3 Types of Family Budgets—Which Budget is Best for You

Best Budgets for Families - a man jumping for joy in falling money.

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Are you looking for the best type of budget for your family? With so many different types of budgets available, which one will work for you?

We’ve discovered that there are almost as many types of budget systems as there are people talking about it.

Family Budgets can be done with expensive software systems, free systems, apps, websites and grandma’s cookie jar system for budgeting.

With so many choices, it’s hard to know which type of budget will be best for you!

What Type of Budget System Will Work Best for Your Family?

  • Lots of people talk about having a budget for their money.
  • Lots of people want to budget.
  • And lots of people start to budget . . . but then stop.

Watch the video below to hear Steve & Annette explain the advantages and disadvantages of
the different types of budget systems they’ve seen

Honestly, there is no “Right Way” or “Only Way” or “Best Way” to budget your money. But if you want to have confidence in your money and become a savvy spender, you should really consider using one of these budgeting systems.

Looking for the Best Budget System?

More or Less: Successful budgeting depends less on the system and more on the consistency of the person using the system.

The best family budget isn’t a sheet of paper, a spreadsheet or an app, with all of your anticipated monthly expenses listed in orderly columns, filled out in January and then forgotten. That worksheet, while it might be somewhat accurate, isn’t going to help you manage your money on a week-in and week-out basis.

Consistent use of whatever system you choose is the key to budgeting success. And for us, consistency means that we reconcile, balance or “do” our budget twice each month.

Three Different Types of Budget Systems for Families

We’ll discuss how we do our budget in another article, but for now, we want to identify the three different types of budgeting systems we’ve seen used successfully by budget-savvy families we know.

1) The Cash Envelope System – is this the best family budget?

While many people may think that this type of system was invented by popular radio host Dave Ramsey that just isn’t so. Envelope budgeting has been around for as long as there have been envelopes (about 3000 years).

Using a cash system is one of the easiest ways to control those budget categories that can quickly be overspent. A family usually doesn’t overspend on Fixed Expenses like utilities, car payments or a mortgage. However, Variable Expenses like eating out, date nights, clothes shopping or grocery shopping are quite a different story.

These variable expense budget categories are perfect candidates for using cash envelopes because of the temptation to overspend and because most people just aren’t sure what they have been spending each month.

Positives of Cash Budgeting:

Visual Cues

Because cash is tangible and visible, being able to look inside your recreation envelope to see that you only have $6 and 37 cents left for the week provides a perfect visual cue to select an affordable option, find a coupon or simply do something that costs nothing.

Easy Family Budgeting

A fanned shape of black plastic money budgeting envelopes with a white label on each one. Bart & Nancy Good thinks this is the best budget system there is.
This is an envelope budgeting system used by our friends Bart and Nancy. They’ve been budgeting this way for more than 20 years.

The beauty of cash envelopes is in the weekly setup. Many people have a simple list of cash they need to take out of each weekly / bi-monthly paycheck; go to the bank and have the teller give them the same amount of cash in specific denominations each time. Then they divide the money into specific envelopes and move on with life. Simple, fast and easy.

Other friends have taken cash envelopes one step further and keep their receipts or a small ledger in each envelope to help them know where their money is going.

Negatives of Cash Budgeting:

  1. A Cash Stockpile: We started our budget using cash envelopes, but because we didn’t spend it all each week, a large amount of cash accumulated in our apartment. We didn’t like the idea that someone could break in and steal our stash, so we started using budget method #3 below.
  2. Paying Bills: In today’s instant payment lifestyle with Google Pay, Apple Pay, Auto payments and paying with debit and credit cards paying bills in cash is clunky. Paying your mortgage, utility bills and other recurring monthly payments in cash is really inconvenient and time-consuming.
  3. Weekly Cash Withdrawals: The cash envelope budget system is dependent on having cash from each paycheck to distribute into your envelopes. This requires that you are able to go to a bank each time you get paid and withdraw a predetermined amount of cash. And it usually means that you’ll need some 1s, 5s, and 10-dollar bills. So simply going to an ATM and withdrawing an amount of cash in 20s isn’t going to work.

But despite our objections, there are many people who think that cash envelope systems are the best types of budgets out there.

