How do you budget? And what digital tools do you use?
Reese sent this question in December:
Kristen, could we get a post about starting up some things for the new year, financially speaking?
I’m just trying to make it through the holidays, but I know I want to focus on paying down debt, working on saving more, and maybe introduce some fun apps and frugal wins into my everyday life. It might be a fun option to have readers write in to say what they use (Envelope system? Excel? Mint? Good ol’ paper and pen?), how they budget (What percentage for tithing, savings, how to figure out food $), any digital tools (ibotta, CashApp, GetUpside, etc).
I could really use some motivation. And need help to get back on track! I figured the new year would be a good time to start something I could stick to. 🙂
-Reese
Reese did a Meet a Reader interview before. Remember the beautiful baked goods she makes??
To address Reese's questions:
Personally, I am in a super weird state of financial limbo. My finances are functionally separated, but until a divorce agreement is finalized, nothing I save or earn is completely mine.
It's sort of a demoralizing place to be, but I know it's temporary. A long temporary, yes, but that's still not the same as something being permanent!
I'm obviously still working hard at saving money, but I will have a lot more excitement around my financial efforts once my money is entirely my own.
So, I'm not really budgeting at the moment; I'm just in spend-as-little-as-is-reasonably-possible mode.
Once my divorce is finalized, I will get back to setting up specific savings goals, and I'll set up targeted savings accounts like I used to have.
Right now, that's too much complication to deal with. I have been trying to keep the financial picture as simple as possible in order to smooth the process of splitting everything.
In short, I am rather useless at answering these questions right now; next year, I'll have better answers.
Reese, thank you for asking this question, I have the same one but always feel a little sheepish asking it. I look forward to seeing what everyone has to say.
@Hannah, I too need some direction.
We've used a lot of systems over the years, but prefer a spreadsheet budget. At the beginning of the year, we estimate our expenses. From there, we earmark all of our money (broken out per paycheck) for the things we need to spend. We also have savings, as our spending can be a bit uneven (when paying for travel or such).
We track how we're doing monthly, although we try not to get too hot & bothered over monthly variances in some of our categories. For example, our utilities are quite varied by month, but we have a yearly target we're trying to hit
@Hawaii Planner, does your electric company have a monthly payment plan? They average your annual bill for the previous year and divide it by 12. You pay that every month, then you know what you have to pay every month. It could be adjusted where you do that on your own and set aside that amount of money. There's no monetary benefit it just makes it easier to know what you need to pay. But in those low months of the year you're going to pay more than you're actually using in the high months you're going to pay less than what you're using.
I use a combination of things for budgeting. Paper and pencil for crafting the overall monthly budget, and to track all sources of income. I also use the free Goodbudget app to track expenses in my virtual envelopes. (I find it easier to record transactions in an app than on paper. It also tells me instantly how much money I have left in each envelope, which I can access anywhere from my phone.) [Side note: When we are in a stage of consistently overspending in any budget category, we've used cash envelopes, too.] And finally, I use an Excel spreadsheet to track sinking funds like car insurance, my yearly Mint Mobile expenses, etc.
Ok, now that I'm writing it, it sounds super complicated, but it works for me, haha.
I use the Money Manager app to track my spending. It's free (though with lots of ads...) and I find it intuitive and easy to use. I keep track of my finances, but don't budget.
@Christine81, what does the app icon look like? Looking in the google play store and there are several by that name
@Brittany, The icon is orange/red with a white piggy bank.
@Christine, thank you
I have a love/hate relationship with budgets. I would love to have one, I hate to do them.
I used Every Dollar's app for a three years or longer. I recently quit because the budget was always in flux and I grew frustrated - I'd plan for X dollars for utilities, and my bill would jump up or fall back down. Even though I'm on a budget plan with Duke Energy, my bill can go up or down as my year's usage changes, which changes the monthly average I'm asked to pay. I'd plan on X dollars for groceries, then I'd find a good sale for stocking up, which blew my budget. I'd plan on X dollars for lawn care and the rain would be heavier than usual and they would have to mow more often, or they would get so busy they wouldn't be able to come their usual amount of times. I'd plan X dollars for medical co-pays and I'd get a whale of a bill from a provider after an unexpected health event. I budgeted X dollars for gasoline and, well, you know how that went. I just got a letter from my home insurance providers that the big increase they gave me last year in my annual premium was not enough, oops. I'll be paying another $300 next time, unless it goes up even more, so I have to adjust the money I set aside each month to save for that. I felt like I was constantly juggling and changing categories because even most of my "fixed" expenses weren't very fixed and I got so tired of that.
Another problem was that I sometimes couldn't access Every Dollar on my phone in a store due to internet issues, so I'd have to remember to add that expense later, and my memory is not that good, frankly.
Of course, my biggest problem is that, according to my most realistic budget, I don't have the income to cover all my expenses. I think that is the biggest frustration of all. I am tracking my spending with old fashioned pencil and paper. I'm doing what Kristen is doing, and what I believe Amy Dacyczyn of the "Tightwad Gazette"used to do - spend as little as I can, save as much as I can. I "budget" in that I save up certain amounts weekly or monthly for things such as my property taxes, car insurance, health insurance, home insurance and Christmas spending, but other than that, I just spend carefully and am mindful of how much I am spending. I'll try another budget again at some point.
That brings up a question of my own. I know a few people who use and love YNAB (You Need a Budget). How is YNAB different from just having a month's salary extra in the bank? I know the idea is "plan and spend using last month's income", but my income is exactly the same, month to month, so my planned amount to spend is always the same. I can see the advantage of having a month's salary ahead in the bank at all times, but I think I must not understand how YNAB actually works.
@JD,
For me, the value of YNAB is that it helps me track different savings and rainy day funds. Each month we set aside money for a new car (when needed), car repairs, home repairs, taxes and a landscaping project. So when I want to buy something the question I am asking myself is not "how much is in my bank account?" but rather, "how much do I have set aside for groceries/clothing/entertainment?"
