• Freya

How to find your budgeting style

Updated: Jan 27, 2020

It's the end of January, and many of us have received our first paycheck of the year. We have clarified our financial goals for the year and it's now down to systems and habits to inch ourselves closer to our goals with every step. Have you consciously chosen a budgeting method?

There are so many templates and styles out there, which you can adapt and tailor to your individual needs and goals. Learn about the four most common styles and take what resonates.

Zero-based budget

For those who like (yes!) or need to monitor their spending continuously. Martine spoke about this in one of our first money chats! This method is about taking your after-tax-income and planning on how to allocate it down to the penny. This style requires you to log every expense to know how much there is left on each post, so using a budgeting app is very helpful.

Let's say your income is £2500 net. You subtract £350 to debt, £500 to savings, £900 to rent, £200 to food, £100 to travel, £150 to bills, £200 to socialising and £100 for miscellaneous. Every pound is allocated with intention.

Pay yourself first

Pay yourself first is the ultimate value-based budgeting method and the foundation for the F.I.R.E. movement. You decide how much you want to save before you even think about how much to spend on food, travelling et cetera. You might want to put one amount aside for retirement, one sum for travelling, and one amount for general saving. Once this money is subtracted from your net pay, you see how much you have left to live and break it down from there. This method might raise questions of how you can lower your living costs (moving to a cheaper location?) or increase your income (taking on an extra job?).

Cash envelope system

The cash envelope system is a big favourite in the online money-saving community, much thanks to The Budget Mom. It has similarities with the zero-based budget in allocating each pound, however, the cash envelope system takes it one step further and deals in cash only, where every note gets placed in a labelled envelope.

This method is perfect to reduce frivolous spending, and need a bit of extra support - it is easier for our brains to grasp what we can see and touch than numbers on a screen. A quick look in the "fun" envelope can inform how much you can spend on a night out where digital numbers might not provide the same effect. Interestingly, designing and selling cash envelopes in all colours and patterns har become a booming business!


A popular system due to its simplicity and how it provides a guideline in how much you should be spending on necessities yet making room for wants. The 50/30/20 system divides your income into three major categories; necessities, wants, and savings/debt.

Let's get back to the example of a monthly £2500 net salary. This indicates £1250 to necessities, £750 to wants, and £500 to debt and saving. Knowing that necessities (often rent/mortgage, bills, and food) must be limited to £1250 a month gives a clear guideline of how much you should be spending on rent or mortgage. It also makes it easy to see how much you can send on wants, which is uplifting and fun!

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