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10 Budgeting Methods

For those of you who are allergic to budgeting, I am going to list 10 budgeting methods. Regardless of what method you choose, financial goals are best achieved through budgeting.

Update: It’s not even the middle of September and I’ve already spent $4,472.45. Keep a lookout for my monthly expense reports for an update on this. I have also earned about $3,200 doing telemedicine up to now; we’ll see if I can catch up. 


10 Budgeting Methods

I will list the budgeting methods from most effective to least effective.


My favorite budgeting method, and therefore first on the list, is using YNAB. It’s cheap, only $80 for the year, and it’s easy to use.

YNAB allows you to not just look back at what you spend but it allows you to assign a job to every single dollar you earn or anticipate to earn.

It’s the best kept secret in budgeting as one of my readers indicated. He has been using it for 8 years.

2. Pay Yourself First

Some say that this method doesn’t work. That you cannot pay yourself first because you have bills to pay. I don’t see the purpose of earning money if I can’t put it to use for my future.

Since 2012 I have paid myself first. I used my income to pay down my debt, to max out my retirement accounts, and to pad my savings.

If you pay yourself first, then whatever is left over can be spent on bills and elective expenses.

3. Spreadsheet

If you have a mathematical mind then the spreadsheet method might be as effective as YNAB.

It’s by far the simplest method but I suspect that only the frugal can do well with a spreadsheet. You write down every major spending category and write down what you spend in each category every month.

Then you review your spending on a month-to-month basis and try to optimize it.

4. Goal-Based Budgeting

With goal-based budgeting you focus one goal at a time. Early in the medical professional’s career it might be getting rid of student loan debt.

Next, you might focus on saving enough to buy a house (hopefully in cash). And once you are debt-free and have a roof over your head, you can focus on saving for retirement.

The nice thing about goal-based budgeting is that whatever money you have left over at the end of the month you can spend any way you wish. Your only focus is to achieve your immediate financial goal.

5. Cash Method

I tried this for a few months when I lived in Barcelona and I can recognize its value. But I wasn’t the right person for this. I don’t enjoy carrying cash and creating envelopes and getting money orders isn’t my jam.

However, the cash method can help those who have very busy lives and readily reach for their debit or credit cards to handle daily expenses. This can quickly get out of hand and leave you with a hefty bill at the end of the month.

6. Stipend Method

If you have a financial advisor or CPA who is heavily involved in your day to day finances, they might agree to pay you a stipend out of your gross wages.

This is common for business owners who put themselves on their own payroll and pay themselves a certain amount of money every month. Despite what their profits are, they only have that stipend amount to spend every month.

7. Competitive Budgeting

If you are someone motivated by the thrill of competition then you can try something like Status.

This platform allows you to compare your spending to a cohort similar to yours. Or whatever cohort you want to choose.

8. 30-Zone Method

The 30-Zone method goes something like this:

  • save 30% of your income
  • use 30% to pay down debt
  • spend the other 30% on whatever you want

The other 10% you donate every month or set aside in an investment fund (donor advised fund) which can grow and you can donate in the future.

9. Zero-Debt Method

A pediatrician friend of mine once told me that his budgeting method all his life has been the zero-debt method. He would never carry any debt and his plan was to work forever.

If he never went into debt then it was impossible for him to spend more than what he earned. This was his budgeting method for nearly 55 years – 45 of which he spent in private practice.

10. Mental Accounting

Mental accounting is definitely the most commonly used budgeting method by medical professionals. We earn such high incomes that we don’t worry too much about running out of money.

And for the most part we do quite well. The problem is with unexpected expenses and recurring bills which add up and escape our mental accounting.

  • $1,500 for a brake job
  • $1,200 to resod the grass
  • $2,000 for DEA and medical license
  • $2,000 for a dental crown
  • $1,700 for airline tickets
  • $450 replacement cell phone
  • $750 for new camping gear

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