According to PricewaterhouseCoopers, the average Christmas budget will amount to $1,430 on gifts, travel, and entertainment in 2022 — very similar to the $1,447 they spent last year._[1] Eye-watering figures when one considers 45% of Americans have no savings._[2]

Holiday debt is the gift that keeps on giving, but you don’t have to be the intended recipient.

If you’re looking for ways to enjoy the holiday season without breaking the bank, here are several cheery ways to celebrate Christmas on a budget. From making your own decorations to finding creative gift ideas, these tips will help you make the most of your holiday season without spending too much money.

1. Start by Listing Anticipated Expenses 

Having a topline figure in mind helps prevent spending creep, and serves as a psychological accountability partner. To get started, simply jot down a Christmas budget list of the common holiday expenses you may encounter. 

Possible Holiday Season Expenses:

Next, set reasonable boundaries for whom you may choose to buy gifts. Setting boundaries can help ensure that everyone involved in the gift–giving process is comfortable and that expectations are managed. Boundaries can also help to keep the focus on the spirit of giving, rather than on material possessions.

Possible Gift Recipients:

• Spouse
• Children
• Extended family members
• In-laws
• Nieces, nephews, goddaughters, and godsons
• Teachers
• Neighbors
• Bosses, coworkers, secretaries, etc.

When you’re budgeting for Christmas, the costs can add up quickly. Not all of these expenses will apply to you, but it gives a few examples of costs you might not have remembered. 

And while the average American household considers a Christmas budget per child of around $200 to be the norm, experts suggest far less. At just $75 per child, their suggestion is to invest in year-round core memory events as opposed to a once-yearly toy dump._[3]

As you consider the expenses you’re responsible for this Christmas, take a look at the next step.

Related: 5 Financial Mistakes to Avoid This Holiday Season

2. Create a Frugal Christmas Budget

The key to enjoying Christmas on a budget comes as a surprise to exactly no one — merely having a budget in place. Your completed Christmas budget will show you an overall picture of your projected costs and help you save money in the long run. In this step, you’ll assign a dollar figure to each anticipated expense to give you a clearer picture of how much you’ll be spending.

 

 

 

 

 

 

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Keep in mind that it might take a little bit of time to complete this step. For example, you might look up the cost of a professional photographer, but then realize you have the perfect selfie to put on your Christmas card instead.

Or, you might think you want to buy new Christmas decorations for your front lawn, but change your mind once you see the cost.

Spend some time doing a little research about the items on your list and try to come up with a total projected expense for the season. If you’re not comfortable with this total number, move on to the next step.

3. Find Ways to Lower Costs

You might be looking at your Christmas budget with fresh eyes and seeing a number you simply can’t afford.

Christmas might seem expensive, but it doesn’t have to be. Furthermore, you don’t have to go into credit card debt to make it a memorable and fun holiday season.

Here are some ideas to help you have an enjoyable Christmas on a budget: 

• Play a gift game. Many families now play games like a white elephant gift exchange or hot gift potato, which means they only have to buy one gift for the adults in their family. Suggesting this can save hundreds of dollars every Christmas. Plus, it’s a fun way to spend time as a family.

• Stick to the four-gift rule for your kids. Kids have so many toys these days. They can easily become overwhelmed, especially when the time comes to clean the playroom to make room for new toys. The four-gift rule says that you can buy your kids something they want, something they need, something to wear, and something to read. These four presents should be more than enough for them to enjoy their holiday season.

• Consider thoughtful Christmas gifts on a budget. Budget Christmas gifts are great for teachers, co-workers, and neighbors. If you’re a crafty person, take a shot at some homemade gifts. A nice letter and a $5 Starbucks gift card can also go a long way. Teachers love gifts that are from the heart – a thank you note from your child would go much further than another coffee mug or candle.

• Have a potluck. Even if you love hosting Christmas dinner, you don’t have to pay for the entire meal. Ask your guests to bring a dish.

• Use coupons and shop at discount stores. T.J. Maxx and Marshalls are ideal stores for you to shop for gifts. They have amazing name brands at affordable prices. You can also use coupons when shopping online. DollarSprout Rewards — a desktop browser extension available for Chrome or Safari — allows you to save on gifts in a multitude of ways. You’ll earn up to 10% cash back (or more) at 15,000+ popular online merchants. Walmart, eBay, Kohl’s, Macy’s, you name it. Wherever you do your Christmas shopping you’ll be sure to earn cash back on your purchases.

Related: 75 Creative Ways to Save Money Around the House

4. Look for Ways to Make Extra Money

Of course, you can only cut your budget so much. If you’ve done everything you can to lower the cost of your Christmas expenses but you’re still coming up short, it’s time to hustle. Here are a few ways to earn more money for Christmas spending. 

• Deliver food. Get paid to make deliveries on your own schedule. People don’t like going shopping when it’s cold and snowy outside, so now is a great time to start this side job.
• Complete microtasks. Not everyone has a ton of extra time to commit to a second job or even a fully involved side hustle. Micro job sites allow users to find and complete simple tasks for cash. From spotting errors on websites and data entry to product reviews and feedback, most tasks can be completed in 1 hour or less.
• Sell last year’s gently used gifts. Getting rid of some of your old gifts can help pay for this year’s presents. If you have an old cell phone lying around, try selling it on Decluttr. Once your tech is evaluated, you’ll get same-day payment via PayPal or with a check sent by mail.
• Shovel snow. If you live in a cold climate, there are lots of people who will pay you to shovel their driveway when it snows. Start with your neighbors and friends first.
• Work retail. Many stores hire extra employees during the holiday season. It’s a short period of time, but you can earn extra money and score discounts at your favorite stores.

Here is a list of more legitimate ways to earn cash quickly if you need more inspiration.

5. Take advantage of seasonal offers

Stores are clamoring over customers during one of the busiest shopping seasons of the year. In doing so, they’ll offer generous rewards, cash, or steep discounts just to get you in the door. Along with earning more money, you can also find ways to earn gift cards for free. Use the gift cards to buy your Christmas presents or give them away as gifts. 

Some easy ways to snag free gift cards include: 

1. Collect Swagbucks. New members get a $10 sign-up bonus. When you build up your supply of Swagbucks by taking surveys, watching videos, playing games, and more, you can redeem them for gift cards to your favorite retailers.
2. Take online surveys with Survey Junkie. When you cash out the money you’ve earned from completing surveys, you can get paid in a variety of gift cards.
3. Sign up for InboxDollars. Earn a $5 bonus for signing up, which you can get in the form of a gift card to one of dozens of major retailers. Every time you shop online, take a look at current deals and earn cash back for purchasing items on your list.

Remember, Fun is Free

Even though Christmas can get expensive and you might feel pressure to buy many people gifts, remember that fun is free.

You don’t have to spend money that you don’t have this holiday season. Christmas is about spending time with family and friends. There are so many frugal and free activities you can do that will bring you closer together.

You can volunteer at a soup kitchen and help the needy. Spend an afternoon baking bread and cookies with your children. Take a drive and look at Christmas lights. Surprise your grandmother and her friends at the nursing home. Create a silly Christmas dance choreography and teach it to your nieces and nephews.

Related: 9 Christmas Gifts You Should Never Buy for Someone

The post 5 Cheery Ways to Enjoy Christmas on a Budget appeared first on DollarSprout.

The kind that works for any occasion. That’s how I feel about my favorite lightweight cardigan. It’s a great layering piece in the winter. I can wear it over sleeveless shirts in the summer. If I sit in some mustard at my boyfriend’s family barbecue, I can tie it around my waist and no one’s the wiser.

It’s a cold-weather helper, a saver from air conditioning, and, when need be, a stain cover-upper all in one.

When it comes to personal finance, Empower is the only app that matches in versatility.

Empower Review at a Glance

Empower helps you automate your savings goals, budget with ease, and analyzes your finances to provide personalized recommendations for your situation.

Try Empower

$8/mo Price 14-day free trial

DollarSprout Rating Tailored recommendations

The Empower app helps you manage your money using automatic saving, spending tracking, and easy subscription cancellation. The app also provides personalized recommendations to help you save more and optimize your finances.

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Pros

• 14-day free trial
• Interest Checking Account
• Automatically adjusts savings withdrawals
• No transaction or overdraft fees
• Personalized recommendations
• Automatic monitoring of bank accounts

Cons

• Can’t deposit cash into your accounts
• Monthly subscription fee
• No traditional banking services like mortgages or credit cards

What Is Empower and How Does It Work?

Empower is an AI-focused, comprehensive money management app that began in 2016. It provides a secure, central place to manage all facets of your money: your budget, savings, and checking account. The app’s core features include:

• Automatic saving
• Interest Checking
• Budget and spending tracking
• Personalized financial recommendations

The Empower app is like a buffet — you get to choose and use the features that look good to you. For example, if you want to use the AutoSave feature but not the Interest Checking, then just tell the app which checking account to transfer your savings from.

Is Empower Legit?

Empower Deposits are insured by nbkc bank, Member FDIC up to $250,000¹.

Although there are no user reviews on TrustPilot, it has a 4.7 rating in the Apple App Store and a 4.4 rating in Google Play. They are responsive to customer complaints, which generally involve technical issues rather than money-management or banking-related complaints.

Empower has been featured in the New York Times, Forbes, and Business Insider. The app has also won “Best New App” from Time and was awarded “New Apps We Love” by Apple.

Empower Money Management Features

Let’s take a deep dive into Empower four core features: Automatic Savings, budget tracking, smart recommendations, and Interest Checking.

Automatic Savings

Empower’s Automatic Savings feature is similar to other finance apps. You’ll link a bank account, typically your primary checking, to your Empower Account.

Tell the app how much you want to save each week, and it’ll make automatic transfers to your Empower AutoSave Account.

Most banks offer the ability to set up automatic transfers from a checking to savings account. What makes Empower unique is that it analyzes your checking account balance daily and saves accordingly.

They’ll make up to four transfers per week in an attempt to hit your savings goal. If they aren’t able to hit your target savings number in one week, they’ll try to set aside more money the following week to catch up.

