The Top 5 Budgeting Techniques Every Young Adult Should Know



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In the roller coaster of life where new experiences and challenges can come at you fast, getting a grip on your finances is crucial. Let's cut through the noise and explore five tried-and-true budgeting techniques that can put you in the driver’s seat of your financial journey.

The Foundation: Why Budgeting is Essential

Start Early, Thank Later

One of the secrets to a stress-free financial life is starting early. When you begin to budget in your younger years, you are not just counting pennies but also laying the foundation for a stable future. It is like planting a tree, the sooner you do it, the more shade you will enjoy down the road.

Read the Benefits

Proper budgeting does more than just prevent the dreaded end-of-the-month penny-pinching. It sets you up for success:

  • Save for Goals: Whether it is travel, higher education, or buying a home, a budget helps you put aside funds intentionally.
  • Avoid Unnecessary Debt: With a clear view of your income and expenses, you can make informed decisions, preventing you from spending more than you can afford to pay.
  • Achieve Financial Freedom: While it sounds dreamy, it is achievable. A well-maintained budget paves the way for peace of mind, giving you the freedom to live without constant money worries.

The 50/30/20 Rule

The 50/30/20 rule is a straightforward framework to help individuals allocate their income:

  • Necessities (50%): This segment is not just about survival but it is about maintaining a baseline quality of life. This should cover rent or mortgage, utilities, transportation, basic groceries, health insurance, and debt payments.
  • Wants (30%): This is not about reckless spending but acknowledging that leisure and entertainment are part of a balanced life. This can cover outings, special occasions, hobbies, dining out, and non-essential shopping.
  • Savings & Debt Repayment (20%): While part of this goes to savings, it is also about chipping away at any outstanding debt faster than just minimum payments.


  • Provide a simple structure ideal for those new to the budgeting process
  • Ensure you're saving consistently every month.


  • One-size-fits-all percentages might not accommodate everyone's unique situation.
  • Could be challenging in areas with a high cost of living.

Zero-Based Budgeting

Every dollar you earn should be put to use, whether that is paying for a service, buying goods, saving, or paying off debt. Each month, your budget should "zero out":

  • Record Monthly Income: This includes your regular paycheck, any side hustles, rental income, and other sources.
  • Itemize Monthly Expenses: Start with fixed expenses (like rent) and then move to variable ones (like entertainment).
  • Match Income to Expenses: Deduct every expense from your income until you've allocated every dollar. If there is money left, put it toward savings or debt. If you are in the red, adjust your expenses.


  • Promotes intense awareness of your spending habits.
  • Can lead to a more frugal lifestyle as you critically evaluate every expenditure.


  • Requires frequent attention and adjustments, especially if you have fluctuating income or expenses.
  • Can be tedious for those not used to detailed financial tracking.

The Envelope System

Actual physical envelopes labeled for each of your expenses. After receiving your paycheck, you distribute cash into each envelope according to your budgeted amounts. When the envelope is empty, that is your cue: no more spending in that category for the month.

  • Tactile Advantage: The tangible act of handing over cash and seeing an envelope thin out offers a visceral connection to your spending, making you more conscious of your choices.
  • Digital Variations: With the world moving increasingly towards cashless transactions, use apps to mimic the envelope system with digital "envelopes" to help you allocate and track your spending in the same disciplined manner.


  • Provides clear boundaries for spending in each category.
  • Cultivates awareness and curbs impulsive spending.


  • Carrying cash can be inconvenient or even unsafe in some settings.
  • Might not cater to larger or online transactions.

The Reverse Budget Method

Instead of saving what is left after all expenses, this method flips the script. You decide on a savings goal and immediately set that amount aside when you receive your income. The remainder is then used for expenses.

  • Savings Commitment: By prioritizing savings, you ensure consistent progress toward financial goals, regardless of how the month's spending unfolds.
  • For Variable Incomes: Since traditional budgeting can be hard when income isn't consistent, reverse budgeting provides a way to ensure savings aren't overlooked. By setting a percentage or fixed minimum amount to save, it instills discipline, even amidst financial unpredictability.


  • Prioritizes long-term financial health and goals.
  • Simplifies budgeting by focusing on one primary action.


  • Requires a strong commitment, as it can be tempting to dip into savings when other expenses arise.
  • Might not account for unexpected, high-cost necessities.

The Value-Based Budget

Unlike more rigid systems, the value-based budget doesn’t focus primarily on percentages, categories, or envelopes. Instead, it centers on your personal values, ensuring that the way you spend your money aligns with what matters most to you.

  • Self-Reflection: Begin with introspection. What truly brings joy, purpose, and meaning to your life? Is it travel? Perhaps education, or maybe supporting charitable causes? It is not about what society deems important, but what resonates with you.
  • Allocate Accordingly: Once you have identified your core values, align your spending to reflect them. This might mean allocating more to experiences over possessions if experiences are what you value most. Or it could mean setting aside a specific portion for charitable donations if giving back is a cornerstone of your values.


  • Creates a deep sense of fulfillment, as your spending is intrinsically tied to your passions and beliefs.
  • Provides flexibility, allowing for shifts in values and priorities over time.


  • Requires consistent introspection and honesty about what truly matters.
  • Lacks the structural rigidity of other methods, which can be a challenge for those who benefit from stricter frameworks.

Tips for Sticking to a Budget

Consistent Reviews

Consistent Reviews: Your financial journey is a living, breathing entity. To ensure you are navigating it efficiently, set aside time at least once a month for a budget review. This allows you to:

  • Identify areas where you consistently overspend.
  • Recognize positive patterns and reinforce them.
  • Adjust for any new income or unexpected expenses.

Set Realistic Expectations

Understand that budgeting is a skill developed over time. As you embark on this journey:

  • Celebrate small victories. Did you stick to your dining out budget this month? That is a win!
  • Don’t be disheartened by slip-ups. Instead, view them as learning opportunities. Analyze what went wrong and strategize for the future.

Embrace Flexibility

While discipline is a crucial aspect of budgeting, so is adaptability. Life throws curveballs, unexpected medical bills, car repairs, or other surprise expenses. When these arise:

  • Avoid panic. Instead, revisit your budget, making temporary adjustments to accommodate these unforeseen costs.
  • Consider having an emergency fund in place, which can act as a financial cushion for such scenarios.
  • Remember that every month might not look the same. Holidays, birthdays, or seasonal expenses can alter your spending. Anticipate these variations and adjust your budget accordingly.


Mastering your finances is an evolving journey, not a destination. Embrace the techniques that resonate, be patient with yourself, and remember: every step you take is one step closer to financial empowerment.