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  • Writer's pictureDr. Disha

How to Pick a Budgeting Method

Last week, we talked about five different ways of budgeting that can help you be more in control of your money and achieve your money goals.  This week, I’d like to dive deeper into how to pick a budgeting method.

To recap, the budgeting methods we talked about were:

  1. The Proportional Budget

  2. The Pay Yourself First or Backward Budget

  3. The Spreadsheet Budget

  4. The Zero Based Budget

  5. The Envelope Budget

How to Pick a Budgeting Method

In my opinion, the type of budget you choose has to do with a couple of factors: 

How Critical Your Situation Is

Consider a heart failure patient who presents to the ED acutely hypoxic. 

The patient is acutely decompensated and is in critical condition.  He gets intubated and admitted to the ICU.  This patient may have a foley to record strict I’s and O’s, the vent to strictly monitor and control his respirations, and maybe even an arterial line to monitor pressures.  We will monitor everything about this patient VERY closely and intervene with the strongest medicines we have to get him through this episode. 

As his condition improves and he diureses, he will get moved will be moved to the med-surg unit.  He will get extubated, his foley and art lines will come out, and we will monitor his I’s and O’s a little less precisely.  But that’s ok, we have enough data to make the patient feel better while allowing him to regain some freedom and quality of life. 

As he gets better, he will get discharged home.  At home, he will likely monitor his I’s and O’s even less strictly- maybe just with daily weights.  Since his situation is less critical, fewer data points are enough to maintain equilibrium, as long as he is mindful of what he is eating and drinking and checking in with his primary.  

Budgeting out of living paycheck to paycheck is similar.  As our financial situation gets more and more stable, we may be able to move on to less intensive ways of budgeting.

For example, when my family’s situation was in a critical condition, we were living paycheck to paycheck and had a net worth of -250k.  To turn things around, we made a spreadsheet budget with a strict zero-based strategy and checked in on our spending frequently, sometimes once a week. 

Doing this, we were able to adjust our habits and fixed expenses to save more money.  We had less budgeted for discretionary spending, so we looked at our expenses often to gauge whether we wanted to spend more. 

After we paid off my student loans and we had more breathing room in our budget, we relaxed our meetings to monthly check-in’s. 

We have now incorporated some “pay yourself first” strategies by automating our investing and debt payoff, knowing we’re not at the risk of overdrafting.  We still meet at the end of the month to go over all of our spending and actively manage the rest of our monthly savings and transfer them to different accounts manually. 

So, budgeting is an evolving process and can change as our money situation changes.  We can get less detailed as our situation improves and still make good progress.

Your Style

Josh, my husband, is a project manager.  Spreadsheets are his jam.  When we started budgeting, I tried to get us to use YNAB and every dollar, but that didn’t work well because Josh wasn’t into checking in that frequently.  He feels much more comfortable with a spreadsheet so I met him in the middle and we did it that way.  I have come to love the spreadsheet method because it’s so hands-on and the data is ours and accessible. 

So, when you start budgeting, you may have to try on a couple of methods and see what fits.  If the first way doesn’t work, try another way.  I’m sure you’ll be able to find a method that works for your family. 

Maybe all you need to do is break down your spending a couple of times a year with the proportional budget and make sure your spending aligns with the 50/30/20 theory (some recommend 50/25/25 for doctors).  Or maybe you and your family are super motivated and are able to jump into a zero based budget using YNAB.  Or maybe you have plenty of cash flow and just need to set up some automatic transfers towards your goals, so a pay yourself first budget will do just fine.

The Bottom Line

The important thing is that you get started and get going so you can get closer to your goals.  If you don’t yet have a budget, I encourage you to stop what you’re doing and organize a budget date with your spouse or yourself right now.  Get it on the calendar.  Then, pick a method at your budget date and get started!  When you do, your spending will become more intentional and you’ll reach your goals faster than you imagined possible.  I promise your future self will thank you!  

Next week, I’ll review some of the budgeting apps out there for you.  

Stay frugal, y’all!


Standard Disclaimer: Not meant as individualized financial or medical advice.              


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