We've used YNAB since 2007--that feels like ages ago!! I couldn't live without it. It allows us to have an extremely clear picture of what money we have, what our real expenses are, Ava what our future plans are for savings. It has helped SO much when we contemplated job changes, moving, and buying cars/a house. Back in 2007 it was absolutely necessary to budget and be frugal. Since then we have much more disposable income, so some would think we could give up the budget, but we never will. Having a budgeting system like YNAB helps us make sure we're really using money in a way that matches our priorities. It keeps us honest and not wasteful in areas where we may over spend unnecessarily. And it helps us really enjoy the fun things we choose to do because we know we have the money set aside to do so without worry. Prior to YNAB we tried Quicken, but it was only good for planning and recording, not managing real life expenses and "rolling with the punches" which YNAB allows for. And after YNAB I looked at Mint a bit, but again it didn't come close to the level of YNAB. The learning curve can be a tiny bit steep, but they have many training tools and great customer service with real people. We highly recommend it!
@Kimberly, I so agree with this. YNAB eliminates the need for multiple savings accounts and makes it so simple to move money around in the budget when unexpected things happen. I an always see exactly where the money is going and I find I save more as well. Couldn’t live without it.
@JD, we've been using YNAB for 2 years now and I absolutely love it. I'm sure this has already been said but more praise to the YNAB crew! We doubled the $$ in our checking account by easily creating savings categories and I genuinely feel more in control of my money. Unfortunately there is an annual fee associated with it but it's totally worth it to have all our transactions sync right into the app and stay organized. 100000000% recommend this!!
My husband made an Excel spreadsheet that we use to budget and track our expenses-- we make a new budget every month even though a lot of our expenses stay the same month-to-month (I get paid monthly while he gets paid biweekly, so it's a little funky sometimes). We also have a savings account sheet where we track longer-term expenses like our summer camp savings for the kids, Christmas savings, and etc. My opinion, though, is that I think you might want to think about where you will access it and look at it regularly. Is an app better for you if you always have your phone? Or are you on a computer regularly enough to use a spreadsheet?
We started this spreadsheet before we had smartphones, but if we were starting over we might use an app. Several of my friends LOVE You Need a Budget. Also, good luck!
I recently switched to You Need A Budget (https://www.youneedabudget.com) after years of using Moneywell. You Need A Budget has a slight learning curve, but they have TONS of support available for free to best learn how to use it.
I'm highly impressed by it. It's like working the a cash envelope system, but doing it digitally.
I’ve used YNAB for years and I love it! I’m most thankful for it at tax time. I’m considered an independent contractor and it makes tracking and reporting my deductions so easy. I also love that I can link my credit cards to it.
@Jen,
100% on the credit card linking. Its the only budget I've ever been able to keep because I don't have to manually input the transactions.
Honestly same. We don't have a strict budget for anything. We just kinda have an agreement on what we think we can afford and what our are parameters and go with that. I realize this is super fortunate of us. We are finally meeting with a financial advisor to make our money work more for us than just retirement accounts and we are having to fill out a spread sheet with our spending. Should be eye opening
@Heather, I'm another member of the "no strict budget for anything" club. I've always relied on my Spidey Sense of how much money we have and what our expenses are. (Well, maybe there's more to it than Spidey Sense: My nickname in 8th-grade algebra class 55 years ago was "Univac." Look that one up in ancient computer history, kids.) DH, who was more of a free spender at first, occasionally rebelled--but he came around when he acknowledged that I pretty much knew what I was doing.
@A. Marie, I'm also member of the "no strict budget" club. I try to keep our spending as low, but we are fortunate and make more than we spend. I do have a variety of savings accounts that I add to each paycheck, including things like home maintenance, car funds (repairs or for purchase of new vehicle), and college savings (which we no longer need now that our kids have graduated). I also put money into savings before I consider any other spending and watch our accounts on a daily basis.
@Beverly, @A. Marie and @Heather: Ditto. (except I had no cool nickname, though I loved algebra). I keep track of finances on paper to see what is coming up in monthly regular expenses and a few annual ones. It is also good for my brain to have to do mathematical calculations by hand once in a while. Since we already shop for goods and services as frugally as possible, comparing costs over times past or forcing spending into certain percentages of the total won't turn up much that could be cut in the future.
We are also fortunate to have always had a just-enough predictable salary throughout our working years.
@A. Marie,
I know I know! My Algebra class was 53 years ago. Did you have to read the short story, "Epicac" by Kurt Vonnegut?
I use my planner for monthly budgeting. I write all my bills on the day they are due in the planner. I can check my account balance and then estimate how much I need to cover the rest of the month. My husband and I use a general Wells Fargo checking for basic bills and is so convenient to deposit and get cash when we need it. I also use my old che cking/savings account from when I was a kid. They are a really small bank and do not have online banking, you still have to call to transfer money. It’s crazy. Helps me be more intentional. I just use this for specific savings and I have one bill I am working on paying off. It’s also nice to be able to write a check and from my account and not worry about it. I know the money is there and I account for it, so when it gets cashed no worries. I live in a small town and people cashing checks in a timely manner is a huge issue. Like we are talking months later. I also have a capital one 360 checking and savings account online. I love this account. I can seriously budget with this account. I have 10 accounts and they are all labeled accordingly. It is super easy to move money around as well. Good luck with whatever route you decide to take:)
I get a lot of tips from Lydia Senn on IG and she’s on YouTube. Very real doable budgeting.
@SaraS, thanks for the tip. I saved a few of Lydia’s videos to my playlist and will watch on my commute.
We don't use a formalized budget process. At the beginning if each calendar year, we write down our net income and fixed expenses. We set things up so we are notified via email when bills are due and pay them electronically. Then we set a two-week limit for variable, yet controllable expenses such as dining out, food shopping, etc, and stick to it. Each two-week pay period we pay off our credit card and any fixed expenses that are due from checking. Whatever is left, less a small cushion left for emergencies, is transferred to savings/investments.
