Best personal budget to use – Become a millionaire in 2020 – Part 2

So we know we need a budget and we know we have to apply some goals. If you aren’t sure why (check out Part 1 – Getting Started with a Budget), but what budget plan might work out best for you, given your personality, discipline and propensity to spend vs save/invest. Read on to discover some of the most popular budget techniques that could help you achieve success.

This is Part 2 of the Become a Millionaire in 2020 series being run both on this blog and on my YouTube channel. Any questions, thoughts, ideas or criticisms, please get in touch through this site or on the comments of the YouTube video.

No Budget Budget

Let’s get the dirtiest one out of the way, quickly!

Probably the loosest interpretation of a budget there can be. Basically you take care of your fixed costs each month first, and then the rest of your income is yours to spend however you feel like. This is the sort of thing that might suit someone who lives comfortably below their means.

It doesn’t matter who you are, though, spending can spiral without a plan, and even though you might be able to afford to not monitor your finances beyond the essentials, you could still be missing out on more valuable things to do with your money if you just carry on spending what you like, when you like on whatever you feel like at the time.

Pay Yourself First Budget

With this strategy, before you spend any money on anything, whether it is bills, food, fun, you first set aside money to save. This basically means you are investing in yourself and your future every single month to build up some kind of wealth.

Then you tackle your priorities you need every month and then whatever is left over is yours to spend on all the whimsical joys of daily life.

This method really helps teach good financial habits by putting more of your money to good use each month, and minimising the amount of unnecessary spending on things that don’t offer a lot of value in your life. Saving first, bills second (but you must always pay your bills!) leaves a variable amount of spare money to spend on yourself, so when it’s gone, at least you have taken care of all the important stuff first.

50/30/20 Budget

This budget is based around spending 50% of your income on needs, 30% on wants and saving 20%. Personally, if you are aiming to become a millionaire, you really need to reverse these figures! While 20% isn’t a bad place to start for savings/investments, it’s not the best either. To agressively chase financial independence I think you have to reduce spending on your needs as far as possible, heavily reduce your wants to what really brings value to you, and up your savings/investments game to as high a level as possible. I realise that might not be possible for everyone, so consider ways in which you can increase your income in order to be able to save more… but that’s another blog post!

Zero Based Income Budget

This budget focuses on giving every pound/euro/dollar of your income a job. Everything goes somewhere so that at the end of the month you have zero money left in the account the money landed in. Every penny coming in is budgeted for and it has a job. Whether it be a bill, disposable income or savings/investments no penny is without a destination. It has become hugely popular because of the information it yields as every expense is tracked. Such information really helps to define and track progress towards your goals.

Nicola Richardson’s Zero Based Budget

Inevitably you might have some unexpected expense pop up, that’s real life, so this budget offers the flexibility to move money from a less important area to one that requires prioritising. The flexibility to adjust where money goes when is invaluable and on the occasion you underspend on a particular area you can up your spending in another area… such as paying off debt or extra investment.

Extra Income Budget

This was a new one for me… simply any extra money you can make as a side hustle or an extra money that comes your way goes towards your financial goals and nothing else. The money is not spent on anything in your day to day life, but purely on a long term financial goal, like paying down mortgage for example.

There is a very nice explanation of it here:
Francesca Henry – Extra Income Budget Method

I can definitely see the appeal of this one. Life goes on but as you find a way to make extra money, you continue to live on your regular income while the extra is treated as an extra and you don’t inflate your lifestyle to use up your increased income.

This definitely goes along with my philosophy of living below your means and continuing to save/invest as much as possible.


Hopefully these budgets give you an idea of the kind of approach might be best for you. Having some kind of budget in place certainly helps plan your finances and while it may take some effort on your part to maintain and manage your finances in a more productive way, you will definitely see an improvement in how you spend your hard earned money from month the month.

Jennifer Kempson Budget With Me

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