Skip To Content
Blog Get a Quote

What is reverse budgeting, and is it right for you?

Reverse budgeting uses the “pay yourself first” approach to saving. Learn whether it’s right for you

A couple prepares their tax information for filing from the comfort of their home.

We’ve all been there: It’s the end of the month, and we’re not sure where our money went. And suddenly, that savings goal — whether it’s for building an emergency fund or saving for retirement — we set up for ourselves will have to wait until the next pay period. And so the cycle repeats itself.

While we all know that making and keeping a budget is an essential part of managing your finances, we also know that finding the right budgeting system can take some trial and error. If you find yourself struggling to keep your finances on track, then reverse budgeting might be the right budgeting strategy for you. Here’s what it is and who might benefit from it.

In this article:

What is reverse budgeting?

Reverse budgeting puts your savings goal front and center: You move a chunk of your money to your savings account before you get a chance to spend it. It’s also known as the “pay yourself first” approach, because you put money in your savings as soon as you get paid. Once you’ve met your monthly savings goal, you’re free to spend the rest of your money on regular bills and expenses, knowing that you can spend what’s left over guilt-free.

For example, let’s say you have a monthly income of $4,000 after taxes and your monthly savings goal is $500. In that case, you would move $500 into your savings account, IRA account, or preferred savings tool as soon as you get your paycheck. (Or $250 per paycheck if you’re paid bi-weekly.) Now, your monthly take-home is $3,500 instead of $4,000.

If you can cover your monthly expenses after you’ve “paid yourself,” then it really doesn’t matter how — or if — you budget after the fact. The most important thing is hitting that savings goal as soon as possible so you don’t have to worry about it for the rest of the month.

What are some pros and cons of reverse budgeting?

Here are some of the biggest advantages and disadvantages of this money management strategy.



Who should consider reverse budgeting?

Reverse budgeting isn’t for everyone. If you’re still wondering whether this is the right approach for you, consider if you fall into any of the following categories:

The best financial tools are the ones you can stick to

There are so many different money management techniques out there, and reverse budgeting is just one of them. If you have a regular income, not a lot of debt, and tend to have a hard time sticking to a budget, then reverse budgeting may be the right strategy for you. Otherwise, you may benefit from other budgeting techniques, like zero-based budgeting or even a YNAB budget.

Whatever the case may be, we can all benefit from budgeting a few dollars each month for a life insurance policy. Buying a term insurance policy is more affordable and accessible than ever, with policies that can fit any budget. Start with a free online life insurance quote, and begin your journey toward providing financial protection for your loved ones.

Haven Life: Life insurance that’s actually simple5 Star Ratings

Easy + Simple + Affordable

“I'm so happy I chose Haven Life for my policy needs. The entire process was quick, easy, stress-free and convenient. Their customer service is top-notch.” - Sandra

Learn more
Default author headshot

About Marco Monroy Robles

Read more by Marco Monroy Robles

Our editorial policy

Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.

Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.

Our disclosures

Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.

MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.

Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit:

You might also like

Get our most-read stories, twice a month

.newsletter-msg-success, .newsletter-msg-error { display: none; }

What our customers are saying

Sign up for our newsletter

Get our most-read stories, twice a month

Thanks for signing up. See you in your inbox soon.