18 Seemingly Foolproof Ways to Create a Budget in 2021

From paper and pencil to top-rated budgeting apps, this list has a budgeting strategy for everyone.
Last updated Dec 1, 2020 | By Larissa Runkle
Woman building a budget

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If you’re feeling ready to leave 2020 behind, you wouldn’t be the only one. In addition to being hectic from a financial standpoint, 2020 was also just downright draining in every other sense as well. But a new year means new opportunities, such as revisiting your long- and short-term goals and establishing a plan to meet them. And if your 2021 goals have anything to do with making money moves, then this is the list for you.

After scouring our archives for the absolute best budgeting apps, and adding in a few extra budgeting strategies — we’re able to bring you this complete roundup of the best ways to get back your budgeting A-game in the new year. Ready for a new year, new financially-secure you? Keep reading.

18 budgeting methods and apps to try in 2021

Classic budgeting

When it comes down to it, budgeting is all about learning how to manage your money. A lot of this will depend on your income and expenses. One tried-and-true budgeting method is classic budgeting, where you simply track and subtract your monthly expenses from what you earn. You can keep it simple with a pen and paper or opt for a more complex spreadsheet if you choose.

This will help you get a sense of where you are financially, and what (if anything) is leftover, or where your savings efforts could be improved. If you find that your monthly expenses exceed your paychecks, then it might be time to either scale back spending or pick up one of the best side hustles to support your lifestyle.

Zero-based budgeting

If you’re feeling ready to take your budgeting to the next level, then you might want to try something called zero-based budgeting. Much like classic budgeting, this method has you writing down all of your monthly income and bills, breaking it down into detailed categories, and then taking a look at what’s left.

The key difference is that rather than just spending that leftover money on something random, you’ll instead assign a destination for it. Maybe this is a savings account or an investment account for your retirement. Start by asking yourself this: If you could do anything with this extra money — what would you do? Save up for a car? Go back to school? Finally pay off your debts? Whatever your 2021 financial goals are, make a plan to meet them. Even if that means just scraping $100 out of your monthly income and putting it aside — that money will add up.

50/30/20 budget

Although some people might like the level of detail involved in listing out all their monthly expenses, others may not. If lists aren’t your thing, then you’ll probably like the 50/30/20 budgeting method. Rather than itemizing your income and expenses, simply plan on dividing your money into an easy-to-remember 50/30/20 ratio, in which 50% of your income goes toward your needs, 30% toward your wants, and 20% toward savings or paying off debt.

This is a great budget for people who have the income to afford that 30% in spending on wants, but also want to control their spending habits a bit more. If you can assign a monetary value to what 30% of your monthly income is, then you can track how much of it you’ve spent. Similarly, you’ll be able to plan in advance on allocating that 20% to your savings accounts or toward paying down any debts you may have.

The envelope budget

This method also involves putting your money in categories, but instead of making an abstract list, you’ll actually be physically putting money in envelopes. Start by gathering some envelopes and writing out categories of your spending on each one. This might include things like food and utilities, or even gifts. Once you’ve done that, allocate funds to each one.

This type of budgeting should be done every time you cash a paycheck because it allows you to immediately assign a category to your money. It’s also a great option for anyone who receives actual physical cash as payment, such as those working in the food industry. Under this type of budgeting, once an envelope is empty, that category of spending is considered exhausted until your next pay period.

The bare-bones budget

Speaking of the food industry, if you find yourself working in a field that’s been hard-hit by the pandemic, now might be a good time to try this bare-bones budgeting method. The bare-bones budget is pretty much exactly what it sounds like — a budget that takes your nonessential spending down to zero in order to help you pay for essentials like food and rent.

Start by looking at your spending for the last month, then plan on cutting any nonessentials you find for the coming month. Not only will this method help you get through a rough patch, but it might also help you avoid racking up extensive debt while you get back on your feet again.

Debt snowball method

Sometimes budgeting is all about finding the means to pay off debt. If that describes your situation, then you might want to try the debt snowball method. This type of payoff method has you focusing your attention on paying off your smallest debts first, then working your way up to the larger ones.