The downside to this feature is that you can only set one weekly savings goal. So if you’re saving for several things, like an emergency fund, vacation, and wedding, then you’ll need to figure out your weekly savings goal for each, add them up, then tell Empower your total number.

Since all your savings go into the same account, you’ll need to track your progress for each one individually. A spreadsheet or pen and paper can accomplish the job.

Because of this, Empower’s AutoSave feature works best for one goal at a time. For example, if you want to save a $1,500 emergency fund this year, you can set your weekly goal at $29 and let Empower do the heavy lifting.

Related: The Best High-Yield Online Saving Accounts

Budget Tracking

There are lots of budgeting apps on the market. Where Empower stands out is that it gives spending limit suggestions for your budget categories based on your income and expenses.

You can create your own spending categories or choose from their list. Set your spending limits by week or month. Empower will send you alerts to let you know where you’re under and if any categories are at risk of going over budget.

At the end of the month, you’ll get an expense breakdown you can use to make better, more empowered spending decisions going forward.

Smart Recommendations

Empower’s personalized recommendations are my favorite feature of the app.

Their software analyzes your income and expenses to detect patterns and trends. If the app realizes you’ve missed a payment or been charged more than normal, it’ll send you a notification.

You’ll also receive alerts for things like bank fees, bill increases, missed payments, and if your credit utilization is getting too high.

These features aren’t unique to Empower. But it’s a powerful combination considering the other aspects of the app.

Interest Checking

Again, there are plenty of banks and apps that offer interest checking accounts. But Empower’s stands out in a few ways.

Notably, there are no overdraft fees, account minimums, or card replacement fees. If you lose your debit card, you can freeze it and order a new one straight from the app, no customer service call required.

It also offers the same features as many other interest checking accounts:

• 0.01% APY¹
• Empower Deposits are insured by nbkc bank, Member FDIC up to $250,000¹
• Visa zero liability insurance
• 1% foreign transaction fee²
• Unlimited transfers

With Visa zero liability insurance, you’re protected in the event your card is lost or stolen, and you won’t be held responsible for unauthorized charges made to your account.

Empower’s Money Personality Quiz

Working in conjunction with financial experts, authors, and a psychologist, Empower created a quiz to help you identify your unique money personality. The goal of the quiz is to help you better understand and improve your relationship with money.

After you answer the short questionnaire, they provide you with a summary of your money personality, what childhood experiences likely contributed to it, and an explanation of how their features can help you take charge of your finances in a way that makes sense for you.

For instance, my money personality came back as Stockpiler. According to the results, their high interest rates and alerts will help me feel less anxious about my spending.

People who fall into the Celebrity personality, on the other hand, will particularly appreciate the easy budget tracking to help stay on course and avoid overspending.

How Much Does Empower Cost?

New users can try out the Empower app free for 14 days. After that, you’ll pay $8 a month for access to all of the app’s features, including autosave, and smart recommendations.

This is on par with apps that offer less robust features than Empower. If you decide to stick with it after your first 14 days, the app will automatically transfer the payment from your checking account each month.

Alternatives to Empower

There are several apps like Empower you can try. However, most of them only offer a few of the same features; they aren’t as comprehensive in their services.

You Need a Budget

You Need a Budget (YNAB) is a popular zero-based budgeting.

As the name implies, this app focuses solely on budgeting. Because of this, its budgeting features are more robust than Empower’s. Users create a proactive spending plan and categorize expenses manually throughout the month.

YNAB lacks many of the other features Empower has, like checking and savings accounts, and automatic savings.

Like Empower, you have to pay to use their services after the free trial ends. The cost is $84 a year, or $11.99 for a month-to-month subscription.

Mint

Mint is a free alternative to Empower. The app lets you view all of your accounts and balances in one place, including your credit score, so you get a comprehensive picture of your finances. It also tracks your purchases, and categorizes them for you, and provides tips on where you can cut back and save.

It also tracks your purchases, categorizes them for you, and provides suggestions on where you could save.

However, Mint doesn’t offer services to negotiate with providers on your behalf, you can only budget your money one month at a time, and since the app is free, you’ll see ads from their sponsors and partner companies.

Qapital

Qapital offers similar services to Empower: automated savings, a central place to check all of your accounts, a debit card, and no amount minimums. This app also comes with additional automated savings features, including the ability to create saving rules and save for multiple goals at once.

One of the primary differences between these apps is that Qapital doesn’t offer personalized recommendations. However, you can set alerts to help keep your spending on track.

The cost ranges from $3 to $12 per month depending on which plan you choose. 

Traditional Banks

Many traditional banks are starting to incorporate some of Empower’s key features. They have bill pay services, free alerts, automatic savings, and easy-to-use apps.

You typically won’t receive the same kind of interest rates, and banks often charge high overdraft fees, teller fees, and fees for using other banks’ ATMs. Some banks waive these charges if you keep a minimum balance in your account.

Empower App Review Summary

Though many apps and banks offer similar features, Empower is one of the few that combines so many powerful elements into a single platform. Its most standout features are the smart recommendations and spending limit suggestions.

If you’re looking for a smart app that provides tips tailored to your unique situation, then Empower is a solid option.

If you don’t need the personalized recommendations, then you can easily accomplish your savings goals by opening an online checking account, signing up for free alerts, setting up your online bill pay, and creating automatic transfers to your goal savings accounts.

¹ Banking services for new accounts provided by nbkc bank, Member FDIC. 0.01% Annual Percentage Yield (APY) may change at any time. APY as of October 1, 2021. Empower charges an auto-recurring monthly subscription fee of $8 for access to the full suite of money management features offered on the platform. The subscription fee will apply (a) after the 14-day free trial concludes for first-time customers, and (b) immediately for customers returning for a second or subsequent subscription.

² Empower does not charge foreign transaction fees for the use of the Empower Visa Debit Card outside of the US. However, Visa charges a foreign transaction fee of 1%. Empower does not reimburse this 1% transaction fee on foreign ATM transactions or on any other foreign transactions or purchases.

The post Empower App Review 2023: Pros, Cons, and Key Features Explained appeared first on DollarSprout.

But making a budget can be difficult, especially if you’re not tech-savvy and don’t like updating spreadsheets.

The cash envelope method can help people who want an easy, low-tech approach to budgeting. It doesn’t require you to register for any apps or pay for software. All you need to get started are some mailing envelopes, a pen, and your cash.

Not only is it inexpensive to use, but this system can help curb your spending and keep you on track. That’s because studies show that consumers spend more when using credit cards compared to paying in cash._[1]

Using cash envelopes can be the easiest budget to use, especially if you find yourself frequently overspending.

What Is the Cash Envelope System?

The cash envelope system turns the budget you made from an abstract concept to a tangible one with the use of physical envelopes. It’s been around a while but was popularized in the last few years as an instrumental part of Dave Ramsey’s Baby Steps.

The way it works is you withdraw a fixed amount of cash from your bank account and divide it into categorized envelopes based on how much you’ve budgeted for each item.

Label each envelope with budget categories such as groceries, restaurants, gas, and entertainment. The only categories you should use envelopes for are the ones where you normally pay, or could potentially pay, in cash. For example, if your utilities are usually paid online, you would continue to pay those directly from your bank account.

How to Use Money Envelopes

One of the big advantages of the cash envelope system is that you can only spend what is in your designated envelope for that month, week, or pay period. To make the system work, you stop spending money from that category when the envelope runs out.

1. Choose your cash envelope categories

There’s no right answer for which categories are best to use for your cash envelope system. It’s important that you tailor the system to your needs, and you should do whatever makes sense for your financial situation.

One practical way to get started is to pick a few categories where you have problems staying on track with your spending and use those for your cash envelopes. For instance, if you tend to go over your dining out budget, you can do a cash envelope just for that line item. Start with a couple envelopes and add more as you get the hang of the system.

2. Decide on your envelope amounts

How you budget the money in the envelopes depends on your paycheck frequency or your overall budgeting strategy. If you get paid twice a month, you can fund your cash envelopes when you get your paycheck.

For example, if you budget $400 a month for groceries and get paid twice a month, you’ll put $200 in the grocery envelope each paycheck. If you get paid weekly, you would put $100 in the envelope every week.

Base your envelope amounts on your current budget. Try to account for any extra or irregular spending such as lunch out with a friend so you have enough money available.

Related: How to Save Money on Groceries

3. Set up your envelopes

Once you’ve decided on the amounts for each category, it’s time to set up your envelope budget system. All you need are envelopes and something to write with.

You can buy a box of envelopes from the dollar store and write your categories on them. Using color-coded envelopes makes this system a little easier and more enjoyable. If you have construction paper around the house, you can try to fashion your own simple envelopes.

Since many greeting cards come with different color envelopes, you can also collect some from the next round of birthday or holiday cards and use them as your cash envelopes.

Once you have your envelopes, put the allocated amount of cash into each one. Try to keep all of the envelopes in one spot in your house, preferably near your keys or purse. This way, you remember to take them with you when you leave.

4. Spend your cash

Once you have your cash envelope system set up, you’re ready to spend the money. For many people, this is the most difficult part at first because you can only use the funds inside your envelope for their designated purpose.

You’ll need to get in the habit of planning so you can have the right envelope on hand. What happens if you head to the grocery store and forget your envelope in the car? Instead of borrowing money from a different envelope, or using your debit or credit card, go back and get the right one. This system only works if you adhere to it.

When doing an activity or buying groceries, track your expenses. Check your envelope before you leave the house to see how much cash you have left. As you’re putting items in your grocery cart, keep a tally with a calculator. Staying on top of your purchases will prevent you from having to put things back when you get to the checkout lane.

It’s also handy to keep the receipts in each envelope so you know where the money went. This is good for staying on track, and it can help you figure out where you’re spending your money and how to budget accordingly.

It’ll take practice, but once you get it down, using your cash envelopes will be second nature.

Pros of the Cash Envelope System

In addition to being simple to set up and use, there are several benefits to using the cash envelope system.

Stay on track with your budget. Because you can only spend the money inside each envelope, the cash envelope system helps you stick to your budget. You won’t go over budget unless you cheat the system.