Since we are looking at what we spend every two weeks, we can quickly adjust for the next two weeks if we went over for any reason. It's easy to download the details from our banking site if we need to. Also, if additional income over what we planned comes in due to freelancing or such, we put it right to savings/investments.
My husband and I use the You Need A Budget (YNAB) program. Our income is slightly variable so we always budget on last months income. For example, at the end of January we will total up the income received in January and assign that money a job for February. I think this approach is called zero based budgeting.
With rising costs it is a little difficult to predict how much money we will need to spend on food. We tend to set a hard number (maybe $400) and toward the end of the month we might decide to eat vegetarian to stay under or at the budgeted amount. Or we might move money from another category (like restaurants or gasoline) to cover the overspending in that category.
For us, budgeting has helped save money and stop spending in certain areas when we hit "enough." There are always things we want but you need to stop spending sometime.
I know some people on YouTube that do "no buy" challenges and stuff, but I don't mess with that.
One additional note, I am more frugal than my spouse so I try to make sure we budget for things that are fun for him or for small luxuries so that he doesn't feel too deprived. I would be find with a more restrictive budget (and more saving) but it is important to me that our lifestyle be sustainable over the long haul.
Ours is a household of two self-employed parents and five kids. We have a general idea of cash flow for the farm and a general idea of cash flow for the household, which generally comes from my work. It is written ... in pencil, lol.
Most farm income, and therefore most income for the family altogether, comes once in February and once in October/November/December. This is not really like most people and it often throws people for a loop (like health insurance providers; they just don't know how to deal with our crazy income pattern).
Specific budgets are extremely troublesome (I so very much empathize with JD). We had two major out-of-the-blue tractor expenses in 2021, and in 2022, some significant unplanned expenses for kids. What will 2023 bring? I have no idea.
At the end of each year we go through all our farm accounts and log and sort and categorize what has been spent. This is in a spreadsheet with multiple tabs (expenses, income, balance sheet, etc.).
I decided this year (because of the unplanned kid expenses of 2022) to track every penny that we use through the household account to make absolutely sure I know where it's going. This is just on ledger paper because I know I won't track it on a computer or app.
Basic principle for us is to simply spend as little as possible. Right now our savings is pretty healthy, but that's a highly mobile total; see also troublesome budgets.
We have tried a lot of different things, but I think my best advice is to use something and if/when you find it is not working, don't try to force the square peg into the round hole. Try something else. There are a million ideas out there, and none is a best one-size-fits-all. Just don't lose sight of your big picture.
The keys for our family were to pay off debt, automate, and fund an emergency account and sinking fund. At the beginning, we lived very frugally AND increased income. We used a simple spreadsheet and our bank’s free app to predict and track expenses. Most expenses were set up to autopay from a savings account that received automatic deposits from the checking account where our paychecks were deposited. Any funds remaining in the checking account were available for spending on variable costs like groceries and entertainment. We made day to day decisions based on our checking balance knowing that money for bills was already set aside. It took us months to get the hang of this system! Whichever method you use, don’t give up. It just takes discipline, gratitude, and contentment which is why I love this blog! Good luck!
As abstattend, I‘d recommend a 50/30/20 rule. When I started saving, I had no money, had just gotten a new job, moved countries and had zero emergency funds. So I started with 50/20/30 rule, till I had my emergency to where it should be. 50 on must things- rent, electricity, water, heating, insurance, basic food etc / 20 - wants- movies, makeup, clothes and 30 - direct to savings. At that time I was doing everything in savings account. Now I try 10 in investments and the rest in savings. as I’m trying to save up for a huge purchase and also on an international vacation, I’m currently trying 5 in vacation and rest in my dream house savings budget.
I can write more, but it’s too complicated. If anyone has questions, I can go into details.
I also have used an Excel spreadsheet for some time. We have always been “pay yourself first people,” so the only money in our household account is the money for our regular expenses.
However, as costs continue to increase, I’m finding it necessary to tighten things up a bit. (We have experienced an 15% increase in our cost of living over the last two years without any change in lifestyle.) Therefore, I am also trying to decide if my spreadsheet is still the best tool to use. I’m a little wary of budgeting apps because of security reasons. I wondered if anyone had had a negative experience related to that.
I use YNAB (You Need A Budget). It is not free ( I believe there is a 45 day trial period) and has a learning curve but there is tons of support and I feel it is a real budgeting tool rather than a tracking tool. The basic premise is you give every dollar a job the moment in comes in and the program recognizes that no one month is the same so you “roll with the punches” and everyone’s life priorities are different. Also, the goal is to get to a point that you are using last month’s income to pay this months bills or further. Some people can accomplish this quickly and some can take a long time.
The other cool thing is you can take the live classes or watch the gazillion support video free and use the concepts with old fashioned pencil & paper but for me the cost if the program is worth it, I could never do paper & pencil.
Finally, there is a Facebook page where you can ask questions, if you get stuck, of other users.
You can also view the “getting started” or any other videos or classes before starting the free trial to get the gist of YNAB.
The word "budget" is sounds so formal and difficult. It's not. If you just start tracking expenses and take one month at a time, it really is a helpful thing. It has reduced stress, made it easier to not panic when unexpected things happen, and improved communication in my marriage.
I started with the free version of Every Dollar (Ramsey Solutions) and within a month paid the $60 annual fee to connect with my credit card. The app is easy and fun (that says a lot - I am not young.) After about two years, I found I wanted to dig in a bit more so I downloaded a free spreadsheet offered by Stephanie at sixfiguresunder.com. I used it as a template to create my own Excel spreadsheet which, even after three years, I still tweak on occasion. (the purpose of the budget/expense tracking is to serve you, not to be a stumbling block) My credit card has an option to send me a text for each purchase, so I just use them to update the spreadsheet. For things like checks (yes, there are those of us who still use them), automatic bank withdrawals, and cash I have to work a little harder to remember to enter them into the spreadsheet but it's habit now and doesn't take much time if done every day or so.