Get started by making a list of all of your debts, then pick one (preferably the smallest one with the highest interest rate) and focus on aggressively paying it down, while still meeting minimum payments on your other debts. Although starting small might seem counterintuitive, a lot of people like this method for the sense of accomplishment it brings. Paying off any debt (even the smallest one), will inspire you to keep going and take on bigger challenges toward becoming debt-free.

Debt avalanche method

Another type of budgeting that will help you focus your efforts on paying down debts is the debt avalanche method. Unlike the debt snowball method, this strategy has you paying down your debts with the highest interest rates first.

This method works best for people with lots of debt who are wondering where to start. By starting with the debt (regardless of amount) that has the highest interest rate, you’ll actually be saving yourself money — as those debts won’t be left to grow at such a high rate.

Truebill

If this whole setting-up-your-own-budget thing doesn’t sound like the right fit, then it might just be worth checking out a few top-rated budgeting apps that can help. And if you want to start out nice and slow, Truebill is a great one to check out. Truebill offers a free membership and a premium membership. You can choose your own price for a premium membership, from $3 to $12 per month. The free membership comes with basic budgeting features, whereas the premium membership offers more robust features like bill negotiation and cancellation.

Rather than limiting your spending, or dividing things up into categories, a Truebill premium membership may help you spend less money by identifying nonessential expenses — expenses you might not even know you’re paying. After you sign up and link your bank and credit card accounts to Truebill, the app will analyze your bills and spending, then make suggestions on how you can cut (or even just lower) those expenses.

Digit

Another heavy-lifting budgeting app, Digit makes it easy to reach your savings goals without even thinking about it. By connecting your bank accounts and analyzing your income, expenses, and even taking into account your preferred minimum balance, Digit helps you save all those extra unspoken-for dollars and puts them into the savings account of your choice. Need more cash for grad school or your dream vacation? Digit will help you save up for it, a little bit at a time. You can sign up for Digit for as little as $2.99 per month.

Simplifi

Another great budgeting app, this time from the creators of Quicken — Simplifi will help you see the big picture on your finances, and help you make adjustments to meet your goals.

With the ability to connect to more than 14,000 financial institutions, it will look not only at your checking and savings accounts but also all of your outstanding debts and investments. With that birds-eye view of your finances, Simplifi then helps you identify places where you can do better, both in cutting down spending, improving savings, and even paying down debts.

With Simplifi, your first 30 days are free, after which you can select either an annual plan (for $2.99 per month or $35.99 billed annually) or a monthly plan for $3.99 per month.

YNAB

Praised as being a more proactive budgeting app, YNAB (short for “You need a budget”) won’t just send you an analysis of your finances at the end of every month. Instead, it’ll actively work with you to improve your financial standing. The company prides itself on actually teaching users how to budget by setting goals like stashing aside various emergency funds, breaking the cycle of living paycheck to paycheck, and investing money in the right places.

If the hands-on approach is for you, consider giving YNAB a shot. Although free for the first 34 days, YNAB also operates on a subscription basis and costs either $11.99 per month for a monthly plan, or $84 annually for a yearly plan.

Mint

Although a whole lot less involved than other apps on this list, Mint still has a great reputation as being a top-rated budgeting app that allows its on-the-go users to have the full picture of their finances, wherever and whenever they want it.

What’s really great about Mint is being able to see that quick and easy snapshot of all of your money in one place. By linking to your external bank accounts, the company is able to show you how all of your finances are doing in just one place, and then help you manage your bills, debts, and investments in-app. You’ll have a customized dashboard with notifications for upcoming expenses and reminders for other action items you want to take. The company will also break down your spending into categories, so you can monitor exactly where you’re at and how close you are to meeting your goals.

Many aspects of Mint are free to use. However, if you’d like to upgrade to the premium membership, which includes things like credit monitoring services, it costs $16.99 per month.