Fewer overdraft charges. Staying within your budget also helps prevent overdraft charges. Since you’ve already planned out your spending for the month, you know you have the money in your account and envelopes to cover your bills.

Helps curb overspending. If you struggle with overspending, cash envelopes can often help this issue. You can only use what’s inside each envelope, and you can’t borrow from other envelopes, which keeps overspending in check.

Forces discipline. Only spending what’s in your envelope takes discipline and restraint. You may notice once you use cash envelopes that this translates to the rest of your finances, helping you cut back on spending in other ways.

The habits you develop from using the envelope system build on each other. If you’re looking for a way to change your behavior with your money, this is a good method to try.

Cons of Using Cash Envelopes

While there are plenty of positives to using envelope budgeting, the system is not for everyone.

Can be inconvenient. Carrying several envelopes of cash around can be awkward. You need to make sure you always have the right envelope with you. Also, there are some retailers that don’t take cash, which can be a problem.

Confusing at first. Another downside is that using cash only can be confusing when you first get started. If you have several envelopes, you will have to juggle them and make sure you’re using the cash from the correct one. That’s why it helps to make the envelopes look different. Put food stickers on the grocery one or make the entertainment one a fun color.

No credit card rewards. Using the cash envelope system means you won’t earn credit card rewards on your purchases. If you’re used to getting airline miles, hotel points, or cash back, this can be a major drawback.

Hard to keep track. While you can only spend what’s inside each envelope, you may forget to keep track of how you spent it. This means you may have a difficult time figuring out where your money went at the end of each month, especially if you’re not good at remembering to save receipts.

Everyone must be on board. If you have a significant other, they would have to agree to use the envelope system. This means that if you ask your spouse to make a grocery run, they would need to remember to bring the cash envelope to pay for the purchase. If they forget, you risk going over budget or even overdrafting your account.

If you’re looking for a convenient budgeting system that easily tracks your spending, the cash envelope method might not be for you.

 

 

 

 

 

 

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Cash Envelope System FAQs

Cash envelopes can be a difficult system to use, especially if you’re used to swiping your credit card everywhere you go.

What happens if I spend all my cash?

If you spend all of your cash, then it’s gone. It can be tempting to shuffle cash between envelopes if you spend more in one category over another, but for this system to work, you can’t borrow from other envelopes.

There’s also no cheating by using a debit or credit card. The point of using cash envelopes is to stay on budget. This means you’ll need to make a plan and ensure you have enough to cover your needs for that month.

If you run out of restaurant money, you don’t get to go out. Just say no and eat leftovers or invite your friends over to your house. Running out of gas money? Limit your trips, run errands on a bike, ask to go with a friend, or carpool to work. Figure out creative ways to stretch your money when you’re running low on cash.

Can I still use cash envelopes if I do everything online?

Using this system works best when you can pay cash for goods and services. If you do everything online, you can still use the concept, but it requires more discipline.

You can use envelopes to track how much you spend in each category. Write the amount you have budgeted for the month at the top of your envelope and itemize each purchase underneath. It’s like balancing a checkbook. Just subtract each purchase from your balance.

What if I have money left over at the end of the month?

Having money left over in your envelope at the end of the month is a great feeling. You can either roll the money over into next month’s budget or splurge on something fun.

It’s OK to reward yourself by going to the movies or buying a new shirt if you have money left over. This will keep you motivated to stick to your budget and only spend what you have set aside for each category.

Celebrating the little wins along the way has a positive psychological effect. It will help you keep going even when you’re frustrated and want to give up.

Related: 8 Best Budgeting Apps For Every Type of Budgeter

Money Envelopes: The Enemy of Overspending

When you use a credit card, it can be easy to swipe and forget. Looking back at your statements, you may wonder where your money went each pay period. With cash envelopes, you know that whatever you spent was already part of your monthly budget plan.

They provide a physical way to curb overspending by limiting your funds to only the budgeted amount in each category. This makes it a great way to teach yourself discipline and stay on track financially. Cash envelopes may seem like a simple idea, but they can be a powerful way to take control of your spending.

The post What Is the Cash Envelope System and How Does It Work? appeared first on DollarSprout.

Do you choose a 50/30/20 method? Should you use cash envelopes? The range of options can make it harder for beginners who don’t know which method will work best for them.

One of the most common types of budgeting is a zero-sum budget or a zero-based budget. It’s also one of the simplest and most straightforward ways to budget your money. This is how I budget my money, and I find it works really well.

If you’re new to budgeting and want something simple and easy to start with, consider using a zero-based budget.

What is a Zero-Based Budget?

A zero-based budget is a budget where you assign every single dollar a job, even if you have “leftover money” after paying bills. This ensures that your monthly expenses equal your monthly income. With this budget, every single dollar you earn goes toward a purpose.

Just because every dollar has a job doesn’t mean you spend every dollar you earn. Rather, some dollars will go toward expenses and others will go toward paying down credit card debt, adding to your emergency savings, or another financial goal.

This type of budget is a more mindful approach because it makes you think about every dollar and forces you to confront your spending habits.

Zero-based budgeting encourages you to create a budget that incorporates spending and saving. You’ll have some expenses that are fixed, like your mortgage or rent or car payment. But when it comes to variable expenses, like your grocery bill or your clothing budget, you’re more likely to think about what you really need and can afford.

To see it in action, check out our zero-based budget calculator below:

Example of a Zero-Based Budget

Here’s an example of how a zero-based budget actually works. You can use this as a guide to create your own spreadsheet, or you can use our zero-based budget calculator to get started. Just modify the categories and amounts to fit your spending and expenses

Benefits of Budgeting to Zero

There are numerous benefits to zero-based budgeting. Because every dollar is accounted for, you’re less likely to waste money. This can help you reach your financial goals much faster because you know where your money is going.

Every dollar has a purpose

In a zero-based budget, every single dollar has a purpose. If you aren’t sure how much you’re spending each month, this is a great place to start. It’s also helpful if you’re trying to get out of debt and need to allocate extra money toward your debt payments.

When every dollar has a purpose, you have better control over your money. You can effectively spread your money out between monthly necessities and long-term financial goals.

Helps to identify spending patterns

Without a budget, you might not be completely aware of what you’re spending money on. A zero-based budget forces you to face where your money is truly going and evaluate whether that decision aligns with your values and financial goals.

I made the mistake of finding out how much money I spent at Starbucks last year. Let’s just say, I haven’t had any Starbucks since the new year started. We all have our little vices, and when you pay close attention to a zero-based budget, you’re more likely to make better decisions.

You also have the ability to choose what’s more important to you — daily Starbucks drinks or a nice date night, for example. Whatever you decide, this budgeting exercise gives you a reason to evaluate the tradeoffs you make with your money. And this ultimately will lead to better financial decisions overall.

Reach your goals faster

A zero-based budget can be a great tool to help you reach your financial goals faster because it encourages you to be consistent and clear about where your money goes.

For example, if you’ve assigned $300 to the “pay down car loan” category, you’ll be less tempted to use the money for something else. When you can be consistent about payments or savings over time, you’ll reach your goals faster.

Downsides of Zero-Based Budgeting

Zero-based budgeting can be an amazing tool to achieve financial stability, but it also has some downsides. If you’re the type of person who struggles to stick to a budget, consider these challenges before choosing this budgeting system.

It can feel restrictive

Unfortunately, a zero-based budget can feel restrictive at times. You have to decide how all of your money will be used for the whole month before it even begins, so it’s easy to get frustrated when you need to address the unexpected.

Perhaps you only make it halfway through the month before you’ve spent your entertainment budget. Then a friend invites you to a big birthday outing where you have to pay your own way. You can rebalance the budget and borrow from another category, but if this type of restriction will bother you, then the zero-based budget may be a challenge.

Difficult to handle emergencies

When every dollar has a job, unexpected expenses can put a dent in your financial plans.

You can set aside a sum of money each month for unexpected expenses or emergencies, but these can still be hard to predict. Months can go by without any major surprises, and then suddenly your car needs a new transmission.

You can handle this by allocating money to an emergency fund each month and drawing on that fund when large, unexpected expenses occur. Look at your unexpected expenses over the last year or so to calculate how much to put into your emergency fund.

Time consuming at first

When you’re trying to get the hang of zero-based budgeting, it can be extremely time-consuming. You’ll have to monitor your spending throughout the month and record which expenses go into which category. You might even end up tracking your spending every day.

Instead of manually tracking your expenses, you can always use a budgeting app. You Need a Budget is probably the most well-known, and it’s based on zero-based budgeting principles. It also teaches you to live on last month’s income, which is great for people who have a variable income or are self-employed.

Mint and Personal Capital also allow you to set a budget and track your expenses in various categories.

Some people like to track their expenses without an app and prefer to use a spreadsheet or notebook. They claim that it’s easier to truly see how you spend your money.

How to Make a Zero-Based Budget

Making your own zero-based budget may sound time-intensive, but it’s a useful exercise for anyone new to budgeting.

1. Figure out your monthly income

First, you’ll need to add up all of your monthly income. This can come from a variety of sources, including:

• Wages and tips
• Freelance payments
• Stock dividends
• Sale of investments or property
• Tax returns
• Rental income
• Royalties
• Child support and/or alimony

If your income varies from month to month, look back at least six months to capture a realistic average monthly income.

2. Start with regular expenses

Next, list your regular expenses. This includes all expenses you’ll incur every month. It should cover things like:

• Mortgage or rent
• Utilities
• Gas, tolls, parking or public transportation pass
• Groceries
• Childcare
• Cell phones
• Insurance
• Car payments
• Memberships and dues
• Subscriptions

3. Add your sinking funds

After you’ve listed your monthly expenses, add your sinking funds. A sinking fund is savings set aside money toward an expense that doesn’t occur monthly. To prepare for infrequent expenses, you’ll need to create sinking funds for any irregular items such as:

• Car insurance payments (every 6 or 12 months)
• Property taxes (yearly)
• Christmas (yearly)
• Income taxes (yearly)

A sinking fund ensures that you have the money you need when you need it, which is especially important when it comes to expenses like insurance and taxes.