Whatever you decide on, don't quit after the first month -- that's the hardest.
This time next year, you will be so glad you did!!
I have long wrestled with budgeting, which was not helped at all by the recent rises in food and fuel costs. What my husband and I finally settled on is the major fixed expenses (insurance, property tax, mortgage or car payment) are paid by direct draft out of a bank account that half of bi-weekly is income direct debited into.
The paycheck is further divided into accounts for household expenses, retirement savings, and targeted savings, which are things like emergency fund, major pet medical, and Christmas. Targeted savings are in a higher interest-earning account since they will not be used often. We prefer to pay for direct debit subscriptions and utilities with a credit card that earns some annual rewards. If there are any billing screw-ups, it's Visa's money that's hung up and not ours while we get it straightened out.
My major role in this is to shepherd the smaller, daily expenses. I set budgets for those and deploy all my frugal skills to make them work. To that end, having set months in which only essentials are purchased are very helpful.
I am old enough that keeping track of finances on a computer is foreign to me. I have had a pencil and paper budget all of my adult life. As soon as funds leave the household for any reason, they get subtracted from their account. (If I paid with credit card, I treat it like I paid cash.) Of course all months are a little bit different so if there is increased outgo from one area, I "rob" a different category. This pretty much happens every month as life...happens. I do find I need to update the monthly budget at least once a week, if not more. Any longer than that and I have forgotten where I spent money.
Savings is automatic. I can remember when we were thrilled to have $15 per week automatically deposited in savings. Wasn't much but it started to add up so there was always a cushion for the unexpected. Now, we're retired and we still put a large chunk away each month. I don't know why exactly, other than I would feel evil if I didn't save.
When there are really big budget changes, either income or outgo, I do a completely new master budget. For instance if we bought a car and had to make payments, we would need a major reshuffle. This year we got a leap upwards in our social security income, so I redid the master budget to reflect more income.
Most importantly, you have to do what feels natural to you.
Check out SixFiguresUnder.com - Stephanie uses YNAB and shares lots of details on their setup. YNAB charges a monthly subscription fee, but if it saves you from frivolous
spending, it's probably worth it.
I automate my budgeting as much as possible so I don't even have to think about it.
* First thing's first: I pay #1 first. My wife and I each get an allowance from our paychecks. This is for our own spending (hobbies, lunches, whatever we want to spend it on.)
* I then have money sent to another bank account for separate savings.
For general tools I use:
Mint (free from Quickbooks)
Some basic spreadsheets I created in LibreOffice.
The clearest instructions I've found are from Ramsey Solutions, link here: https://www.ramseysolutions.com/budgeting/how-to-make-a-budget
For the first extremely tight financial years of our marriage, we used pencil and paper to see what expenses were coming up, compared to what money would be coming in. Then I knew exactly how much could be spent on groceries and would often ask the checker to subtotal the absolute necessities before adding in any extras. It was awkward, but kept me from overspending.
Make sure there is a category for "blow money", even if it is minuscule, so that no one feels like a slave or a prisoner.
Nowadays we just live frugally, so that there is extra for splurging. If it is a big item, we discuss it, but after 36 years of practicing living within our means, there isn't much disagreement, for which I am deeply thankful.
@Kristen, your current financial situation sounds very stressful. My gut reaction would be to spend as little as possible, but also, to earn as little as possible!
I used a good old pen/ paper until 2022. I got a notebook and added 1) our monthly income 2) and tracked what/where we were spending for a month. Then it became clear how to stay within our income and even save some by allocating the money we had into a few need/ want categories. Basically, we cut our coats according to our cloth. It was simple and eventually became easy ;).
Budgeting was simple because we never focused on getting more ( obsessing over deals, hoarding freebies/ samples, compromising on quality despite having the money for it, etc.). It was challenging at first because we were not allowed to take/give any form of interest because of our faith, and being in debt was highly discouraged as well.
I started saving for an emergency fund once I got the hang of it in a few months. I started my savings in a disposable cup- a quarter at a time which helped inculcate the keystone habit of being in charge of your finances (thank God).
I use google docs now ( to limit phone/ screen uses). I still religiously add my spending every day, no matter how small. We give 2.5% ( a mandatory charity), and then we give up to 10% voluntarily. I hope this helps.
I quit going to thrift stores. No more “ oh, that’s such a great buy.”
I give every potential purchase a thorough interrogation....will you make me happy or will you gaslight me and end up in a donation box. My money usually stays in my pocket.
I have to keep it simple! For our family, we live off of 70% of our take home pay, 20% goes to savings and 10% goes to tithes.
My husband’s company matches retirement up to 6% so that’s what we have automatically deducted every paycheck.
I usually divide the 20% savings evenly into an emergency account and a regular savings account. Our emergency account is for living expenses should my husband be out of work (we’re a one income family). Once the emergency account is fully funded, all 20% will go into our regular savings account.
Also, I consider savings such as holiday and vacation as a monthly bill which comes out of the 70%.
I hope this makes sense!
@Suzanne R,
We each get a small weekly cash allowance for eating out or whatever we wish to use/save it for.
Wh have a weekly gas and grocery budget that is purchased using a debit card and is tracked via online bank statements and written in our checkbook balance booklet.
Our monthly bills are written in a small planner and paid with either check or drafted from our online acct. These are also written down in the checkbook balance booklet and tracked vis online bank statements.
My husband and I both had Excel spreadsheets of our own budgets prior to when we got married, but since his was a little more detailed than mine and he cared more, he handles most of our finances.
Now we use Google Sheets instead of Excel.
We have separate categories for tithing, missions, clothing, groceries, saving for our next car, gas, home maintenance, the various insurances and utilities, cell phone, gifts, and more. Our grocery budget has always been decided by a conversation between the two of us. We look at what's realistic and at times have had to reduce what we put in other categories to increase our grocery budget. Those conversations usually come after 3 or 4 months where I just can't make it work with the budgeted amount we have. Since I do 99% of the grocery shopping, I keep a running tally in my planner of how much I have spent that month. If I go over a little, I try to be under by at least that much the next month.
