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A guide to budgeting for long-term financial success

Learning how to stick to a budget can be challenging. We’ll cover the best types of budgeting and strategies you can use for long-term success.

Lindsay VanSomeren
January 18, 2024

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Finding a budgeting method that you’re able to keep up with is one of the single best things you can do to improve your finances, but it’s not always easy. Talking about money can be hard, after all, but it doesn’t have to be that way. 

The right budgeting style can help open up conversations with your family about what you value and how to prioritize your different goals, which can help you get on a clear path toward the life you want to live. That, in turn, can reduce some of the biggest sources of stress in most people’s lives, and ultimately, make your family relationships stronger – at any income level. 

We’ll help you get there by showing you how to develop a crystal-clear spending plan with different types of budgeting styles, and how to stick to the budget you create.  

Types of budgeting

Many of us were taught that there’s only one way to budget, by creating a list of categories with spending limits that we track our progress toward each month. This is known as a zero-based budget because the goal is to allocate everything you earn each month to a specific spending category so that you have zero dollars left over. 

Zero-based budgeting is certainly one possibility, but it’s not the only one. Here’s how it compares to other budgeting options that may work better for some people:

Zero-based budget

How it works: Allocate every dollar you earn to a spending category that you track on paper, with a computer, or an app.


  • Comprehensive
  • Highly customizable
  • Lots of tracking options
  • Balances short- and long-term goals


  • Most restrictive
  • Easy to get off track
  • Requires a lot of upkeep

50/30/20 rule

How it works: Allocate your monthly income as follows: 50% toward “needs” like mortgage and groceries, 30% toward “wants” like hobbies and entertainment, and 20% toward savings and debt.


  • Easy way to start budgeting


  • One-size-fits-all approach may not work for everyone
  • Can sometimes be tough to distinguish a “need” from a “want”
  • Prevents people with lots of debt from saving much

Envelope system

How it works: Withdraw your paycheck in cash and divvy it up among different paper envelopes for things like shopping, groceries, entertainment, etc. 


  • Helps control impulse spending
  • Digital options becoming more available


  • No rewards or protections for using credit or debit cards
  • Safety concerns in handling a lot of cash
  • Harder to track individual purchases if you don’t record them

Pay yourself first

How it works: Set up automatic transfers to your savings accounts and bills after each paycheck, allowing you to spend the remainder on whatever you want. 


  • No need to track your spending
  • Ensures you’re able to save and pay bills


  • Easy to overspend and run out of cash before the next paycheck

Budgeting your money: a step-by-step approach

There are many ways to budget, but they all involve the same basic steps to some extent. Here’s a good approach to consider:

Assess your monthly income and expenses

In order to set a realistic budget, you first have to know what you’re working with. First, tally up all your sources of income each month for your household. 

Next, make a list of all of your expenses within categories that make sense to you, such as “mortgage” and “groceries.” This can be trickier since there are more transactions to remember and some occur on an irregular basis. It’s easy to list your monthly bills, for example, but things like necessary clothing purchases or healthcare can be harder to plan. 

Many people find that it helps to go through the last few months of their bank and credit card statements to calculate a monthly average for these expenses. Remember to split up the cost of  semi-annual and annual bills, too — such as heating fuel, property taxes, or insurance — into monthly portions in your budget. 

Whether you continue to track these categories each month depends on the budgeting style you choose. However, even if you choose one of the more hands-off types of budgeting, it’s still an essential exercise to get clear on how you’re already spending your money so you can look for ways to improve. 

Choose a budgeting style

We covered some different types of budgeting above. Many people choose a hybrid approach. For example, some people use a zero-based budgeting style for the bulk of their monthly planning – but use a cash envelope-based approach for areas that they find themselves overspending in a lot, such as dining out or shopping. 

It’s also a good idea to set up automatic bill payments and transfers for all of your savings goals each month, regardless of whether you choose the pay-yourself-first style of budgeting or not. 

Set realistic financial goals and spending targets

Depending on the style of budgeting you’re choosing, you’ll now set your targets for how much to save and spend based on your income level. If you’re opting for a preset budgeting style like the 50/30/20 or pay-yourself-first methods, this part is fairly easy. Otherwise, your job is to figure out how much to set aside for each budgeting category you have each month. You can get different budgeting examples with category ideas by browsing online. 

It’s best to start with your necessary expenses, like your bills and groceries. After that, consider other expenses like savings and “wants,” such as gifts and restaurants. Also consider leaving some wiggle room in your budget for surprise expenses that invariably crop up, such as last-minute school projects for your kids or supporting a friend’s fundraiser. Having a plan for extra money can be useful, too — for example, if you receive a windfall, you already know you’ll put it toward paying down your debt faster or saving up to buy a house

Regular budget check-ins

Setting up a budget can be a useful tool to help you know where things stand right now, but it won’t help you at all going forward unless you find a way to update your budget on a regular basis. You can certainly do that with an old-school pen-and-paper-based approach if you like, or even a computer spreadsheet, but nowadays, there are many more options available. 

There are dozens of budgeting apps and tools available offering slightly different interfaces and options to fit just about anyone. Here are a few popular app-based budgeting examples:

Once you find a way to track your budget that works for you, make sure you check in with it regularly. Many families find that it helps to have a weekly or monthly “money date night” to go over the budget in a low-stress, relaxed environment. Regular check-ins help ensure your budget doesn’t get away from you and that everyone stays on the same page. 

How to stick to a budget

Learning how to stick to a budget — and especially how to budget money on a low income — can be challenging. Here are some tips to succeed:

  • Use debt calculators to see how much paying extra can save you in the long run.
  • Look for ways to boost your income through side hustles, extra hours at work, etc.
  • Celebrate small wins, such as staying under budget or meeting your savings goals.
  • Find an accountability partner or family member to share budgeting wins and failures.
  • Use cash for more of your everyday purchases; research shows that you’ll spend less.
  • Look for opportunities to reduce spending by negotiating your bills or cutting expenses.
  • Open separate savings accounts for different goals, such as your emergency fund or vacation savings. 
  • Don’t be afraid to change your budgeting style, tracking method, or category spending limits as your needs change and you learn what works best for you. 
  • Find ways to visualize long-term financial goals in your daily life, such as fillable progress charts on your fridge or hanging a paper chain link over your door to symbolize debt payoff.

Final thoughts

Budgeting is not something that comes naturally to most people, but it has so many benefits for your financial well-being. Many people think that they’re not good at budgeting when the reality is they haven’t found the right way that works for them

Everyone has different challenges and ways of doing things that work best for their psychology; the trick is to constantly experiment with different budgeting approaches until you find something that blends in naturally with your life. Once you find your ideal budgeting style, you won’t have to worry about how to stick to a budget because it’ll become second nature. 

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