4. Plan for your goals

Now it’s time to think about your family’s long-term financial goals. Start putting aside money for the things that matter to you. Remember, even if you allocate just $50 to each category every month, the money will add up when you’re consistent.

You can save toward goals like:

• An emergency fund for surprise expenses
• Paying off credit card debt, car loans, or student loans
• Going on a vacation
• Making a down payment on a house
• Remodeling your house
• Sending your children to a private school or college

You can put all of your savings into one account or set up sub-accounts for each goal. The latter might make more sense, particularly if you’re saving for multiple goals at once.

5. Budget to zero

Now that you know your monthly income and have a list of your expense categories, assign every dollar of income to an expense.

Cover your fixed expenses first. There won’t be any wiggle room in your mortgage and car payments, so you know precisely how much to allocate.

For variable costs, you may be able to find creative ways to reduce those expenses. For example, you can save money on groceries by using cash-back apps or call your phone service provider to ask if there are any deals you could be taking advantage of.

Next, consider how much money to put into your sinking funds. For many of these funds, you can’t be short on cash when you need it, so add a buffer.

For example, look at your property taxes over the last few years. Suppose you paid an average of $1,000 per year in property taxes over the last three years. Add a buffer, and plan to have $1,200 in your property tax account at the end of the year just in case. This means you need to plan to add $100 to this sinking fund each month.

For sinking funds related to taxes, you should include a buffer since you don’t want to be short. A sinking fund for something like Christmas has a little more leeway.

Finally, allocate the remaining income to your financial goals. Even if you can only save a little each month, it will feel great to put $25 into the vacation fund or $50 into the kitchen remodel account.

6. Track and adjust

Once you create your budget, start tracking your expenses. If you find that you’re consistently over in one area, think about adjusting your budget. You’ll have to take money from one category to increase the budget for another category, so think carefully about where you can reduce your spending.

As mentioned, You Need a Budget, Mint, and Personal Capital are all great apps for tracking your budget and expenses. If you’d rather go old-school, a simple spreadsheet from Excel or an app like Tiller could also work well.

7. Get a month ahead

Once you get in the routine of using your zero-based budget, try to plan a month ahead and have the entire amount you need for the month in your bank account on the first day of the month.

It might take a little while to get there if you’re living paycheck to paycheck, but you’ll have peace of mind if you can make this happen.

Zero-Based Budget FAQs

Making a zero-based budget can be confusing if you’re new to budgeting or have more experience using another system, like the 50/30/20 budget.

Can I make a zero-based budget if I have irregular income?

Yes, you can. If anything, it’s a preferred method if you have irregular income.

Try to build your budget around a lower income than you plan on receiving so you always have wiggle room in case a payment is late or you make less than planned in tips.

Do I need to use a spreadsheet for a zero-based budget?

You can use your own spreadsheet or a digital system like Mint or Tiller. That’s the beauty of a zero-based budget. It might take some time to figure out the best system for you, but there are a variety of options to choose from.

Related: Tiller Review: A Perfect Budgeting Tool for Spreadsheet Addicts

What if I have money left over?

If you have money left over, allocate it to your next financial goal. You can decide where this money will be of the most value to you, whether that’s paying off debt, padding your emergency fund, or moving you that much closer to your next vacation.

The Zero-Based Budget Is Worth Your Time

It takes some time, but a zero-based budget is worthwhile if you have big financial goals or if you’re just getting started budgeting. It can help you rein in your spending or pinpoint areas you need to work on.

The zero-based budget is also helpful if you tend to spend any extra money you have left over at the end of the month. This type of budget means every dollar has a specific purpose that you designate.

By helping you planning ahead and aligning your expenses with your income, you’ll be able to make positive steps toward both short- and long-term financial goals.

The post How to Make a Zero-Based Budget: Your Tool to Financial Freedom appeared first on DollarSprout.

They know it’s important but they shudder at the thought of actually doing it. And just like with calorie counting, once someone starts sticking to a budget that suits their lifestyle, they start seeing positive results.

Budgeting apps — much like food tracking apps — can make this process easier. Once you find the right tool for you, you’ll start to see a substantial improvement. 

To help you find your perfect match, we’ve carefully sorted and tested dozens of apps to find the best budgeting apps for every type of budgeter.

Overview: The Best Budget Apps

1. Best for Overall: Tiller
2. Best for Automatic Tracking: Mint
3. Best for Keeping It Simple: PocketGuard
4. Best for Zero-Based Budgeting: YNAB
5. Best for Envelope System Budgeting: EveryDollar
6. Best for Couples: Honeydue
7. Best for Tracking Net Worth and Spending: Empower (previously Personal Capital)

1. Best Overall: Tiller

Price: 30-day free trial then $79/yr ($6.58/mo)

A common complaint of many budget tools is that they are too rigid and don’t give users enough flexibility to customize certain parts of their budget. For users who want a higher level of control and prefer using spreadsheets over cookie-cutter apps, Tiller is a great solution.

Tiller automatically updates a customizable set of up to five spreadsheets with daily spending, transactions, and balances from all your accounts including credit cards, loans, and bank accounts. Users can opt for either Google Sheets or Excel and can use Tiller’s Autocat feature to automatically categorize their spending. 

Flexibility (without the headache of data entry) is the biggest selling point for Tiller. The tool supports multiple budgeting methods, including 50/30/20 budgeting and zero-based budgeting, among others. You can also receive a daily email with account balance summaries and create spreadsheets to track savings goals, freelance income, net worth, and more.

Related: Tiller Review: A Perfect Budgeting Tool for Spreadsheet Addicts

2. Best for Automatic Tracking: Mint

Price: Free

Mint is an all-inclusive budget management tool that focuses on helping users track their spending automatically. The free budget app allows users to set spending targets for each category in their budget, and transactions are categorized in real time.

One of the biggest draws of Mint is that it’s a clean, centralized place for users to view their entire financial life in one spot. Users can link almost any financial account to Mint, including banks, credit cards, loans, and investment accounts. Mint is used by over 20 million customers and has remained one of the top tools since it hit the market in 2006.

3. Best for Keeping It Simple: PocketGuard

Price: Free or $7.99/mo for PocketGuard Plus (cheaper if paid annually)

PocketGuard is geared toward millennials who are new to budgeting and want something that’s easy to use. Similar to other apps on this list, PocketGuard allows users to sync all of their financial accounts to the app.

Where PocketGuard shines the most is its “In My Pocket” feature, which lets users quickly see what money is safe to spend after factoring in bills, ongoing spending, and savings goals. For instance, if a user finds a pair of shoes they want for $65 but they aren’t sure if they can afford them, a quick glance at their In My Pocket balance provides the answer.

PocketGuard also identifies opportunities for users to save money like canceling recurring subscriptions or negotiating bills. And through its referral program, you can accrue points to trade for a month (or more) of its PocketGuard Plus service.

Also, if you don’t like the idea of paying a monthly fee to use to use the app, PocketGuard Plus lifetime access is available for a one time purchase of $79.99.

Related: How to Make a Zero-Sum Budget: Your Tool to Financial Freedom

4. Best for Zero-Based Budgeting: YNAB

Price: 34-day free trial, then $99/yr (or $14.99 per month)

You Need a Budget, also known as YNAB, is one of the most popular and well-known budgeting apps. It works on the premise that every dollar has a purpose. Whether it’s paying a mortgage, buying a latte, or saving for the future, the idea behind YNAB — and zero-based budgeting in general — is that every dollar is accounted for at the end of the month. 

This easy-to-use app is great for beginner budgeters or those who want to track all of their spending because they’re trying to pay off debt or reach another financial goal. It provides a central location to manage all of your accounts and debt, and you can even share the information with a partner or spouse.

Since you have to manually enter all of your spending, it forces you to pay attention to where your money is going. 

As YNAB advises, “All the dollars in your checking account are no longer at your disposal because now you are spending from the budget, from the plan, from your categories.”

5. Best for Envelope System Budgeting: EveryDollar

Price: 14-day free trial, then $12.99 per month or $79.99 per year.

EveryDollar is the budgeting app created by Dave Ramsey, one of the most popular figures in the personal finance industry. While a bit pricier than some of its competitors, Ramsey+ (formerly EveryDollar Plus) comes with access to Financial Peace University, Dave Ramsey’s flagship personal finance course, and other features including spending insights and the ability to track your progress through the Baby Steps.

EveryDollar works off of the envelope budgeting system, which is similar to zero-based budgeting. For users looking to assemble a debt payoff plan, EveryDollar has built-in features like the Debt Snowball Tool to help. Similar to other apps on this list, Ramsey+ syncs with a user’s outside accounts and updates transactions in real time.

For anyone following Dave Ramsey’s program, this app is a perfect fit. However, if you can’t afford Ramsey+ or don’t need the other features, there is a free version that allows you to create a basic, customizable budget.  

6. Best for Couples: Honeydue

Price: Free

While many of the apps on this list allow for multiple users, the Honeydue app is specifically designed for couples. The app allows each partner to stay up to date on account balances, bill due dates, and it even allows users to split bills within the app.

The most unique feature of Honeydue, though, is the messaging feature. For instance, if a transaction looks suspicious or fraudulent, a quick message to your partner can clear things up. Users can also send encouraging notes and emojis, which can help facilitate difficult conversations and help couples merge their finances without any drama. 

The app does have privacy settings so users can decide how much information they want to share with their partner. For instance, if you have separate accounts, you can decide to share account balances but not every specific transaction. This is particularly helpful if you’re planning a surprise gift or trip, but if you’re concerned about financial infidelity, you might want to choose an app that provides more transparency for both parties’ spending.

7. Best for Tracking Net Worth and Spending: Empower

Price: Free

Empower’s (Previously Personal Capital) main claim to fame is its investment software, but the app also boasts a powerful set of budgeting planner tools for everyday users. The app allows user to connect all their financial accounts, including checking, savings, credit cards, loans, mortgages, and more.

In addition to the spending tracking, Empower has a net worth tracking feature that shows a user’s net worth trends over time. The app can also help you find any hidden fees, develop a personalized retirement planning strategy, and customize your investment portfolio.