I think that tithe might be the only category that we do a percentage. Everything else is a set dollar amount. Many of those are fixed numbers, the others are just trial and error to figure out what works well for our family. For categories that vary over the course of a year (like our heating bill), our goal is for it to balance out over the 12 months. Since we have money in savings, we are able to be flexible if we need to be. There are times where a category gets behind (overspent) and it takes a little time to catch up. There are other times where we take from categories that are doing great to help one that is behind. For example, if we have a lot of extra in the gas category but are behind in clothing, we can take $50 from gas and move it to clothing.
I agree with others who have mentioned having a specified amount to spend on whatever you want, no matter how small it is. Right now, I have $20/month. It's not much, but it's enough and I love the freedom of it coupled with how it makes me really think through if I want something. I'm not good at minimalism, so this is good for me. (My monthly amount used to be higher, but I knew I could do with less and there was a season where we were struggling to figure out where we could find more for groceries, so I offered to reduce my fun money.)
I use Ibotta and sometimes do really well with it, sometimes not so much. But I do enjoy the "win" of it.
We pretty much track every penny. Part of me knows that it's necessary in this season of one income and 3 kids, but I also think we'd probably do it anyways because of our personalities and how we want to steward what we have.
That was so long. Sorry! Hope there's something in there that's helpful or encouraging, Reese!
I use google sheets for my overall budget. I have consistent income, so I do a zero-based dollar budget which means every dollar is assigned a specific category. I have multiple savings accounts at Capital 360 for Emergency funds, car fund, home repair fund and Christmas fund. I also have a smaller sinking fund at my local credit union. All bills are set up to automatically bill to a credit card that I pay off every month and treat it like a debit card. I do use the free version of EveryDollar, but only for my "spending money" - variable bills like utilities, food, spending and gas money, so I can remember how much _____ money I have when out and about.
I have been budgeting for years and I don't really have any surprises anymore. The most important advice is to just start. Every single savings account I ever started began with $25 a month. If you need to start an emergency fund with $5 a month, then do it, it is more important to get in the habit of savings. Best of luck to you and happy budgeting!
Hey Reese, When I was digging myself out of debt and paying for my daughter's college I found a free expense tracker app; there are loads of free ones. I tracked for one month, then two, it really gave me a sense of where the impulse spending was going. Once I got a handle on my impulse spending I started to pay down the debt and put a little towards college savings. I was super visual and kept the two accounts Debt repayment and College Savings in a bullet journal that I could refer to regularly. Having a purpose for my money changed my relationship with it (I used to either ignore or fear facing my finances). Knowlege is power, you can't manage what you don't measure!
When things were really tough, I didn't really have any "fun money". I will say just like a diet, don't go too strict or you will start to lose interest and feel like you're never getting anywhere. The rewards I gave myself for getting out of debt and saving more were usually free or really inexpensive. Reading personal finance blogs (like Kristens!) can be very motivating as well. Knowing you're not alone in this is important as well, maybe finding a personal finance accountability friend can help.
It can seem overwhelming but over time, a regular accounting of how you earn and spend your money will change your feelings about your finances. Best of luck!
I used paper and pencil, with columns. My columns were:
1) Necessities, such as utilities, doc visits, and fixed expenses;
2) Food (and toiletries), the basics like eggs, butter, and chocolate chips but not indulgences such as expensive shampoo;
3) Semi-luxuries, which are things that you don't strictly need to buy but generally do, such as birthday cards and (used) books; and
4) Luxuries, such as sodas and eating out.
Then I wrote everything down: income, outflow and what it was. When I was really - and voluntarily - broke (not poor, mind you, but broke), I included pennies I found on the ground. What counts as a semi-luxury also could change: on a very small income, all soda was a luxury. When I had more income, soda and candy might move to semi-luxury and I'd keep a side account of what I spent on it.
For me, "spend less on luxuries" is a workable strategy, which is not surprising to me: moderation has always worked better for me that strict rules. YMMV.
Our budgeting system has evolved over the last few years. As a former cpa I live working in excel. I would download all of our transactions, categorize them and set up a spreadsheet tab to creat income statements by month. However, between caring for 2 young children, purchasing and renovating a house and 2 major medical diagnosis in the past 2 years it was becoming a burden. I was feeling guilty about not budgeting even though we were living well below our means and meeting our financial goals (my husband and I are naturally frugal and I’m an under buyer). So here’s what we settled on:
- I don’t track groceries, gas, utilities or recurring expenses such as mortgage, tithing, insurance, etc.
- we have personal accounts for each member of our family (in which everyone gets a set number deposited in their account each pay period). We also have separate savings accounts for travel, home repairs, car repairs and medical bills. I do track all of these and reimburse our operating account (checking account) as we make expenditures in these categories (keep notes in phone of my personal expenses and when I make purchases for my son, my husband does the same, it’s our respective responsibilities to keep track of). Also, the other expenses are pretty infrequent so it’s not terribly hard to track but I’ll look over our credit card transactions after a trip to make sure I caught everything.
- we max out our 457b, 401k and hsa accounts.
- we are setting up automatic savings to our taxable accounts to meet our other financial goals.
- we have a chat if either of us makes big purchases for the home (electronics, furniture, etc).
This works well for us.
######Nothing to do with budgeting, sorry.#######
Kristen, I've been in the hospital since last Wednesday and I wanted to say thanks to you, future nurses and all the current nurses. You do an amazing job. There's a peculiar loneliness to the hospital, and a sweet nurse provides much-needed comfort. I will be sending these ladies a large gourmet cookie tray once I get out, unless I think of something better.
@Rose, oh no! I send best wishes to you and all of your nurses/aides/etc., and hopes for a speedy recovery (or at least a speedy return to previous status quo).
