Top 4 Budgeting Strategies and Practices to Save and Enrich Your Household

Budgeting methods are not taught at school, let alone budgeting in this economy. While life is getting pricier, let’s explore some of the popular budgeting practices and unconventional advice that will ease your finances — even just a little bit!

How budgeting can help you

What if simply tracking expenses in your banking app works? Why would you need to plan anything aside from rent and taxes in advance? How can you plan anything when the world seems to approach its bitter end?

Here’s how conscious budgeting can help you:

• You’ll be more aware of spending habits. Banking apps are flawed since they get category data either from you or from wireless payment systems, so the categories assigned can be a bit random. If that’s the only budgeting method you’re using, you might end up in the “Where did I spend these $400?” situation.
• You’ll cut expenses wisely. If you have a bad spending habit, you’ll have a harder time breaking it until you put it into perspective. For example, $5 a day for a coffee doesn’t feel like a lot — what about $35 a week? $140 a month to consider when budget planning? Now you’re getting it.
• You’ll manage money more effectively. Starting or continuing to save and invest, covering your debts, dealing with your mortgage, and paying your self-employed tax without going broke are a lot easier when you plan expenses in advance instead of living in chaos. 

4 popular budgeting strategies

Now that you know how managing your money consciously can actually improve your finances and life, let’s check out some of the popular budgeting practices proven by thousands of households!

The 50/30/20 scheme

In this budget planning scheme, you divide every paycheck into three parts:

• Needs — all your unavoidable expenses like rent, groceries, taxes, and so on. That should take about 50% of your monthly income.
• Wants — everything you don’t necessarily need to survive but makes your life better, from concert tickets to app subscriptions and an occasional coffee-to-go on workdays. That should take 30% of your monthly income.
• Savings — whether you invest or have a simple savings account, that’s where the remaining 20% of your income should go.

Pros: Puts boundaries on bad spending habits

Cons: Not applicable to freelancers and people with unpredictable income in general; poorly applicable in the current economy — the 75/15/10 scheme describes the situation better for most people

Best for: Those who specifically want to limit (but not eliminate) some of their unwanted spending habits

Zero-based budget

The core principle of this strategy is: income – expenses = zero. That means, every penny from your paycheck should be used for something: purchases, savings, debt paying, investments, and so on. By the next paycheck, you should be left with zero unused money.

Pros: Aims at building wealth, holds you accountable, can be easily maintained via software like YNAB

Cons: Not a great option for people with unstable income like folks working via freelance contracts; being “zero-budget broke” can be psychologically uncomfortable for some

Best for: Getting out of debt, increasing savings

Reverse budgeting

Reverse, or “pay yourself first” budgeting is a strategy that prioritizes savings instead of expenses. It works like this: once you get a paycheck, you save a certain fixed amount and use the rest for any expenses this month. If you’re not living on a salary but instead receive several remunerations for different projects each month, you put a certain percentage of each one into your savings account.

Pros: Ridiculously simple to maintain, good even for folks with unstable income

Cons: Only includes savings management; not the best choice if you want to fix your spending habits

Best for: Saving money for any purpose

Value-based budgeting

This one is less straightforward and doesn’t involve detailed planning and split spreadsheets. Value-based budgeting is based on a simple idea, which is aligning your spending habits with your values — and, in the end, start living the life you actually want to live. It’s easier to explain with an example.

Let’s say, you’re a creative kind of person, but you spend a lot of money on material possessions that simply collect dust in your closet, which is why purchases don’t bring you joy. You discover that discrepancy through the value-based budgeting and start changing your behavior. For example, instead of buying more clothes, you picked a new hobby and started buying disposables to create things. This kind of spending makes you happier and your wallet fuller — so, in addition to living a more fulfilling life, your financial situation has become more secure.

Pros: Affects things beyond money, helps you not just maintain the balance but live happier

Cons: Not good for people in actually bad situations (debt, addiction, low income, unstable income); also, it’s not really budgeting since it doesn’t involve strict planning

Best for: Self-discovery, improving the already decent life

Top 4 unconventional practices and tips to save your wallet

Now that you know the basic budgeting strategies, let’s dive into some less obvious money-saving tips that will help you curb impulsive spending and improve your finances.

