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How to Pick the Right Approach to Budgeting (That You’ll Stick With)

By Nicole Bustamante

Picture this: it’s December 31, it’s cold outside, and you’re snuggled up indoors getting ready to ring in the New Year with loved ones. There’s hope for a better year in the air as you count down to midnight and toast to new beginnings. In your back pocket (literally or figuratively), there is a list of goals—or shall we say, resolutions.


While it feels like nearly everyone makes New Year’s resolutions, according to a study by Discover Happy Habits only 35% of people actually kept their 2020 goals. Let’s be honest: it’s hard to stick to new resolutions! But that doesn’t mean they are a moot point. While the New Year feels like the best time to pick up a new habit, it’s freeing to realize that you can start and stop habits or goals at any time you want. 


And get this, we have the perfect resolution for you to start with today creating a budget!


It may not sound as exciting as committing to a new workout class or a reading goal for the year, but it is definitely important. As onerous as budgeting may seem, there is a lot of value in understanding and controlling your cash flow—and it will keep you prepared for when the holidays actually roll around. 


How to Create a Budget that Works for Your Goals


One of the best parts about budgeting is that you don’t need to color within the lines. You can mold your budgeting model to fit your life and everyday needs while helping you meet your longer-term financial goals. There are a number of methods to choose from when it comes to tackling your finances, but first you have to know where and how to start. 


Here are a few steps you can take to help you discern the best path for you.


  1. Take stock of where you are financially.



First things first, take a peek into your bank account. We know, it can be scary—but the first step forward is always the hardest. Acknowledging what’s in your savings and checking accounts and how that stacks up next to your debt and credit card payments is essential to selecting the right budget plan for you. This is also the time to take a hard look at your true after-tax income (check this out if you need some side hustle ideas to boost that baseline). 


  • Write out your goals.


Give yourself some clarity! Writing out your financial goals will help you set clear objectives. This could be anything from saving for a house to paying off your credit card completely. This is a judgment-free zone, so write out any and all financial goals you want to set.


  • Choose your form of budget.


In addition to choosing a specific budgeting method, you should consider your medium. There are both automatic and manual ways to keep your finances in check. 


Automatic methods include budgeting apps like Mint or Mvelopes
that link directly to your bank account. Manual methods include creating tried-and-true spreadsheets that you go in and update with every purchase or financial change you make. 


There are pros and cons to both avenues. Automatic methods provide convenience but less control over the details, whereas manual methods are managed by you alone and force you to pay attention to where exactly your money is going day in and day out.


Popular Budgeting Methods to Consider


With these basics under your belt, you can now explore some different budgeting methods that span both the manual and automatic realms. Remember, there is no one “right” way to budget. The right method is the one that best fits your lifestyle and addresses your needs. 



This budget method is ideal for people with set incomes. Each month you can write out what your income is, and then divy that amount up among your expenses (with one bucket left for savings). Subtracting your expenses from your income should equal zero, meaning that you are assigning every nickel, dollar, and dime to either an expense or your savings pot. 



This budget goes hand in hand with a zero-sum budget. A line-item budget is exactly what it sounds like: you write out each expense, line by line, and plop the expenses into categories. It is an intuitive way to budget because it is essentially writing out every one of your expenses for the month, but it is quite time-consuming. 


  • Pay-Yourself-First Budget


This method is ideal for anyone whose top priority is paying off debt or saving for a major milestone. The idea with this plan is to immediately take a chunk of your income and allocate it either to debt like a student loan, or to a savings pot like an emergency fund. 


The remaining money from your income is fair game and can be used however you want. This budget plan is also best for someone who wants to pay off the things that matter first and not focus too much on the day-to-day financial details. 


  • Envelope System Budget


Are you more of a tactile learner? This system is essentially a line-item budget IRL. Instead of creating categories in a spreadsheet and assigning an amount, you use several physical envelopes to each act as a category bucket. 


Then you pull out your money for the month from the bank and allocate amounts across the categories. You are physically putting, say, $200 in your envelope for “shopping” for that month or $100 for “utilities.” This method makes the budgeting process extremely visual and hands-on. 


Of course, there’s nothing worse than opening an empty “dining out” envelope. If you run out of money in any one envelope, you can pull from another—although this is not a good habit to maintain. This method is ideal for anyone who needs a real-life visualization of their spendings, but not ideal if you are trying to reap the benefits from swiping your credit card. 


  • 50/30/20 Budget


This is one of the more common budgeting methods, designed to address your needs, wants, and savings. The idea is that 50% of your income goes towards needs, like rent and groceries; 30% goes toward your wants, like eating out or shopping; and 20% goes toward your savings. 


This specific breakdown is not ideal for people who are trying to pay off large debts or save for a major purchase, but what’s amazing is that you can adjust the proportions as you see fit. You can make 30% go toward your savings and 20% go toward wants. Heck, you could make your savings 50% of your income and your needs 30%, so long as your essential expenses can fit in that percentage. The main idea behind this method is to intentionally divvy up your income into three big categories, regardless of the pie slice sizes.



This is a spin-off from the 50/30/20 budget, but instead of dividing up your needs and wants, all you need to do with this method is immediately set aside at least 20% of your income for savings. After that, you can spend the remaining 80% of your budget on whatever you please. This method covers your bases, knowing that you’re putting money aside for later while not obsessing over the details of the day-to-day. 


Bonus tip: Regardless of the budgeting method you choose, you can also use Zip to split any payment into four, making your monthly expenses that much more manageable.


Be Free and Budget Well


The beauty in setting a new resolution is that you can always adjust it to your needs (no, that is not code for “throw in the towel”). What we mean is that you can always try one method out and pivot to another if it ends up not working for you. Even if you jump around a bit to try on different budgeting hats, you are still actively trying. And that’s half the battle, isn’t it? 


When you start to feel the laziness creep up, remind yourself why you’re budgeting in the first place. It could be to set yourself financially free from debt or to help you feel more in control of your daily expenses. Whatever your “why” is, know that you are doing your best and that doing something, even if it’s small, is better than doing nothing at all. 


Happy budgeting!

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Zip’s editorial content is not written by a financial advisor. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

About the author
Nicole Bustamante

Nicole Bustamante is a writer and journalist passionate about storytelling and the art of fashion. She has written for The Zoe Report, Angeleno Magazine, Modern Luxury Interiors California, and more in addition to writing for her personal blog.