@A. Marie, Ha! Remember my son calling me Stagger Lee? I eventually became paralyzed with life threatening potassium deficiency, kidney damage and Campylobacter infection. But I'm much much better. Home in a few.
Oh my goodness, Rose! I'm so glad you got help for what was wrong, and I hope you able to get back to at least semi-normal at home soon.
@Rose, I think the gourmet cookie tray sounds like a great thank you.
@Rose, What a perfect way to describe it, "a peculiar loneliness to the hospital." I have felt it every time I've been hospitalized but did not have a name for it. I hope you feel better soon!
@Rose,
The hospital is a lonely place. I hope things will improve for you soon.
I use gnu cash to track all our expenses and have a general idea of budget from there. It’s pretty loose though and we just try to spend as little as we can. I don’t track monthly but more year to date which helps keep high spending months balanced with low spending months.
I love this question, and I love hearing how others use a budget system. Personally, as the financial planner of my family, I keep things very simple with a Google sheets spreadsheet. I list the months across the top columns, then I have our income listed for the first rows. A few spaces down I write down all the categories for expenses. I get pretty micro in my listing and have things broken down into about 40 different categories. I update the spreadsheet every couple of days and have the sum of our income minus expenses at the bottom so I can always see how much money is left in a month. I've tried some apps, but I find the spreadsheet to be easier to work with personally! I also have savings and retirement on auto draft, and put that and any recurring payments (phone, mortgage, etc.) in as soon as a new month starts. Having the savings stuff set up on auto draft helps me because I know that money is coming out and can budget accordingly with what's left.
I use You Need a Budget because, well, I NEED a budget! I am a natural spender and would spend my last cent without much thought (and did, for a long time) so a budget helps keep me intentional and helped me to pay off 45k in debt. Over the years I have used cash envelopes, my own spreadsheet--but I am not great at Excel--so I also tried other people's more advanced spreadsheets that I paid for. I also used a notebook and pen for a number of years and tried some free budgeting software including Every Dollar. I finally landed on YNAB and haven't looked back. It is a little pricey in my opinion, but it helps me soooo much. I like to get very granular with how I track my spending and I track all my expenses and have a zillion set-aside accounts that YNAB makes easy to manage. I also love the reports function so I can easily see a pie chart of what I spent in certain categories over specified periods of time. I realize you can do that with a spreadsheet, too, but as noted above, spreadsheets are not my strong suit. YNAB has a lot of functions I don't use - I don't set targets for savings (well, in my brain I do, but not in the program), etc. and I manually log all my purchases because it helps me to really see what I have really been buying so its not linked to my bank accounts, although it can be. I do like having the app so if I am out shopping and see a pair of shoes or something, it is easy to check to see if I have money in my clothing budget. As others have noted, there is a learning curve, but the free online classes will get you up and running in no time. I sound like a commercial for YNAB, haha. But I just really like it and having been using it for 10 years or so.
We have used the same method for over two decades. We kept a list of where our money went for three months, which gave us a pretty exhaustive list of our spending categories. From that we used Access to start tracking every penny we spend every single day, assigning each penny to a category. Every entry gets a number that we put on any receipts that will be tax write-offs, and the receipts go in an envelope for that month. So for 2022 we have 12 envelopes of receipts and it is easy to find things for tax returns. Tracking every single penny spent is so automatic now that it takes very little time to make sure it is done each night before we shut off our computers and go to bed. When we started keeping track, it impacted our spending enormously because we were horrified to see how much we were spending/wasting/could have gotten some other way. For example, until we started keeping track, I had no idea I was spending over $3,000 for books and magazines. I immediately switched to using the library and now I spend only about $150 on books a magazines, partly because I have three friends who are authors and I want to support their art. (I asked my husband why he never said anything about how much I spent on reading materials and he reminded me that when I agreed to marry, I said he could never complain about how much I spent on books, so he kept his mouth shut. Unfortunately, that would not have stopped me, had the roles been reversed!) Within a year, we had radically changed how we spent our money, all because seeing the totals on a daily, monthly and year to date basis really shined a light on things. We did design a budget, but once we paid off our house, grad school loans, and each of our vehicles, we no longer really needed one. Our spending was also reduced because we decided we wanted to have our house and everything else paid off so that we could work only at jobs we liked after we reached 50, rather than ever feeling forced to stay with an employer. Pretty much every penny was evaluated on whether we wanted to trade our lives for that item---it helps to think about how many hours of labor/your life you exchange for something you are about to buy. I can't tell you how many times I have decided I didn't really need to spent X minutes of my existence on paying for this or that. It does not mean we have not made spending errors, but I think we made a lot more before we started keeping track of every penny spent.
@Lindsey, your approach sounds a lot like the one in the book "Your Money or Your Life." Although I never got down to the nitty-gritty of doing charts the way you or the YMOYL authors (Joe Rodriguez and Vicki Robin) did, I too adopted the general approach. In every major financial decision DH and I (and then I alone) have made, I've chosen life over money.
For food budgeting:
The USDA has a chart for food costs for individuals and families on different expense levels: thrifty, frugal, average, high, very high. I use that when moving to a new city to set a starting budget and figure out how to work it for my family from there. They publish the charts monthly, so it keeps up fairly well with current costs.
This might seem convoluted to some, but it works for us. We have five categories:
-Giving
-Childcare
-Mortgage
-Savings
-Credit Cards
We figure out giving from the previous month's income, and childcare based on how many days off school the kids have. Mortgage is fixed, so that doesn't change.
Whatever's left we can save or spend. Savings includes things like emergency fund, car expenses, home repairs and vacations (and retirement), so when we need the money I can transfer it in.
I monitor our credit card to make sure our spending is on track. Both my husband and I have agreed to talk with each other before we make discretionary purchases just in case some small emergency came up.
YNAB—I’ve been using it consistently for 4-5 years, and I will never give it up. I tried mint, pen and paper, my own excel sheet, and YNAB is the easiest, most consistent, and most helpful in terms of goals and planning that I’ve ever used. Worth every penny I pay for it.