Honorable Mentions: More Budgeting Apps to Consider

If you’re looking for some alternatives to the best budgeting apps, here are a few to consider. 

Goodbudget

Price: Free for the basic plan, $7/mo for Goodbudget Plus

Goodbudget is another app for you to use if you prefer to budget using the cash envelope system. Rather than putting your money in physical envelopes, you create digital ones within the app. You can choose the categories, spending limits, and there’s even the option to establish envelopes for saving and paying off debt. You can also sync and share your budget and spending with other family members.

Goodbudget comes with both a free and paid option. They offer the same features. However, the paid version comes with more options. For instance, with the free version, you can only set ten envelope categories. The paid account offers an unlimited number of envelopes. And you can link up to five accounts through Goodbudget Plus whereas you can only link two with the free plan. 

Goodbudget also offers a free month-long online course for those who are new to budgeting and has two seasons of a budget living podcast.

If you’re new to budgeting and plan to manage your money with someone else with the envelope system, Goodbudget is a solid choice.

Wally

Price: Free for the basic app, $19.99 for lifetime membership to the paid version

Wally helps users budget, track their spending, set savings goals, and provides regular updates and insights into your spending. There’s also a feature that allows users to scan important documents and receipts directly into the app. When you scan your receipts, the app will automatically track the expenses for you; there’s no need to manually input the purchase.

If you opt for the paid version, you can monitor and track foreign currency accounts and digital wallets along with your traditional bank accounts. Other premium features include the ability to schedule payment reminders, create an advanced budget with customized budget categories, and jointly manage finances with family, friends, or business partners.

Wally is best for users who want to track their expenses and spending but already have a basic understanding of budgeting.

A Few Things to Be Aware Of When Using a Budgeting App

If you are new to using apps to manage your money, there are a few things you should know.

• Set aside time for account setup. Although it can be tedious and time-consuming, anywhere from 10 minutes to an hour or more per app, it’s worth taking the time to sync all of your bank accounts within an app. The more accounts and information you can include, the more useful the app will be. If you plan on testing several apps, set aside time to set up each one correctly. 
• Transactions will get miscategorized. Almost all of these apps rely on algorithms or AI to categorize your transactions. This makes them prone to error, which is why it’s important to inspect each transaction to make sure it’s categorized correctly. As you fix the errors, the apps “learn” and make the correct designation next time.
• You may need to re-sync accounts at times. Between two-factor authentication, security questions, device settings, and other factors, your accounts may occasionally become disconnected from an app. While this can be frustrating, the extra layers of security are necessary to protect you from fraud. 
• Beware of notification fatigue. Some of these apps will notify you multiple times per day, and it can become a lot to manage. Rather than ignoring or deleting them, adjust your alert preferences. Set your notifications to once a day or for email alerts instead of ones directly from the app. Whatever you prefer, set your alerts so that you’ll actually pay attention to them. A budgeting tool is only helpful when it’s being used.
• Free apps make their money off of advertising. Even though you aren’t paying to use the app, the companies still need to make money. For example, Mint is totally free to users but earns money by referring customers to other financial products and services. It may earn a referral fee for each user who signs up for a suggested product. While the company is still providing you with a legitimate product and advice, this is something to be aware of. 

How to Decide Which App is Right for You

With so many choices out there, it can be tough to decide on just one app. The best way to know for sure if a tool is going to meet your needs is to try it. 

In general, it’s a smart idea to research the apps before using them. You also want to make sure you fall into the target market for an app. You can do that by browsing the app’s website or reviews.

For instance, after spending a few minutes on PocketGuard’s site, you’ll quickly learn the app caters to millennials. If you’re a professional looking to get a longer-term view of your finances and overall wealth, consider using Personal Capital instead. If you’re looking to manage your money with a partner, Honeydue may be the best fit. 

Remember that it’s OK to dislike an app after giving it a try. You might find it’s cumbersome, doesn’t do what you want, or is too expensive for your needs. There are a number of alternatives you can use. Keep trying paid and free budgeting apps until you find what works for you. 

More Resources to Help You Budget

If you are looking for more help with getting started with budgeting, check out these resources.

15 Budgeting Tips

Emergency Fund Calculator

50/30/20 Budget Calculator

Zero-Based Budget Calculator

Savings Goal Calculator

The post 8 Best Budgeting Apps for 2023 appeared first on DollarSprout.

Making a budget isn’t hard at all, but sticking to it is easier said than done.

You research budget tips, download the budget worksheet, plan your spending on paper, then somehow, two weeks later you’re taking the money you set aside for your credit card payment and adding it to your Chipotle budget.

You can make the most comprehensive budget spreadsheet and plan the perfect month of spending, but if you can’t follow through then your planning is in vain.

15 Budget Tips That’ll Keep Your Spending in Check

Do you feel like you’re in an overspending rut? It happens to everyone. If you’re ready for a reset, these budget tips will get you back on track to reaching your financial goals.

1. Use an app.

The best way to stay on top of your spending across all your accounts is to use a mobile app. No matter what budgeting method you use, a budgeting app will track your transactions, show you the impact of your financial choices, and help you keep your budget in check.

A great app to start with is Mint.com. In addition to tracking your transactions, Mint eliminates the guilt that comes with trying to scale down your budget too quickly. It suggests spending goals based on your previous month’s spending.

Mint also has a bill tracking feature that reminds you when bills are due and alerts you if your account funds might be too low to cover them.

If you own a home or have multiple investment accounts, you’ll also want to keep track of your net worth. Personal Capital is a web and mobile app that tracks your spending and calculates your net worth, helping you see the big picture of your financial future.

The budgeting feature of Personal Capital allows you to set how much you want to spend each month. You can also track progress with a month-to-month direct comparison of your spending and earning.

Related: How to Make a Budget in 7 Easy Steps

2. Think ahead.

Even with the best-made plans, cars malfunction, pets get sick, and kids go to the hospital at the most financially inconvenient times. Surprises come up and you have to be prepared for them. The best budgeting tip for keeping up with these expenses is to save money every month in a “Random Stuff” fund.

This is in addition to your emergency fund which should cover catastrophic events like job loss and medical emergencies. This fund is for the month-to-month things that always come up but can never be planned for.

In his book, I Will Teach You to be Rich, author Ramit Sethi says he started saving $20 per month for unexpected expenses. After he got a $200 speeding ticket and $600 medical bill within two months of each other, he quickly realized he needed to increase that amount and now saves around $200 per month.

If he doesn’t spend it all by the end of the year, he’ll save half of whatever’s left for next year and spend the other half.

Look at all the components in your life that could cost money and estimate what they might require in a best and worst-case scenario. Pick a number in the middle and save every month to reach that goal.

Related: How to Pay Off Unexpected Medical Debt

3. Review your budget regularly.

Your budget isn’t set in stone. In order to stay on top of it, you have to review it and refine it regularly.

Start with a standard budget like the 50/30/20 method, then revisit it at the beginning of each week to see where you need to make adjustments. It’s much easier to rearrange cash in your budget before you’ve spent it versus when the money is already gone.

4. Find an accountability partner.

If you live with a spouse or partner, you may have a live-in accountability partner. If you’re single or your partner isn’t on board with budgeting, you can ask a friend or head to social media to find other people living on a budget and paying off debt.

Instagram has a community of people sharing their budgeting and debt payoff journeys centered around the hashtag #debtfreecommunity. When you search that hashtag or add it to your posts, you’re sure to find other like-minded budgeters also looking for accountability.

Related: Money and Relationships: How to Merge Finances without Any Drama

5. Disconnect from one-click shopping.

Make it harder to impulse shop online by disconnecting one-click shopping and taking your cards out of auto-fill.

It’s a small step, but the inconvenience of inputting your card information will give you extra time to consider if you really need to make the purchase.

6. Remove tempting apps.

Companies often incentivize downloading their apps with discounts, sale alerts, and even games. That’s because once you’ve downloaded their app they have direct access to you from one of your home screens or through push notifications.

Get rid of the food delivery, clothing, and restaurant apps that tempt you to spend money outside of your budget. Like disconnecting your card numbers from one-click shopping, it’s another barrier to make you think before you buy.

Related: 10 Best Shopping Apps for Epic Savings in 2023

7. Document your struggles.

You don’t have to keep your struggles with budgeting a secret. Writing them down — or typing them up — will help you push through them.

Whether its a private journal, a public Twitter account, or right there in your budget planner, documenting your journey to spend better and sharing your own budgeting tips will help you work through the hard times now and in the future.

8. Institute a 24-hour rule.

Impulse purchases are the kryptonite to any budget. You can limit them by implementing a 24-hour rule. Anytime you get the urge to buy something you didn’t specifically budget for, wait 24 hours. If you can still justify getting it, then go back and purchase it.

You can do this for purchases above a certain amount, for a set period of time, or just for particular stores. If you stick to it, this tip will cut down on the number of impulse purchases you make each month.

9. Create a realistic budget.

Making the perfect budget would be great if you were your perfect self. However, none of us are perfect, so your budget shouldn’t be either.

When you write out your budget, look at your actual spending for the previous month, not what you budgeted, and try to improve on that incrementally.

10. Make it easy.

Consider that the budget template that works for your favorite YouTuber may not be the one that works for you. Try a few different methods that make budgeting easy — or just easier — for you.

Allison Baggerly of Inspired Budget and her husband paid off $111,000 of debt using cash envelopes to track their spending. “Using cash envelopes has made sticking to my budget so much easier! It has taught me how to not overspend and live within my means,” Allison said.

Another way to alleviate some of the budgeting burden is to use an app like Trim. Trim analyzes your spending, shows where you could save, and can even negotiate your cable, phone, internet, and medical bills for you. The app will also cancel your unwanted subscriptions you no longer use or want.

Related: Trim Review: The App That Negotiates Bills on Your Behalf

11. Try a no-spend challenge.

A no-spend challenge is a great way to reset your spending and evaluate your habits.

Whether it’s for a weekend, week, month, or entire year, commit to not spending any money on non-necessities for a period of time. It will pay dividends by improving your budgeting in the future.

