budgeting methods before the year ends so you can start making progress toward your financial goals.
1. Zero-sum budgeting
If you’re someone who wants to dive into budgeting and never look back, you might want to try the most serious budgeting tactic of them all: zero-sum budgeting. This type of budget, also known as zero-based budgeting, requires you to plan out every dollar you spend on your regular bills and, well, everything else.
But there’s a kicker. In addition to planning out your spending on housing, transportation, food, entertainment and other categories, you also budget for important expenses like savings, investing and debt repayment. By prioritizing these expenses and putting them in your budget, you make sure they don’t fall to the wayside.
The goal of the zero-sum budget is finding a place for every dollar you earn. Once the month is over, you’ll move the money you need to your checking account for the next month’s budget, rinse and repeat.
Who this budget is good for: People who wants to account for every dollar they earn.
Who should skip it: People who hate tracking their spending.
2. Envelope budget
An envelope budget is a type of cash budget that works well for people who have trouble tracking their spending. This type of budget requires you to set a limit for how much you’ll spend in fluctuating budget categories like groceries, dining out and entertainment.
Once you set a limit for the month for each of your fluctuating expenses, set the money aside in separate envelopes. Yes, actual cash. From that point, you carry the envelopes of cash with you so you have money to buy what you need.
The key to getting an envelope budget to work is realizing your money can run out. If you set aside $500 for food for the month but spend every cent of cash by the 21st, you are out of luck until the next month. You will likely have to tweak your amounts as you play with this budget, but the goal is helping you spend less across the board.
Who this budget is good for: People who overspend with credit and debit and need strict constraints.
Who should skip it: Anyone who detests carrying cash.
3. 50-20-30 budget
Maybe you don’t like to watch every penny you spend. In that case, a budget with looser requirements may fit the bill. The 50-20-30 budget is a proportional money plan that can help you reach your financial goals.
Here’s how this type of budget works: With a 50-20-30 budget, you’re supposed to spend 50% of your monthly income on essentials, 20% of your income on savings and 30% of your income on whatever you want.
The essentials component of your budget should pay for what you need — things like housing, utilities, groceries and transportation. Your savings bucket, on the other hand, is for savings and debt repayment. When it comes to the 30% you have left over, you can spend it how you wish. Discretionary spending includes expenses like dining out, movies, fun nights with friends and new clothes — anything you could probably live without.
This budget won’t work for everyone, but it can work for people who hate budgeting every cent they earn. And if you’re saving 20% of your income with this budget, how can you complain?
Who this budget is good for: People who hate tracking every penny and still want to live the good life.
Who should skip it: High earners, because spending 30% of their income on discretionary spending could be too much.
4. Bare-bones budget
Last but not least, sometimes you have to tear everything down before you can rebuild. This is where a bare-bones budget comes in. With a bare-bones budget, you cut everything out of your life that is non-essential to see how little you can get by on. This strategy can help you spend less and force you to re-evaluate how you’ve spent money in the past.
To create a bare-bones budget, write out the bills you have to pay every month — bills like utilities, rent, credit cards, your car payment and food. Everything else gets canceled.
Your cable television subscription? Axed. Dining out? Not right now. A daily coffee? Nope. You get the drill.
A bare-bones budget shouldn’t be forever, but it can help you save money in the short-term. You may be miserable for a while, but that may be what you need to change.
Who this budget is good for: Anyone who is ready to take drastic measures to shake up their finances.
Who should skip it: People who can’t handle too much change at once.
Curious about how other people budget? Here's how the average American spends and what it means for your budget.