I’ll echo a few folks who mentioned a slight learning curve, but it’s worth figuring out. And the support resource are A++. I often feel bad I don’t spend more time taking advantage!
I used Mvelopes for years, but it shut down at the end of 2022, so now I’m learning YNAB. I have variable income so I budget based on the low end. I include the bills and the basics and the things I’m saving for - like a Christmas budget, or yearly expenses. Then when I inevitably bring in more than that, I divide it among the more fun/optional categories. Specifically, I divide my monthly leftover (I’m debt free) in thirds between long, medium and short term. So 1/3 will be an extra bump to my retirement fund, 1/3 will go to my travel envelope or saving for a new car, and the other third will go to bump up near term fun stuff like boosting our dining out envelope or getting manicures or replacing a worn out household item. We’re pretty minimalist so it’s kind of hard to spend in that last category, and honestly, I’ll often do less than a third there, but at least I give myself the option.
For digital “envelopes”, my husband and I use the Buckets feature on Ally Bank. We have ten buckets set up to allocate our savings, but it is really all in one single account with subcategories. It’s fabulous!
YNAB. “You need a budget” Google about it, will find articles etc that explain it. I’ve used it for years, it’s fabulous.
(With hubby) we use an Excel spread sheet and enter EVERY spent and every pay into it, even if it's 1$. We don't budget specifics amounts for x-y-z, but the spread sheets tells us where our money is spent year after year. We mostly pay by credit cards (with cash back rewards and paid in full each month, so no interest), which makes it easier to track expenses.
As for how we share the expenses, we put our paychecks into a joint account and then we each take a fixed amount from it each month for our personnal expenses like clothes, hobbies, etc. That way, there's never any fights about who is spending how much on what. This money is ours to do whatever we want with it. All the rest (family necessities like housing, car, food, cost related to children, etc) is taken form the joint account.
@Isa, Pretty much identical to what we do.
The value of doing this, for me, is it forces me to re-handle every financial transaction by virtue of logging it into our spreadsheet. I also add an electronic note to indicate precisely what was purchased. It's always interesting to look back and see if I'd/we'd make the same purchase decision again. In Year One of doing this, the answer was often, 'What we're we thinking???' Nowadays, some 15 years into tracking our finances, it's very, very rare that we regret an expenditure in hindsight. I think it's brought us to a place of deliberating spending, vs. impulse spending, if that makes sense.
Pen & paper
1) Automate savings (treat it as a monthly bill-make a category for future savings like retirement and "this year" savings like sports registration, insurance, vacation-also known as sinking funds)
2) Contact your payroll department and ask if there is a group retirement savings program. That contribution comes right off your paycheck.
3) When using numbers for income, lowball the number. When using numbers for expenses, highball the number. Whenever you receive more or a bill is lower that expected, that extra all goes to debt.
4) On a weekly basis (or whatever works for you), set aside an amount in your money book for groceries/gas/entertainment/clothing/gifts/other and stick to it. I use 2 methods depending on how I'm feeling. I'll get out the amount in cash (ex: $300) and divide it with colored paperclips and keep the cheat sheet in my wallet. I use this little guide:
FOOD 50% (ex: $150)
FUEL 20% (ex: $60)
ENTERTAINMENT 10% (ex: $30)
CLOTHING & GIFTS 10% (ex: $30)
OTHER 10% (ex: $30)
I read all of Gail Vaz Oxlade's books and while they are a bit dated now, she explains things really well.
The other method I use is credit and then pay off immediately. I write my allowable spend in each of the above categories at the top of my grocery list and put the grocery amount in my calculator at the store. As I'm shopping, I'll subtract each item I buy so I can see how much remains. That way I put the priorities in the cart first and then throw in extra if I'm able. As I go around and do my errands, I keep track of what I have to spend on that item (gas, for example) and I pay using credit. I pay the credit card as soon as I get home with the amount I had set aside in my money book. I prefer this method since I get rewards with my card and you have an easy way to track how much you spent in each category at the end of the year. Your challenge is to stay under the number so that when you pay that money to the card, not only is it covering ALL the purchases you just made, the extra goes towards any debt you may have! Some weeks are easier than others. But this way, you're not going further into debt. You are living within your means.
I'm here to represent those who just cannot with budgets but still want to and manage to save money. We go about it the opposite way sort of?
1. My husband and I look at all payments that we HAVE to make (mortgage, utilities, etc.) and all savings we can MAX out (like RRSP, RESP, etc. emergency fund of living expenses for 4-6 months), and see if we can pay our regular costs (food, medicine, etc.) with what is left. If it looks doable, even if tight, then we forge ahead, and if not doable, then we reduce savings until the regular costs fit.
2. I set up all automatic transfers for mortgage (weekly accelerated, every cent of interest saved counts!) and all savings, so I never have to make a decision again on that.
3. I set up all automatic transfer from as many other payments that I can: credit card in full every month, property taxes, etc. Again, no decisions again.
4. I set up automatic transfers my main account to another account where all other bills get paid from. less decisions!
5. I monitor my bank account almost daily to see where things are at. If things start looking iffy, then I'll put a ban of purchase non-fresh foods, or restaurants or anything else, until we stabilise.
6. Anytime I get a refund (medical insurance, or whatever) I will put that amount towards any dips into line of credit I may have done due to cashflow issues, or put it into savings, or if savings are good, then it can stay in the current account.
Basically, I set up our finances in a way to reduce to max savings and the absolute minimum the number of decisions I have to make. Sometimes, there is a cashflow problem and if it's for a few days, I'll leave it from a line of credit then pay that back, but if it's a week or more, I'll take it from my emergency fund to avoid interest, but I'm ok with a dollar or two of interest in exchange for everything else.
Anyway, this is what I slowly came to after years of trying budgeting and finding that way too stressful. This is easier for me because I don't have to think too much about it. And we have managed to increase our savings progressively. When we started this way, our savings were like a sad, but still good $50 month, now we can max out many things, so it works for us.