Tip #1. Leave Pinterest

This one is applicable to social media with a focus on visual content in general, so feel free to replace Pinterest with Instagram or TikTok — depends on your poison of choice. Here’s why it makes sense.

Social media visuals create the desires we wouldn’t have otherwise. So, if you stop scrolling through endless videos and photos of people wearing cute clothes you don’t have, you’ll discover you already have enough clothes. Personally, I noticed that my online store “Favorites” folder stopped expanding once I quit casually scrolling Pinterest — now I only use the platform for reference boards related to my hobbies and pet projects.

Does it mean you can’t use social media at all? Not really. Here’s what you can do to control your content consumption without deleting all accounts:

• Restrict time using browser extensions and mobile apps that block social media on specific custom schedules.
• Restrict use cases — for example, only use social media for work and communications.
• Restrict time and place — remove social media apps and access from your phone so you can only enjoy scrolling on your laptop.

Tip #2. Unsubscribe from marketing newsletters

This cool tip I found on Reddit is also related to manufactured desires. You might object: but marketing newsletters often have great discounts so I’ll save money! The problem is, you didn’t save money — you’ve just spent money on a thing you only bought because it had a discount. 

While social media trick you into wanting things with social proof and cute-looking visuals, email newsletters entice with discounts, exclusive offers, and other tools from the marketer’s starter pack. Also, so many Black Friday deals are scammy…

Tip #3. Keep the “boots theory” in mind

When you buy something, don’t think only about the price you’re paying right away — but also for how long and how often you’ll be using the thing. It’s called “Boots theory”, thanks to Sir Terry Pratchett. Here’s an example of how it works.

Let’s say, you need a pair of boots. You have a more expensive option made of natural leather and a cheaper option from AliExpress that’s made of questionable plastic. If you buy the second one, you’ll save some money in the short run. However, these will last a couple of seasons or less, and you’ll need to spend more to buy a new pair. But if you choose the more expensive option right now, you won’t have to buy a new pair of boots for years. That means spending less money in the long run.

Here’s another, less obvious example. Imagine you bought a pretty pricey pair of pants for $100. The design is basic and goes well with everything, and the fabric is durable and thin enough to wear on warmer days but thick enough to layer for colder days. So, you wear these regularly for a solid period of time, which is less than $1 per wear. Now, imagine buying weird fast fashion pants for $10 because you liked a certain microtrend. You only wore it a couple of times, so it’s about $5 per wear. Turns out, the cheaper pair is actually more expensive!

Tip #4. Hate spreadsheets? Try daily budgeting

This is the budgeting tip I’ve been using when I wanted to quickly gain an emergency fund for moving to another city. In my case, it consisted of three steps:

• Pay yourself first. Each time I got a paycheck, I put a fixed percentage into my savings account.
• Calculate your daily budget. Divide the rest by the number of days until the next paycheck — this is how much you can spend in one day. If you spend more, you’ll get a smaller daily budget for the next day, and vice versa.
• Aim for spending less. Each day, look at the number you calculated, and try spending slightly below it.

That way, I had some extra money left by the next paycheck day — and, of course, I put it into my savings account. That allowed me to get to the goal a little faster and even exceed it by the time I moved.

Bonus tip: Don’t sacrifice your life

Let’s be honest: in the current recession, budgeting advice feels like a mockery. Saving? Using what, if 90% of my income is rent? For what purpose, if I’ll never afford a house and my savings will be destroyed by inflation anyway? The world is coming to an end and you’re asking me to waste my life on spreadsheets as if it’s important? Hell no!

Secondly, budgeting is powerless in the face of the global crisis, but you can help yourself in these “trying” (honestly, hate this expression) times by not creating your own crisis. 

Finally, budgeting doesn’t mean saving every penny for the future you won’t see. You can still have your $5 coffees, road trips, concerts, and experience other good stuff that may require money — you’ll be happier with saving less but remembering more. Don’t put your entire life at stake just to save a couple more dollars! After all, saving for the sake of saving is not a working strategy for many people. So, you can think of it this way: if you save money, you might end up having more resources for even better experiences like going abroad and whatever else you want.

Wrapping up

That was a long one! I hope it was useful and I helped you choose the budgeting strategy that fits your needs. Here’s a short review of the most popular budgeting practices:

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