12. Make automatic transfers to a savings account.

For fixed expenses and saving goals, set up automatic transfers to your high-yield savings account to keep yourself from spending that money elsewhere. If you can, schedule the transfers for the beginning of the month to ensure you can afford them before the rest of your discretionary purchases.

13. Use lots of categories.

If you’re having trouble pinpointing the items you’re spending most on, use lots of categories. This isn’t a sustainable budgeting tip, but it’s useful in the beginning to get a better grasp on your buying habits.

For example, if you’re exceeding your grocery budget every month, separate your grocery store purchases — like snacks, home items, desserts, dinner ingredients, etc. — and ring them up separately at the register.

Don’t be embarrassed to do multiple transactions. Business owners do it frequently, it takes virtually no extra time to do it, and it’s helping you spend better in the long run.

14. Save for annual expenses.

Even though the date never changes, very few people save throughout the year for gifts and are stuck putting Christmas on a credit card and paying it back over the first half of the new year.

Annual and seasonal expenses like Christmas, insurance renewals, registrations, and dues will always be there. Take inventory of the recurring expenses in your life and create a savings fund for each of them. Set money aside each month for all of your savings categories.

Related: How to Do Christmas on a Budget and Still Enjoy Your Holiday

15. Get creative.

The choices that move the needle the most in your budget aren’t a bunch of little cuts, they’re the big ones. Get creative with your living situation, transportation, and food choices to save energy on the small stuff and really impact your budget.

The Most Crucial Budgeting Tip: Don’t Give Up

Everyone is going to budget a little differently. Don’t give up because what worked for someone else doesn’t work for you.

Implement these tried and true budget tips to any method and you will see traction toward your financial goals.

The post 15 Beginner Budgeting Tips to Save Money the Right Way appeared first on DollarSprout.

They mostly appeal to pencil pushers, number crunchers, and obsessive-compulsive types.

Unless you have a job that requires you to use Excel, you may not even know how spreadsheets work.

That’s why I abandoned my traditional spreadsheet budget several years ago. After trying in vain to find a simplified approach to tracking my spending, I decided that spreadsheets weren’t for me. They made budgeting a time-intensive activity and something I avoided doing. Then I found Tiller.

Tiller has changed the way I think about budgeting with a spreadsheet. If using Excel to track and analyze your spending is like learning to drive a stick shift, Tiller is like driving an automatic. Some people may prefer the more complicated route, but they both get you to the same destination.

Here’s what you need to know about Tiller: the good, the bad, and everything in between.

What is Tiller Money?

Tiller Money is a spreadsheet-based budgeting system that works with Google Sheets and Microsoft Excel. It doesn’t have its own spreadsheet system, so you need to have a Google account or Excel software to use it.

Try free for 30 days

$79/year Price 30-day free trial

No App Available Google Sheets or Excel only

DollarSprout Rating Good features, great support

Tiller is similar to an expense tracker spreadsheet that you would create yourself, except it's much more sophisticated. Tiller pulls information from your bank accounts and then automatically populates a Google or Excel spreadsheet for you. You still get the same great spreadsheet magic that you love except Tiller does all the heavy lifting and data entry for you. You can try Tiller free for 30 days, and then it's $79/year to keep.

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Pros:

• 30-day free trial
• Simple to use
• User-friendly tutorials available
• Built for the cloud so you can access anywhere
• Online community and support available
• Help migrating from your old budgeting tool

Cons:

• Costs money to use
• No mobile app (desktop use only)
• Only available in Google Sheets or Excel

Tiller works with more than 21,000 banks, lenders, investment firms, and other financial institutions, including:

• Bank of America
• Chase
• PayPal
• Fidelity
• Wells Fargo
• Vanguard
• American Express

If your bank isn’t listed as a current Tiller partner, you can still use the spreadsheet, but you’ll have to add those transactions manually. There’s no limit to how many accounts you can link with Tiller. You can also check in every so often to see if they’ve added your bank.

Before Tiller, spreadsheet budgeters would have to add in every transaction manually. That meant logging into every account separately, copying the transactions, and then building your own budgeting spreadsheet. Tiller combines spreadsheets with automatic data.

Is Tiller Money Safe?

Some consumers are wary of giving companies their financial information, but Tiller has a bank-grade encryption system to keep your data safe. Signing in to your Tiller account is only available through Google. You can also set up two-factor authorization with Google to further increase your safety.

Tiller can’t transfer money for you, and passwords aren’t stored directly in Tiller. Company employees can’t see or touch your data and only people with direct access to your spreadsheet can view it. This is a similar security setup to other budgeting apps like Mint and Personal Capital.

Tiller was also named the Best Wealth Management Product in 2018 at the FinTech Breakthrough Awards and has been featured in numerous financial publications like Business Insider and Inc Magazine._[1]

How Tiller Works

Similar to other budgeting programs like Mint and Personal Capital, Tiller needs access to users’ bank, credit card, and other financial accounts. Tiller syncs transactions to its spreadsheets, where users can then divide them into appropriate categories.

Signing up

Signing up with Tiller is easy. To create an account, you need to provide basic information like your name and credit card number.

You then decide which banks and credit cards you want to sync with your Tiller sheet. To connect a new account, you have to put in your username and password. This process could take a few minutes, depending on how many accounts you have.

If you ever change a password or username to a connected account, you’ll have to change it in Tiller as well. Tiller will notify you if the bank or credit card provider stops syncing with your account, so you won’t miss any transactions.

Finally, you’ll create a Foundation Template, which is your main spreadsheet. This shows your transactions, monthly budget, net worth, yearly budget, current balances, and more.

It’s incredibly intuitive and only took a few minutes for me to get the hang of. 

How long it takes to set up a Tiller spreadsheet will vary depending on how familiar you are with spreadsheets and the complexity of you budget.

Tiller has video tutorials and responsive customer service agents ready to help if you need it.

Related: How to Make a Budget in 7 Easy Steps

Review of Tiller Money’s Features 

Tiller has a variety of features that can be overwhelming for new users. Read below to see what the service can do for you.

Tiller’s Foundation Budget Template

Tiller has one main spreadsheet to use, but you can have up to five sheets synced to your account at once.

You can also install various add-ons. For example, Tiller has a system where you can import Amazon purchase information so each Amazon item is added individually. If you’re buying several items from Amazon at once, this tool will help you categorize them separately. 

The Tiller Foundation Budget has the following tabs:

Insights: This is the first tab and shows information such as your assets, liabilities, and net worth. It will also show your most popular retailers and biggest individual transactions. 

Monthly Budget: This is the main budget dashboard where you can see the categories, how much is allocated for each category, and total monthly cash flow. It also shows what percentage of your budget is left compared to how many days are left in the month.

Categories: You can add new categories and change the amount allotted to each category.

Balances: This lists the current balances of all your synced accounts.

Transactions: Each transaction is listed here.

Net worth: The net worth tab takes all your available accounts and creates a line graph showing your net worth trajectory. You can add manual accounts that affect your net worth, like your mortgage balance and home value.

It also shows the net worth change per month and each account’s monthly balance. It’s important to track your net worth to see how your wealth is growing over time, and Tiller’s spreadsheet simplifies that process.

Tiller Money Labs

When you create your budget with Tiller, you’ll receive access to Tiller Money Labs. This is where the Tiller team experiments with creating new scripts, templates, and workflows. It also includes add-ons you can use to give your basic spreadsheet more functionality.

These add-ons include options like:

• Estimated Quarterly Taxes
• Holiday Gift Planner
• Spending Trends
• Statement Details
• Tags Report
• Yearly Insights

Tiller is often adding new solutions, so be sure to check this section regularly.

Automatic categorization

Tiller has an add-on that helps you automatically categorize certain transactions. You can create rules to always categorize certain vendors with specific categories.

You can also categorize various accounts in certain categories. For example, if you have a business credit card, you can set it up so those transactions are always reported as “business,” “reimbursable,” or “tax-deductible.”  

This function can be found on the “AutoCat” tab on the Tiller Foundation Template.  

For example, I set it up so it always categorizes Costco as “groceries” and Spectrum as “internet.” These rules take some of the work out of budgeting, especially if you frequent the same retailers every month. 

Debt payoff spreadsheet

If you go to the Money Labs section of the Tiller Foundation Template, you’ll see an add-on for Debt Progress.

This will track your debt payoff progress. First, add the Debt Progress to your template. From there, select which debts you want to pay off. You’ll be able to decide what kind of payoff system you want to use — snowball, avalanche, or lowest-ranked priority. 

Tiller will track your starting balance, current balance, monthly interest, remaining interest, and estimated payoff date.

It will also suggest how much to increase your monthly payments to achieve debt freedom sooner.   

Community, support, and weekly webinars

On the Tiller Foundation Template, there’s a special tab marked “help.” Here you’ll find answers to common questions such as how to manually add transactions or why transactions aren’t syncing.

Currently, Tiller doesn’t do one-on-one support, but they do have a weekly webinar that explains how to set up a budget and create the automatic categorization rules, among other common questions. There’s a Q&A portion at the end of each call where you can ask any questions you have that weren’t answered during the webinar.

You’ll also have access to the Tiller Money Community. In this online forum, you’ll receive support from other Tiller users as well as Tiller’s own staff. The community appears to be active and engaged, with multiple topics and questions posted each day.

Tiller Pricing

Tiller’s pricing is simple. They only offer one tier of service at $79 per year, or $6.58 per month, with no discounts for students.

While there are plenty of free budget tracking tools on the market, Tiller’s pricing is on par with, and even less costly than, some other budgeting apps. If you’re hesitant about the cost, you can try Tiller free for 30 days. If you decide it’s not a good fit for you, then you can cancel your account before the 30-day period ends and Tiller won’t charge you.

Review of Tiller’s Benefits

In addition to its features, these are the reasons I love using Tiller.

It’s simple. Most people think of budgeting spreadsheets as inherently complicated, but Tiller’s system is really easy to pick up. I’ve used Tiller for almost two years now, and I only needed a brief time to master it. On top of that, categorizing expenses takes only a few minutes a week.