So just another idea!
YNAB is the first thing that clicked for me. At first, I really was just tracking my money but a couple years in I finally saw the benefits of budgeting. It's so nice to see the money waiting there in it's own little category to do random things like renew a passport or pay for vacation. I'm naturally a spender but I'm working on being a reformed spender! My biggest thing is staying out of fabric stores. I love to sew but I realistically have more projects than I can make in this lifetime. I've learned so much being here the last few months so thank you all!
I am a spreadsheet girl...My income has changed quite a bit over the past couple of years (for the better) but I still have some debt.
When I get paid, I just try to be thoughtful. What is the best use of this money. My main focus is on debt, but I have some home repairs that have gone undone that sometimes are a more pressing need.
I want to mention a digital thing that I am using which is Qaptial. It is an auto savings app that rounds up your purchases. You can set other goals or make other withdrawls etc. It really helped me get to my first emergency fund. I absolutely love it.
I write down everything I spend in an old school spiral notebook!!
I like it! Frugal and simple.
I really enjoy using a spreadsheet that way you can see where your money is going and then work out a plan for saving money. I also try to spend money and pay on those charges that we have due unexpectedly in the year, that way when the bill is due it is paid for in advance and you don't have to worry about it. We own a time share and I try to pay it off ahead of time, plus I like to pay as much as I can for our yearly taxes every year. This year I am planning on saving as much as I can for those unexpected things that pop up! We also had a flat tire and of course it could not be fixed so I had to buy one. I was so thrilled that I found one on sale on Ebay for $57.00! I was told the cost of the tire would be $169.00. I was so pleased with my purchase and the savings. I hope this helps!!
"I really enjoy using a spreadsheet..." = a thing I will never say. lol
After several different tries, I finally decided what worked best for me was old fashioned pen and paper! For each month I write the pay dates and what bills (fixed expenses such as mortgage, electric, insurance, etc) and other expenses (hair cut, vet, oil change, etc) are in that pay period. I then know when I can pay extra on a bill, do a big pantry shopping trip, buy sneakers, go out to eat, or what have you. We automatically have money put directly into our savings from each pay check so what is deposited into the checking account is for bills. I don’t budget for groceries or gas but I know how much is available and those don’t wildly vary unless it’s a holiday or vacation which has then been accounted for. Good luck!
I currently use a spreadsheet method and reconcile it monthly.
In the past and after a life event that left me in debt, I went to the envelope method. Housing and utility bills were all automated. For utilities, I used the highest month for my budget. Everything else was done with the envelope method. I also did the 52 week savings plan (save $1 week one, $2 week 2... $52 week 52). It was a very tangible way for me to feel in control of my money, which I very much needed at that time. I calculated to the penny weekly. Any "extras" (like having a low electricity bill in May or leftover gas money) went to paying off debt or into the savings envelope.
I've done budgets many times, but I gave them up. It seemed redundant to put everything into an Excel spreadsheet, then copy the same bills into the next month, just changing the amounts when required. I use Quicken exclusively and religiously. I record every single expenditure. We use 2 credit cards for everything (except utilities & mortgage) and those 2 credit cards are paid off every month. The utility bills are equal pay so only change twice a year. Instead of a budget, Quicken is set up so that all bills are on a "Bill & Income Reminders" page. All I do is post all expenditures a month ahead into the checking ledger. That way I know pretty close how much we need for the next month, give or take a changing balance on the credit cards. By the middle of the next month after reconciling the bank statements, I know exactly how much is left in the checking at the end of the month, which I then move all or most of any excess into the savings account. Since the credit card ledgers have a running balance, I can keep an eye on our spending just by looking in Quicken. And at the end of the year (if using categories), most everything transfers into Turbo Tax making tax time much easier.
I use multiple savings accounts. I have one for vacation, one for home improvements (we bought a fixer upper 12 years ago and we are still working!), one for home maintenance, one for cars (either saving for a down payment on a new one or repairs, tires, etc.
I like this because I can see it all when I log onto my account and then I know what I have earmarked.
From there I have a grocery goal each week.
My budgeting methods have changed over the years but the one approach to remain constant has been a spreadsheet where the monthly and annual budget live. I have used Mint, have heard great things about YNAB, but would like to highlight Personal Capital - it's what I have been using for the past 5 years and I love that I can see all my accounts in one place to track our networth AND see our budget. It has the option to show monthly, last month, annual, and custom expenses AND income so when it comes to creating an accurate budget Personal Capital has been amazing! I will say the budget aspect tracks very accurately but I still manually enter month to date and year to date spending into my spreadsheet because it's been a constant for over 15 years.
@Kristen - Much peace and hugs sent your way! Thanks for continuing to write and engage with this community. I was 23 when I got married and 24 when the divorce was finalized; it was painful, hard, disorienting, but mostly I was so embarrassed. I hate that you are going through the loss of your marriage but thank you for being willing to share.
Combo of systems over here. I have a monthly budget that I created and revise when major life changes happen- or when I get anxious- I might compare to reality 1-2/year just to make sure I'm on track(ish). I use a credit card associated with my bank so it's all in one app and review their budgeting/expenses tool every so often (and pay off the CC every month). I also track my various accounts- in a google spreadsheet- just plugging in account balances every month (and I have some calculations in there to see how things adjusted in categories over the last month, etc). This helps give me an overall perspective- especially with market fluctuations- it's easy to scroll to October 2020 and see how my accounts have (mostly) grown overtime. It's also all in one place so I don't forget about accounts and my partner will have some kind of notation if something should happen as I do all the finances in our house. This keeps me motivated to keep up my frugal-ish ways (which are also very in line with my priorities). Finally- I put as much on auto-pilot as I can- auto-pay for bills, $ into a designated savings accounts each month (for car, home repairs, animals, life insurance, emergency, travel, etc), ROTH IRA account, 401K plan at work before it hits my paycheck, etc. It's a "set it and forget it "(and adjust if needed) mantra.