What's Your Budgeting Style?

by Christy Bieber | Updated July 7, 2021 - First published on June 28, 2021

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Answering five simple questions will reveal your best budgeting approach.

Living on a budget is crucial for just about everyone. Budgeting ensures you:

But there are different kinds of budgets, and picking the right one could make all the difference in terms of whether you're able to stick to it or not. And if you're not sure how to pick the best budgeting method, you may spend a lot of time making a spending plan that's hard to live by.

To help you avoid this unpleasant fate, just take this simple five-question quiz to determine your budgeting style.

1. Setting spending limits makes you feel:

A. Happy. It's fun to sit down with a spreadsheet and decide where your cash should go.

B. Stressed. Who wants to account for every dollar of spending? Not you -- that's for sure.

C. Hopeless. You can set limits, but as for sticking to them -- forget it.

2. Tracking your spending is:

A. Awesome. How else are you going to know where your money is going and whether you're using it wisely?

B. Awful. Seriously, that involves keeping receipts and doing math. No thanks.

C. Out of reach. It's way too hard to monitor where your money is going.

3. Making your budget should take:

A. Half an hour or so every month. Taking a little time is worth it to make sure you do it right.

B. No time at all. Life is short, it shouldn't be spent poring over a spreadsheet.

C. Who cares how long it takes? You aren't going to be able to stick to it anyway.

4. When it comes to spending money:

A. You feel better if you know you can afford it.

B. You like to do it without feeling constrained.

C. You have a hard time stopping.

5. Your budget should be:

A. Very detailed. The more information about where your money is going, the better.

B. Easy to follow. The simpler it is, the more likely you are to stick to it.

C. Bigger. You have a really hard time living within your means.

If you chose "A" the most: The "zero-based budget"

The zero-based budget is a budgeting method for those who love to keep track of every single dollar. It involves allocating every dollar of your income across different budgeting categories, including:

  • Spending
  • Saving
  • Rent or mortgage
  • Gas
  • Groceries
  • Entertainment

This budgeting approach is the best choice for people who benefit from -- or enjoy -- accounting for every cent and having strict spending limits for different categories of spending.

If you chose "B" the most: The "50/30/20 budget"

The 50/30/20 budget is a great option for people who don't really like to budget very much at all.

With this approach, you simply keep your fixed costs (like housing and insurance and car payments) to 50% of your budget, save 20% of your income, and can spend the remaining 30% on anything you'd like.

If you feel constrained by detailed categories of spending, this is the budget for you.

If you chose "C" the most: The "envelope-based budget"

The envelope-based budget can work well for people who have trouble sticking to spending limits. With this approach, you decide how much of your money to spend on different categories such as gas, groceries, and dining out. You put that much money into an envelope each month, and then when the envelope is empty for that category, the spending stops.

If you need to see your cash dwindling to understand that you're running short, or if you have a hard time tracking spending to ensure you stick to limits, this budget could be the best choice.

Pick a budgeting method that works

No matter which budgeting method is right for you, the important thing is you find a system that works so you can make smart choices with your money. Get started on your budget today, and hopefully you'll find you're using your dollars more wisely than ever.

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