2) Computer Budgeting – is this the best budget for your family?

There are plenty of computer/internet-based budgeting systems/apps such as

We have tried a few of these systems as have some of our friends. Most of the systems are designed to track expenses after the fact, and not to accumulate money prior to spending.

Positives of Computer Budgeting

We love the fact that some of these systems link directly to your bank account. This eliminates the need to manually enter each expense into the budget, but you still need to categorize each expense.

Downsides of Computer Budgeting

  1. Privacy concerns Your most sensitive data is susceptible to being hacked.
  2. Access If you don’t have internet access, you don’t have access to your budget.
  3. One person While this isn’t insurmountable, it’s harder to work as a couple when information is managed on a computer – usually, one person “drives” and the other just looks on or is not involved.
  4. Negative Balances In some systems money in a specific budget category that is carried over from one paycheck cycle to the next is shown as a negative number.

Years ago we did a time test of doing our budget on paper (see option #3 below) and Quicken.

They both took about the same amount of time to do.

However, in accounts where we hadn’t spent our monthly allotted amount of money, like in our recreation account (because we hadn’t spent the full $40 per paycheck amount) Quicken showed a negative number! This was because we had not met the expected spending level. Quicken isn’t set up for building savings, it’s just designed to hit spending goals.

That type of budget discourages thriftiness.

But once again, there are some people who swear that computer-based budgets are the best budgets out there, and we won’t argue with them.

3) Paper Budgeting – is this the best for a family budget?

Economides Budget book binder - a white 3 ring binder with pocket folders inside is one of the best budget systems.

We’ve been using our “On-Paper” America’s Cheapest Family Budget System since the first year of our marriage and love it. Basically, we set aside a predetermined amount of money each paycheck on paper account sheets, much the same as cash envelopes.

Our system evolved over time and is designed to make it easy for couples to work on their family budget together and without stress (it works well for singles too).

Positives of a Paper Budget

A Budget That’s Portable

We’ve taken and used our budget system at kids’ sports practices and lessons, on long car drives, or when sitting on the couch watching one of our favorite movies.

We are both so familiar with our budget system that when life gets busy, one or the other of us can do it solo. We just check in with each other before recording the final deposits/budget numbers.

Budgeting that Brings Confidence and Smiles

Saving money in advance gives us incredible financial confidence.

For example, it feels great knowing that we have money budgeted for Christmas presents. We have confidence because every budget cycle we set aside a little bit of money in our gift account.

Buying Christmas presents isn’t a financial strain, but a joyful hunt, all year long. And it doesn’t come with a credit card bill 30 days later. That is stress-free budgeting at its best, and that makes us smile! And of course, we’ll tell you that a paper budget is the best budget there is . . . because we think it’s true.

By using this budgeting system we paid off our home in 9 years on an income that was below average. We’ve paid cash for all of our cars, taken great, debt-free vacations and helped our kids earn college degrees without any debt.

America's Cheapest Family Budget System

We recreated the same budgeting system we used and made a kit for you. It’s our America’s Cheapest Family Budget System. It’s ready for you to start using today.

Negatives of Paper Budgeting

  1. Hand Written Entries: Our budget system requires handwritten record-keeping. You’ll need to write down your spending in a checkbook register.
  2. Balancing with a Calculator: You’ll also need to record your expenses on individual account sheets and total those sheets. The balance in your checking account will equal the total of all of your budget categories.

Best Types of Budgets: Conclusion

The bottom line of these three types of budgeting systems is to be committed to consistency. If you’re looking for the best budget system for your family, give these a try for a couple of months each and then decide what fits best with your lifestyle and spending habits.

Remember that money flows to those who actively manage it. And the more you actively manage your budget, the more money will flow to you! Having money flow to you is the best budget there is!

For more great tips and ideas regarding Family Budgets, check out our Pinterest page, and click on the board called Budgeting/Debt/Savings.

Read the entire Budget Series Here

  1. Six obstacles to the perfect budget
  2. How to make the Best Budgets for Savvy Spending
  3. The Amazing Key to the Most Powerful Household Budget Ever!
  4. How to Build Confidence with a Written Budget
Here are 3 types of family budgets for Savvy Spending and awesome money planning!

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