Fast customer support. I’ve never used Tiller’s customer service, but many Reddit users say they respond quickly. They also have a community support group where you can search for your question and see what other users have said.

They’ll help you migrate from your old budgeting tool. Tiller recognizes that many of its customers have been using other budgeting systems and don’t want to lose that data. They offer step-by-step help to upload information from Mint, Personal Capital, Quicken, and You Need a Budget. You can also bulk upload data directly from your bank or credit card provider.

Spreadsheets can be shared. You can share your Tiller spreadsheet with anyone else with a Google account. This makes it easier for my husband and I to manage our money together.

Easy access with the cloud. Because Tiller works with Google Sheets, it’s supported and hosted on the cloud. That means you’ll always have access to your Tiller spreadsheet when logged into your Google account. I like having my budget on the cloud because I can look at it no matter where I’m logged in.

Where Tiller Struggles

No app or budgeting tool is perfect. Here’s a review of Tiller Money’s downsides and where I think the platform struggles.

Tiller isn’t free. It costs $79 a year, but it does come with a free 30-day trial to test out the app before you decide to commit. Budgeting apps like Mint and Personal Capital are free to use, so this can be a surprise if you’re not used to paying for a budgeting service.

It’s completely spreadsheet-based. If you prefer using a mobile app, then Tiller won’t be a good fit for you. Because it’s spreadsheet-based, Tiller works best on a computer or laptop. Mobile customers may access their Tiller spreadsheet on their phone, but it’s not easy to use and needs WiFi or data access to upload new transactions.

Tiller has several spreadsheets available for Excel, but most people seem to prefer using Google Sheets. If you’re new to Google Sheets, you might have a hard time using it at first.

Tiller is only a budgeting system. Unlike some of its competitors, Tiller doesn’t track your credit score or tell you if you’re not saving enough for retirement. It’s designed to help you budget and track your money, not create a comprehensive financial plan.

Related: How to Track Expenses in 3 Easy Steps and Never Fail at Budgeting Again

Tiller Money Review Summary: Who Should Use Tiller?

I have friends and readers who refuse to pay for budgeting services like Tiller, especially when there are free alternatives on the market. Even though Tiller does cost money, it’s roughly the price of two lattes per month. If using Tiller helps you improve your budgeting approach, you’ll save much more than you’ll spend on the service.

I love using Tiller because it combines the clarity of a spreadsheet with the ease of an online budgeting system. I don’t have to manually track my transactions because it automatically adds everything. I’ve also had no issues with any of my accounts syncing with Tiller, which means I never miss an expense.

What I love about using Tiller is that I can change my budget at any time. If I need to add a new category or change how much I’m spending on restaurants, the process takes just a few minutes.

Even if you’re not sure about using a spreadsheet to budget, I recommend trying Tiller Money for the free 30-day trial. The simplicity of this spreadsheet-based tool may surprise you.

The post Tiller Money Review: A Perfect Budgeting Tool for Spreadsheet Addicts appeared first on DollarSprout.

They’ll spend hours poring over budgeting spreadsheets, examining the finer details of their investment accounts, and organizing the cash in their wallet by denomination.

For someone like that, being offered basic budgeting advice is like preaching to the choir.

For the rest of us, there’s the 50/30/20 budgeting system.

Whether you’ve struggled to budget consistently in the past or you’re looking to find a less time-intensive method, the 50/30/20 might be the approach you need to finally make it all click.

What Is the 50/30/20 Budget?

The 50/30/20 system was designed to make budgeting more accessible to people who get overwhelmed by complicated spreadsheets and budgeting apps. It was popularized by Senator Elizabeth Warren in her book All Your Worth: The Ultimate Lifetime Money Plan.

The beauty of the 50/30/20 budget is in its simplicity. It’s designed for people who want to track their spending without dividing each expense into a dozen separate categories.

Users of the system divide their transactions into just three buckets: needs, wants, and debt payments/savings. Spending is broken up into 50% for needs, 30% for wants, and 20% for savings and debt. Groceries would be in the needs group, makeup would be a want, and student loan bills would be a debt payment.

Here’s an example of what kinds of transactions might fit into each category:

Related: How to Make a Budget

Is the 50/30/20 Budget Right for You?

If you’ve tried to budget before and never quite got the hang of it, a 50/30/20 budget might be right up your alley. It’s like starting a fitness program. Jumping straight into a powerlifting routine might leave you sore and unmotivated, but starting with some light yoga will allow you to build a consistent exercise habit.

With the 50/30/20 system, you can start with the basics and get more complex as your financial literacy improves. It’s less of a specific system and more of an overarching philosophy.

It’s vague but flexible.

The 50/30/20 budget has become popular with people who struggle to categorize their spending. If you have separate line items for household goods and groceries, for example, a simple trip to Costco for saran wrap and cooking oil forces you to separate individual items from your receipt. With the 50/30/20, that kind of fussing is unnecessary.

The upside to this broader approach is that you spend less time figuring out how to budget each shopping trip. The downside is that you don’t really see where your money is going. If you need to cut some expenses from your “wants” category, the 50/30/20 budget won’t show exactly where you’re overspending.

It puts savings and debt on the back burner.

One of the reasons the 50/30/20 budget is popular is because it allows for 30% of a consumer’s income to go toward discretionary spending. Unfortunately, that doesn’t leave as much room for savings and paying off debt.

If your student loan payments make up 20% of your budget and you aren’t saving anything for retirement, the 50/30/20 approach could give you a false sense of stability. In reality, you’ll just be forced to play catch-up in the future.

Anyone who uses the 50/30/20 budget while paying off a significant loan balance should still try to save between 10 and 15% of their salary for retirement, even if that means shifting the spending ratio to allow for more saving.

It may not be a long-term solution.

The 50/30/20 is often suggested for beginners because it’s easy to use and set up. It also leaves a lot of room for variation, as long as you’re staying within the correct spending ratio.

But as a long-term budgeting strategy, the 50/30/20 budget might not hold up as well as a traditional line-item budget. That’s because the 50/30/20 split makes less sense above a certain income bracket.

When you’re making an entry-level salary, the 50/30/20 ratio is perfect. It allows you to enjoy your life and live comfortably while still prioritizing debt repayment and saving for retirement. But as your career progresses and your income increases, spending 30% of your income on discretionary items can be frivolous, and it can hold you back from reaching significant financial milestones.

Under the 50/30/20, someone making $80,000 a year after tax would have $2,000 a month for discretionary spending. That may be reasonable for someone with a robust social life and multiple hobbies, but many people would have to go out of their way to spend that much. As you approach upper-middle class, it makes more sense to follow a personalized budgeting system and devote more of your income to building a nest egg.

Related: How to Use the Cash Envelope System to Stop Overspending

How to Use the 50/30/20 Budget

There are three simple steps to creating and implementing a 50/30/20 budget spreadsheet.

Step 1: Figure out your take-home pay.

The first step in creating a 50/30/20 budget is to figure out your net income since that’s the figure you’ll be dividing from. Your net income is how much you take home after payroll taxes are deducted.

Look at your most recent pay stub to see what your take-home pay is. Even though your health insurance and retirement contributions may be deducted from your paycheck, you want to count these expenses as part of your budget.

If you’re self-employed, you’ll want to figure out your take-home pay after federal and state self-employment taxes. These will vary depending on your income and business expenses, so just use your best estimate.

People with irregular salaries, like salesmen working on commission or those with seasonal income, should use a realistically low figure when calculating take-home pay.

Related: Empower Finance Review: The Budgeting App That Does It All

Step 2: Calculate your percentages.

First, make a list of all your transactions from the past month:

Then divide them into needs, wants, and savings/debt categories. Divide each of the three categories by your take-home pay to calculate your percentage, then compare those percentages to the ideal amounts. For this example, let’s assume a take-home amount of $2,700 per month.

Step 3: Adjust your spending and saving.

Like most people who create a 50/30/20 budget, you’ll probably discover that your percentages are out of alignment like the example above. Maybe you’re spending too much on your needs and not enough on your savings, or your wants category might be out of control. Don’t beat yourself up – it’s normal to find out your spending is a little off.

Examine where you need to make a change and explore options for how to save money in those categories. In this example, you can clearly see that the needs category greatly exceeds the 50% goal. To cut back, this person could reexamine their utility usage, negotiate with their cell and internet providers, or find a less expensive apartment.

You can also see in this example that student loan and car payments are mostly responsible for exceeding the 20% debt payment/savings category. In that case, it could be wise to make faster debt payoff a goal or try to pick up a side hustle.

The 50/30/20 Budget Simplifies Managing Your Money

Overall, consumers who like and stick with the 50/30/20 budget do so because of how simple it is. There’s little doubt on how to categorize expenses, and evaluating your spending can take just a few minutes each week.

The 50/30/20 budget has stuck around because it helps people who want to be responsible with their money but don’t like the restrictive nature of most budgeting systems.

The post The 50/30/20 Budget Rule Explained (with Examples) appeared first on DollarSprout.

In fact, I’d argue it takes most people 3-6 months to learn how to track expenses, stick to a budget, and plan achievable goals for the future.

In other words, no one is born knowing how to track expenses and budget. It’s something that you have to learn, and it takes trial and error.

I’ve tried just about every method out there from budgeting apps, to a pen and paper, to cash envelopes. While there are many different ways to manage your money, one thing is true about all of these methods: you have to track your expenses or your budget will never work.

Why Should You Track Your Expenses?

Keeping track of expenses is important for so many reasons. First of all, it’s impossible to budget your money if you don’t know where it’s going each month.

Tracking your expenses also gives you insight into some of your behaviors around money. For example, you might notice you spend more money on the weekends or tend to order take out on Thursdays when you don’t feel like cooking anymore.

Tracking your expenses gives you good information. It shows you where you excel when it comes to money and places you can improve. It also lets you know your priorities. All you need to do is see where you spend the most money to find out what is most important to you.

3 Steps to Track Expenses

If you’re ready to become a champion spending tracker, there are three steps you need to take. First, create a budget. Then, decide how you will track your spending (with an app, spreadsheet, etc.) Lastly, schedule weekly check-ins to keep yourself on track.

