Five Budgeting Methods

A man holding cash money

There are different methods for developing a budget. Different methods may work better for different people…

One size doesn’t fit all. There are many different budgeting methods. Here are five different ones that may work for congregation members:

  1. Envelope system
  2. 50/20/30 rule
  3. Debt snowball
  4. Digital budgeting
  5. Reverse budgeting

The important thing is to find the method that produces results. That means picking a method and sticking to it.


The first method is the envelope system. Dave Ramsey promotes this method for budgeting your money. The idea is simple: for every budget category you have, allocate the budget cash to an envelope labeled with that budget category. Spend the cash in the envelope only on that expense described by that category. When the money runs out, then that’s it for the month.

The major benefit of this method is that it powerfully demonstrates where your money goes, and how much. This can have a powerful psychological effect. The major downside is that it requires cash. Hardly anybody uses cash anymore. It’s too inconvenient. Utility bills can be set up to automatically draft from your bank account every month, as can mortgage or rent payments. The envelope method is probably most practically applied to expenses that are hardest to control, like groceries, restaurants, and fast food, which can be reasonably paid for with cash.

The second method is the 50/20/30 rule. I have described that method here.

The third method is the debt-snowball. This technique is intended to pay off a person’s debt as quickly as possible. It starts by targeting the smallest debt first. Allocate as much income as you can each month to paying off the smallest debt first. Then, once that debt is gone, you turn your sights on the next smallest debt.

As you pay off the debts, and here’s the important part, you apply the debt service payment that you removed to the next debt. The idea is that you snowball your debt payments as you pay off the smaller ones. This is a good method. Consumer debts, especially credit card debt, student loan debt, and auto-loans, should be eliminated as quickly as possible using this method.

The fourth technique is digital budgeting. This technique uses software programs to develop and manage your personal budget and track spending. Any software program used should be able to sync up with your bank accounts, credit card accounts, and so on. Most apps can send alerts to your email account when bill payments come due, or when your accounts are low. The diaconate ought to be familiar with one or two of these programs and make a decision on which to adopt and recommend to members as the default. They need to be able to teach congregation members how to use them.

The fifth technique is called reverse budgeting. The purpose of this technique is to establish your savings goals first, then work backwards. You create an aggressive savings goal, allocate that monthly income to the budget, then divide up what’s left to the other categories. This is probably best used for short-term savings goals, such as for accruing $500 or $1,000 in emergency savings as soon as possible, or for accumulating 6 months of expenses as soon as possible. After that, the payments should be re-allocated to other budget categories.


One of the most important things that a family or individual must do in regards to their household finances is to accumulate 3 to 6 months of expenses in savings. The reason for this is that it generates confidence. A person who has reserves in the bank is less likely to be paralyzed by fear in all areas of their life.

Budgeting is how a household tracks their income and spending and measures how well they are succeeding. What matters is picking a budgeting method and sticking with it. The method can change over time as goals change. Some people like tracking the nitty gritty details. Some get overwhelmed and may only want to track broad categories. But no matter the method, every dime should be accounted for.

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