Personal Capital

If you’re looking for a more classic money-management tool, look no further than Personal Capital. This company provides all of the tech-savvy data on your finances you could possibly want, plus a few extras — like access to real financial advisors. Probably one of its best tools is the Retirement Planner, which allows you to see exactly where you stand in your retirement savings, and suggests adjustments to improve.

Much like other budgeting apps in this list, the company’s online personal finance management tools will also help you understand your true net worth, by providing snapshots of all your assets in one place. Personal Capital’s budgeting and retirement planner tools are free to use. It also offers investment accounts, for which you’ll pay an annual fee as a percentage of your portfolio.

Wally

Wally is another great budgeting app, especially if you enjoy some flexibility when it comes to mapping out your budget. Wally offers fully-customizable budgeting plans that allow you to either cap your monthly spending in certain categories or allocate extra funds to savings.

Its easy-to-use application lets you monitor your progress in real-time, which means you won’t ever have to guess how you’re doing. The app also provides various views, including a financial calendar, which allows you to track expenses and see where all of your accounts are at once. Worried about accountability? Set up reminders to stay on track.

Wally offers a basic free service, but to set up unlimited accounts and budgets, you’ll need to upgrade to the $1.99 per month plan.

Mvelopes

For those who were intrigued by the envelope budget mentioned above, Mvelopes is basically the digital version. This app allows you to track every dollar you spend using an online, real-time version of the envelope budget. It will help you categorize your expenses and stick to a budget by not overspending. The app will also help you come up with a plan for what to do with the rest of your money, and whether it would be best put toward paying off outstanding debts or saving up to meet your goals.

Basic use of Mvelopes is free, but certain features require you to upgrade to one of its two plans — either Premium for $19.95 per month (or $95 per year), or Coaching for $59.95 per month.

Clarity Money

This free app from Goldman Sachs is aimed at people who want to grow their savings, track spending, and eliminate superfluous expenses, such as any unwanted subscriptions. AS with other budgeting apps, Clarity Money works by linking your bank accounts in one place so you can see your financial standing at a quick glance.

Because it is also run by a bank, you can even open up your own high-yield savings account with Goldman Sachs directly from the app. If you were already considering a high-yield savings account as a way to meet your money goals, this budgeting app might be a great place to start. And the best part? It’s free to use.

PocketGuard

Looking for an app that does the heavy lifting for you? Then you might like PocketGuard. This budgeting app not only helps you track bills by providing that big picture on all your accounts, but it also helps you set up automatic transactions to stay on top of your goals. Want to put $200 a month aside for an emergency fund or start putting larger amounts away for your retirement? PocketGuard can do all of that.

By analyzing your full financial picture, PocketGuard lets you know just exactly what expendable income you have left, then helps you decide how to best allocate that money to reach your short- and long-term goals. PocketGuard’s basic plan is free to use, but if you’d like to have access to their offerings under PocketGuard Plus, you’ll need to pay $3.99 per month or $34.99 for the year.

EveryDollar

One of the reasons we love EveryDollar is that it keeps things simple. For those interested in getting a full picture of their spending and maximizing savings and debt payments, EveryDollar will help you do just that.

Start by entering your monthly income and then set up categories for your spending. The app will then help you see what’s left in each budget category, and give tips on how to save more, spend less, and allocate your extra funds toward paying down your debts. EveryDollar is free, but if you’d like to connect your accounts for financial tracking, you’ll need Ramsey Plus (formerly EveryDollar Plus), which is $129.99 per year after a 14-day free trial period.

The bottom line

Budgeting doesn’t have to be complicated, and the great thing about getting started with your budget now is just how many options are available. Whether you prefer to keep things simple by making your own lists, or if you’d rather work with a top-rated budgeting app — there’s really no end to the ways you can organize your money to meet your goals.

Get started by deciding what’s most important to you. Maybe it's spending less, saving for something special, or paying down your debts. Once you have your overall goal in mind, revisit this list to find the best solution that will help you reach your 2021 personal finance goals.

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