What Type of Budget Method is Best for Me?

Women Who Money
8 min readDec 10, 2020

It doesn’t matter how you do it, in a notebook, on a computer, online, or in an app, as long as you’re doing it! Budgeting is an important part of adult life.

If you’re wondering why you need a budget or spending plan, according to Experian, Americans ended 2019 with consumer credit card debt at a record high of $829 billion. Having a personal budget will help ensure you aren’t doling out more money than you have.

A good spending plan can help you avoid taking on debt and reach financial goals — like becoming debt-free or saving for retirement.

This means you can pay cash for that trip to Greece you’ve been dreaming of, save the downpayment for a house, or even pay off your car. It also means you don’t have to go into debt for that handbag you’ve had your eye on and can’t stop thinking about.

So what budget method is right for you? The one you’ll use!

You may need to try a few different types of budgets to discover the one that suits your lifestyle. The important thing is that you find a method of budgeting that works and stick with it.

Types of Budgeting Methods

Because we all have different incomes, expenses, and priorities, there is no one-size-fits-all budget system.

So take a look at the following personal budgeting options to explore what will work best for your financial situation.

Line Item Tracking (Traditional Budget Method)

When you first get started with budgeting we recommend you track your monthly income and expenses for a period of time so you understand how money is flowing in and out of your household. From there you can create a line item budget for future spending and saving.

The initial tracking can be time-consuming, but it’s an important part of the budgeting process.

You won’t know how much money you have to allocate to your various spending and saving categories if you don’t identify all your household income, expenses, and spending patterns.

Some of your monthly spendings are “fixed” — mortgage or rent, insurance premiums, and loan payments. Others are “variable” — groceries…

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