BET Lesson 5 of 11 · 6 min read
Pick a budgeting method
Four proven ways to plan your money: 50/30/20, zero-based, envelopes and pay-yourself-first. Pick the one that fits how you think.
50/30/20: the simple split
Split your take-home pay into three parts: 50% for needs, 30% for wants and 20% for savings or paying down debt. It was popularized by Elizabeth Warren in the book “All Your Worth: The Ultimate Lifetime Money Plan.” It’s a good starting point if you want a quick rule of thumb rather than a detailed plan.
| Needs (50%) | $1,500 |
| Wants (30%) | $900 |
| Savings and extra debt payments (20%) | $600 |
Zero-based: every dollar gets a job
Give every dollar you expect to receive a purpose, whether that’s a bill, groceries or savings, until income minus everything you planned equals zero. Zero doesn’t mean an empty account; it means nothing is left unplanned. It takes more effort, but it shows exactly where everything goes.
| Rent | $1,000 |
| Groceries | $450 |
| Transportation | $250 |
| Utilities | $200 |
| Phone | $60 |
| Credit card payment | $300 |
| Emergency savings | $200 |
| Fun and eating out | $190 |
| Personal and other | $150 |
| Left unplanned | $0 |
Envelopes: spend what’s in the envelope
Give each spending category an envelope, real or digital, holding that category’s money for the month. When an envelope is empty, you stop spending in that category until the next month. It works well for categories that tend to creep up, like groceries, eating out or shopping.
Pay yourself first
As soon as you get paid, move a set amount or percentage into savings, before you have a chance to spend it. Then budget the rest. Setting up an automatic transfer on payday makes this effortless.
These methods mix well. Many people pay themselves first, then use 50/30/20 as a guide and envelopes for the categories they overspend.
Remember
- 50/30/20 is a quick rule of thumb based on take-home pay.
- Zero-based gives every dollar a job; envelopes put hard limits on tricky categories.
- Paying yourself first makes saving automatic. You can combine methods.
Choose your method in BET
Open a ledger’s Budget tab: the budget builder suggests an amount for each category using the method you pick.
Sign in with Google to try itSources and further reading
- The Basics to Budgeting: Personal Finance Series (Part 1) (University of Florida IFAS Extension)
- The 50/30/20 Rule: A Simple Formula for Smarter Budgeting (U.S. Senate Federal Credit Union)
- The 50-30-20 Budget Rule Explained (Henrico County, Virginia)
- Spending Money Wisely (Iowa State University Extension)
- Save and Invest (MyMoney.gov)