Lesson 2 of 4 · 7 min read
Three budgeting methods that really work
50/30/20, envelopes or zero-based: there is no “perfect method”, only the one you can keep up month after month. We compare them so you can choose with knowledge.
The 50/30/20 method
You split your net income into three categories: 50% essential needs (rent or mortgage, utilities, food, transport to work), 30% wants and lifestyle (going out, hobbies, non-essential subscriptions), 20% saving and faster debt repayment. It is simple, flexible and a good starting point for someone with no budgeting experience.
The envelope method
You assign fixed sums to categories (physically, in envelopes of cash, or digitally, in separate accounts or sub-accounts). When the “food” envelope is empty, you stop spending on that category until next month. Very effective for people who spend impulsively in specific categories (food delivery, shopping), because the limit is visible and tangible.
The zero-based budget
Every RON of income gets an explicit destination (spending, saving or investing) until income minus all the destinations reaches zero. It doesn't mean you spend everything: “saving” is a destination too. It is the most precise method, but it takes a little more time to manage each month.
| Method | Best suited to |
|---|---|
| 50/30/20 | People who want simplicity and a quick general framework |
| Envelopes | People who spend impulsively in specific categories |
| Zero-based | People who want maximum control and precision |
You can use the 50/30/20 calculator in the Calculators section to see straight away what the split looks like for your current income.
In short
- 50/30/20 is the simplest method to start with.
- The envelope method helps in categories where you spend impulsively.
- Zero-based gives maximum control, with somewhat more effort to manage.