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How to start and stick to your budget

Learn about four popular types of budgets so you can choose the right one for you.

October 2022 6 min read

Budgeting — for many, it’s a word synonymous with tedious tracking and cutting back. So it’s not surprising that some find it daunting. But the truth is budgeting doesn’t have to be difficult and it’s not about depriving yourself of joy. It’s about ensuring your spending goes towards what truly matters to you, and it can be as simple or detailed as you want.  

That’s why we’re here with tips and tricks to help you find the right budget and stick to it.

4 types of budgets to try

One of the best ways to ensure you stick to a budget is to choose the right budgeting method in the first place. With different priorities, financial situations, and ways of doing things, what works well for one person won’t necessarily work for another. To help you explore your options, let’s look at four popular budget types:

  1. 50/30/20 budget

Great for: Beginners or those who want a straightforward, flexible budget.

The 50/30/20 budget is a favourite among budgeters. This simple method breaks your finances into just three categories, making it easier to keep track of expenses:

  • 50% — Needs, like bills and groceries
  • 30% — Wants, like concert tickets and travel
  • 20% — Savings & Debt, like paying off a credit card or saving for a home

But those ratios aren’t set in stone. So, if you need to spend more than 50% on necessities or want to accelerate saving, you can simply tweak the percentages to match.

  1. Pay-yourself-first budget

Great for: Savers who want to prioritize reaching their goals.

This method is often called a “reverse” budget. That’s because – unlike other approaches which focus mainly on expenses – this method starts with saving. You determine first how much you can put towards your goals and then use your remaining income to cover bills and other spending. That way you avoid crunching a lot of numbers, while still building financial security.

  1. Zero-sum budget

Great for: Detail-oriented trackers who want complete control of their spending.

If you want to know exactly where your money’s going, then this is the budget for you. With the Zero-sum approach, you take your monthly income and give every dollar a job – whether that’s paying bills, dining out or saving for a goal. Once you’re done, there should be zero dollars left to allocate.

This method is great for maximizing your money, but it does involve tracking more categories, which means you’ll need to log each expense carefully to stay on budget.

  1. Values-based budget

Great for: Strong planners who have their finances in order.

This budget is all about spending on what matters to you – and reducing spending on what doesn’t. So if you love eating out? Spend on that. Don’t care about clothes? Save here. This shifts your money mindset from how much things cost to how much you care about them.

But, before choosing this method, make sure your overall finances are in a good place. If you don’t have savings or carry high-interest debt, it’s important to prioritize those.

4 tricks to help you stick to your budget

Choosing the right budgeting method is a good first step, but there are more tricks you can use to help you stay on track. Here are four of them:

  1. Tie it to savings goals

We rarely want to do something for the sake of it. By tying your budget to goals you care about – buying a home, going on a dream vacation, getting debt-free – you give it tangible purpose. That way each dollar you save brings you closer to the future you want, motivating you to continue.  

  1. Reward yourself for doing well

While big goals are great incentives, it can be hard to stay motivated when they seem so far away. Make sure you refresh your motivation by giving yourself a reward, like a nice dinner or concert ticket, when you reach a milestone. That could be:

  • Time-based – tracking spending for 30 days straight
  • Achievement-based – paying off that high-interest credit card
  • Increment-based – saving $500, $1,000, $1,500

The important thing is to reward yourself for that job well done. 

  1. Make targets achievable

Nothing is more discouraging than going overbudget. That’s why it’s crucial you look at your income, expenses, and goals realistically, assigning targets you feel are genuinely achievable for each of your budget categories.

  1. Change your frame of reference

Expenses come up frequently and it’s not always possible to log them straightaway – the people behind you at checkout want to get on with their day too! To avoid losing track, try converting dollar values into a simpler unit of measurement. For example, if your typical takeout dinner costs $50 and you’ve budgeted $100, plan to order out no more than twice a month.

With the right budgeting process and tricks in place, you’ll be in a much better position to combat inflation, save for your goals and ensure financial security. The next step is putting together a practical plan to optimize all the other aspects of your finances, ensuring you bring the future you want to life. We can help with that!