NORFOLK, Va. — In life, the small things add up. Yes, a big purchase like a car will set you back financially — but it's also all the little trips you take to the coffee shop or grabbing a soda every time you check out at the store.
Before understanding which budgeting method is best for you, you first need to know how much you make each month and understand the difference between variable and fixed expenses.
The 50/30/20 rule
The 50/30/20 rule is best for budgeting beginners. It suggests using 50% of your take-home pay for your needs, 30% for your wants, and 20% for savings and debt repayment.
Your needs include rent or mortgage, utilities, groceries, and transportation.
Your wants include vacations, dining out, subscriptions, and hobbies.
Your savings and debt include emergency funds or paying for retirement.
Let's say you take home $4,000 monthly — budget $2,000 for your needs, $1,200 for your wants and $800 for savings.
Zero-based budgeting
Zero-based budgeting is where you use every bit of your monthly income, and every cent has a purpose. You make sure that all your needs are met, but you settle at zero every month.
ZBB takes a lot of planning at the beginning, so it's best for detailed budgeters who struggle with overspending.
The envelope system
The envelope system has you divide your cash or digital funds into categories, and you can only spend what's in them. If you're impulsive, experts say this is probably best for you.
Helpful budgeting tools
It's not easy to do this on your own, so here are a few tools that can help:
Microsoft Excel and Google Sheets templates offer customizable budgeting options. There's also NerdWallet's budget worksheet, which focuses on the 50/30/20 plan, and Consumer.gov's "Make a Budget" worksheet.
This story was reported on-air by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
