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5 Creative Budgeting Strategies

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Julia Park Tracey didn’t know how to budget.

A writer by trade, she says she knew that her lack of knowledge was crushing her and her family. With five kids ranging in age from 10 to 23, and with three of them in high school at the same time, she and her husband found themselves unable to pay for little things like graduation announcements.

And the idea of paying for five college educations terrified them.

Look, we all know the standard approach to budgeting is totaling up your expenses and income, and then reducing your spending until you have more income than expenses. But that wasn’t going to be enough for Tracey and her family to turn things around. Instead, she realized she needed to get real and do something drastic.

And she did. With some creative budgeting tactics, she said she was able to pay down more than $50,000 in debt and put her family on the course to financial recovery.

“We were never going to afford a house — and here we are, owning two houses, one for rental income,” she said.

So here’s how Tracey did it, along with stories of others who managed to make budgeting work for them, and not the other way around.

1) Schedule a spending freeze

So, how did Tracey do it? An extended spending freeze is what put her family on the path to financial reform.

“No buying anything new for a year — either I bought it secondhand or I made it myself,” Tracey said.

After the family went a whole year without buying new clothing or other consumer items, they doubled down and continued the freeze the following year. They eventually eliminated their debt and even started to put money away.

If sticking to a budget every single day for years sounds like a life sentence, try scheduling a day, week or even month when you spend only the bare minimum outside of your rent, mortgage or utility bills. You just might find a few things you could live without!


“My goal is to save money quickly for the holidays without impacting my regular budget."


Once you’re ready to kick it up a notch, commit to a bit more during your spending freeze - like making every meal using food you already have in the pantry. It might push you to be creative and save money in new ways.

Heather O’Donnell, who blogs about frugal living on her website, Happy Humble Home, does a two-week spending freeze every year in November called No-Spend November.

O’Donnell prepares for the freeze by taking inventory of her freezer and pantry and writing out a meal plan based on what she already has in stock.

“My goal is to save money quickly for the holidays without impacting my regular budget,” O’Donnell said. “I don't spend any money except for absolutely necessary expenses, like medical and gas.” 

2) Stuff envelopes with cash

Crystal Paine and her husband, Jesse, were on a tight budget when they got married. They were committed to living debt free, even though Jesse was in law school. To make sure they never spent beyond their modest means, they began using the “cash envelopes” budgeting system.

Here’s how it works:

At the start of every month, after setting aside funds for rent and utilities, Jesse would withdraw all of their spending money for the month. At home, they would use envelopes to sort the pile of cash into categories: groceries, eating out, gas, gifts and so on. Once an envelope was empty, they resolved to not spend any more on that category for the rest of the month. They also reserved a special envelope of cash for themselves to spend as they wished.

Paine credits the envelope system for not only helping them survive the lean years but also teaching them to communicate and cooperate on a budget.

“Working together to spend the money in those shared envelopes — well, it helped us learn to talk about priorities,” she said.

It may seem counterintuitive, but Paine considers the limits imposed by the envelope system liberating.

“We don’t have to worry, ‘If we spend this money on eating out, are we going to be able to buy groceries next week?’” she said. “Because it’s all divvied up at the beginning of the month.”

The cash-envelope system does come with some downsides: you’ll have to go inside a gas station to pay for gas, and you might have to put back some grocery items if you run out of money mid-checkout. If you’d rather use a debit or credit card, try syncing your accounts to an app that simulates the cash-envelope experience.

Another idea for the cash averse: “Put it on a prepaid card,” Paine said. This can be a suitable strategy for holiday spending, when you might want to set a hard limit on total expenditures.

3) Don’t be too hard on yourself

While severely cutting back on spending may seem like a good idea, too much may be counterproductive. That’s why some penny-pinchers recommend setting a budget that you know you can comfortably stay within, rather than a budget you know you can’t stick to.

For instance, if you think you can feed your family for $80 a week, give yourself a break and set the budget at $100. When you worry less about going over, you may surprise yourself and come in at $75.


Over time, exerting self-control can deplete that resource, which may lead to impaired decision making.


One research study demonstrated that self-control is like a limited resource. Over time, exerting self-control can deplete that resource, which may lead to impaired decision making.

So, if you set a budget that has you denying yourself every little desire, from a pack of gum to a cup of coffee, you might find that it backfires and you may end up spending more on impulse buys as the month goes on.

4) Make a game out of it

Danish scholars designed an experimental game called Budget Attack in which bills are represented by enemy castles that players destroy. Some of the experiment’s test subjects said that playing the game was more enjoyable and engaging than other forms of budgeting. All of the respondents said they’d play a budgeting game if their bank offered one.

While the castle game isn’t on the market, there are apps you can download to gamify aspects of your finances. You can always make DIY budgeting games or compete with friends or coworkers to see who can stick to the lowest budget.

5) Participate in a challenge

If you want to find a sense of team spirit with your budgeting, you can turn to blogs and forums that run challenges in which participants commit to sticking to something for a set time.

Don’t want to share with strangers? You can often find challenges in the workplace or among friends and family. We’ve heard about the “cut 20% from your budget this week” or “who can spend the least on entertainment this month?” challenges. If you’re going at it alone, consider announcing your goal on social media and sharing your progress to keep yourself accountable.

In his student days, Chicago-area geography professor Daniel Block regularly put himself on what you could call the Jackson Challenge: “I would take out a twenty-dollar bill in the beginning of the week and see if I could last the whole week on it. I didn’t always make my goal, but usually I came close.”

This article is for informational purposes only and is not a substitute for individualized professional advice. Individuals should consult their own tax advisor for matters specific to their own taxes and nothing communicated to you herein should be considered tax advice. This article was prepared by and approved by Marcus by Goldman Sachs, but does not reflect the institutional opinions of Goldman Sachs Bank USA, Goldman Sachs Group, Inc. or any of their affiliates, subsidiaries or division. Goldman Sachs Bank USA does not provide any financial, economic, legal, accounting, tax or other recommendation in this article. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice.  Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA or any its affiliates. Neither Goldman Sachs Bank USA nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in this document and any liability therefore is expressly disclaimed.