1. Create a budget

People usually cringe when they hear the word budget because it sounds like a fun suck. After all, don’t people who budget live boring lives? Not so!

The first step to creating your first budget is to set goals for your spending. For example, is it your goal to spend fewer than $50 a month on takeout? Write it down.

Then, after your first few months of using a spending tracker, you can measure your goal with your reality. If you come up short, that’s ok. That’s why it’s so important to track your spending. We usually spend more than we think on certain categories. Tracking that can help cure some bad financial habits.

2. Decide on a spending tracker

Once you have a basic budget in place and a list of your spending goals to go along with it, it’s time to start tracking. There are many different spending trackers out there. Here are a few of the most common ways to track what you spend.

Popular apps for personal expense tracking

In the modern, digital age, budgeting apps are taking the market by storm. It seems every time you turn around, there is another one out there. Below are some of the best budgeting apps we’ve tried and like.

Personal Capital

First and foremost, Personal Capital is an investment advisory firm. This means Personal Capital employs financial advisors to help its clients with their investment choices. In order to work with the company as an advisory client, you have to invest a minimum of $100,000 with it.

However, even if you don’t have $100,000, Personal Capital offers free budget tracking software. Connect all of your accounts to its free platform, and you can see your net worth, track your spending, and more. You’ll get emails every week telling you how your portfolio is doing.

Keep in mind that the overall goal of Personal Capital is to eventually acquire clients, and offering free tracking software is one way to spread awareness of its services. However, before you sign on the dotted line as a client, take the time to compare its fees with other brokerage firms to make sure you find one that’s the best fit for you.

Tiller

Tiller is similar to an expense tracker worksheet that you would create yourself, except it’s so much more sophisticated than that.

Tiller pulls information from your bank accounts and then automatically populates a spreadsheet for you. You still get the same great spreadsheet magic that you love except Tiller does all the heavy lifting and data entry for you. You can try Tiller free for 30 days, and then it is $79/year to keep.

Related: DollarSprout’s Tiller Money Review

YNAB

YNAB stands for You Need a Budget. YNAB offers a comprehensive online budgeting software that is based on the principle that everyone should budget one month ahead. YNAB does come with a monthly fee, but you can try it for free for 34 days.

Full disclosure: After trying many different budgeting apps, YNAB is the one that works best for me personally because I also adhere to the philosophy of starting the month with the full amount of money I need for that month.

However, it really took some time to learn how to use the software. I actually tried it once before, got frustrated, and stopped using it. Then I got an email from YNAB inviting me to try it again.

The second time I tried it, I spent more time watching the videos and understanding how it worked. That did the trick. I’ve been using it faithfully for over a year.

Also, even though YNAB isn’t free, it is ad-free. So you won’t be faced with ads for insurance or phone companies or other financial products while you’re using it. This allows you to focus on your own budget without distractions.

Mint

Mint is one of the most popular budgeting software systems out there. It was one of the very first companies to help consumers digitally track their budgets, and it’s free to sign up.

Connect your accounts, categorize your spending, and then find ways to customize Mint to work for you. You can even set up reminders to notify you on your phone to pay your bills.

You can also add alerts to let you know when you’ve gone over budget. If you happen to find out you’re over your grocery budget, you know it’s time to open up the pantry and start using those cans of tuna you’ve been avoiding.

Of course, part of what makes Mint free is that it earns money from different recommendations like credit cards, life insurance, and other financial products. If you don’t mind the ads, this is a great, free product that many people have enjoyed using for years.

Wally

Wally is a relatively new budgeting app that’s recently hit the financial tech scene. Based on reviews of the app, Wally is still in its beta phase but with room to grow.

The way Wally works is by keeping you hyper-aware of your spending. Rather than automatically importing your credit and debit transactions, you manually enter what you spent.

Wally can, however, use GPS to see where you are when you spend money. So if you are waiting for your coffee in line at Starbucks, Wally should be able to know you’re there and suggest that vendor as the one to enter.

This system of entering in your spending after you just had the transaction keeps you aware of your day-to-day spending habits. This would be excellent for someone just starting out budgeting who really needs to understand their behaviors around money in real time.

Pen and Paper

You can’t go wrong with a good, old fashioned pen and paper. This is an inexpensive way to track your spending. I used to do this when I lived abroad and didn’t have a smartphone.

I had a little pad of paper I’d keep in my purse. When I bought something to drink or eat, I just jotted it down. After a few weeks of doing this, you can notice spending patterns. It’s also a very active way to track spending that really makes you think before you buy something. After all, if you buy it, you have to write it down so you remember!

Expense tracker spreadsheet

Many people love using their own expense tracker worksheets, which you can create in Excel or Google Sheets.

The reason this works is because you can really customize an expense tracker spreadsheet to your own budget and spending categories. It’s free, and now you can share a google doc spreadsheet with your spouse and track your spending together.

3. Set weekly check-ins

Once you’ve found an expense tracking system that works for you, it’s important to set weekly check-ins. This can be something you put on your own schedule and stick to if you’re single or it can be something you do with your partner.

The reason weekly check-ins are so important when it comes to expense tracking is that it allows you to adjust your spending for the following week. That way, if you bought too much wine because it was on sale at the grocery store, you know that you might be having a pantry challenge the following week to make up for it.

 

 

 

 

 

 

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Managing your money doesn’t have to be a challenge!⁣ ⁣ Money is a tool that, when used effectively, creates options for you. Managing your money wisely will give you the freedom to live well, and being in control of your finances and your monthly budget will also give you peace of mind. ⁣ ⁣ This quick tidy up should get you well on your way to better managed finances! Oh, and don’t forget to do your check ins!

A post shared by DollarSprout Personal Finance (@dollarsprout) on Sep 26, 2019 at 9:40am PDT

Getting Started is Key

If you’ve struggled with budgeting in the past, tracking your expenses every day is likely the missing ingredient to budgeting success.

Remember, creating a budget and sticking to it doesn’t mean your life will be full of restrictions. Instead, you can feel more in control over your money, learn how to allocate funds to your priorities, and cut back on the things that don’t really matter to you.

Be patient with the process, and switch up your expense trackers if the first one you tried doesn’t work for you. Try this for a few months, without fail, and tracking expenses will become a part of your daily life. Soon, you won’t know how you lived without knowing exactly where your money goes each and every day.

The post How to Track Expenses in 3 Simple Steps appeared first on DollarSprout.

Taking a vacation is a great way to reduce stress and improve productivity, but traveling can be costly. Making a travel budget will make a big difference while planning your next getaway.

Those who love to travel should incorporate it as a line item in their monthly budgets. Each month, set aside a certain amount for travel in its own separate account.

Earmark that money specifically as a vacation budget so that it can be spent guilt-free. Money that is put toward trip expenses can simply be reimbursed from the travel account.

With that said, if there is outstanding debt that is difficult to pay off, planning an immediate vacation may not be a good idea. In this case, the priority should be to set up an emergency fund that includes three-to-six months’ worth of living expenses.

Why Is Budgeting for a Vacation Important?

While it is good to get into the habit of setting aside vacation funds every month, it is also important to create a budget for each individual trip. This will help determine how long it will take to build up enough money in the vacation account to pay for that trip. It will also allow for logistics to be planned out, while staying on budget.

Scheduling and budgeting for vacations can be very enjoyable. Researching hotel accommodations, restaurants, and free things to do helps to build up anticipation. It can be fun for the whole family to spend time together, figuring out the different parts of an upcoming trip.

How to Budget for A Vacation in 5 Simple Steps

When it comes time to map out those vacation expenses, a few key steps will help lead to success and worry-free traveling. Begin by drafting a well-rounded vacation budget, focusing on expenses in the following five main categories. Once these are figured out, the rest of the details will fall into place.

1. Choose a destination and preferred date

Start by picking a destination and nailing down travel dates. Remember that some locations are more expensive to visit than others. The time of year can also make a difference in pricing. Traveling done at peak tourist times usually costs more than off-season trips.

Be flexible

Being flexible is one of the easiest ways to save when budgeting for a vacation. Check out multiple travel destinations and compare prices before settling on options for lodging and airfare. Since these are two of the largest expenses in any travel budget, keeping them in check will go a long way toward helping to keep the overall cost down.

Be willing to look at alternative accommodations or stay at a place that is a little farther away from the tourist areas. Remember that most vacation time is spent outside the hotel room – so there is no reason to put a large chunk of the budget toward nice accommodations that will be used only for sleep.

Also, be flexible when choosing a travel date. Many travel search engines have a “flexible dates” option that can be used to research the lowest prices for airfare and lodging. Plan around these dates for added savings in the travel budget.

Related: 11 of the Best Cheap Vacation Ideas

Consider the season

The time of year can really impact a travel budget. A lot of people have begun to plan weddings around their honeymoons, and not vise versa. For example, if the goal is to travel to Italy without spending a fortune or facing large crowds of tourists – while still enjoying nice weather – get married in early autumn, which is known as the shoulder season. It’s a great time of year to travel, because the weather is still nice, but the crowds have thinned out. Most people with children travel during the summer. Once the kids are back in school, prices for airfare and accommodations tend to drop, allowing people with more flexibility to travel cheaper.

Related: Make Money Renting Your Home with Airbnb While You’re on Vacation

2. Make a list of your major expenses (use a travel budget worksheet)

When drafting a travel budget worksheet, plan for the biggest expenses, including transportation, accommodations, and food, first. Getting those out of the way will greatly aid in putting together the overall vacation budget.

Research cheap travel deals (transportation)

Transportation costs for trips that are taken close to home will not be very high. But when airfare comes into the picture, the transportation line item will increase dramatically. Research multiple airlines for cheap travel deals, and consider taking connecting flights to cut down on the cost. If it’s feasible, check out the price of flights leaving from airports in nearby cities.

Flights on airlines to and from major airport hubs are usually lower in cost. For example, American Airlines and Southwest Airlines are both headquartered in Dallas. Flights on those airlines tend to be the cheapest travel to and from that area.

Research accommodations

Another large expense in any travel budget is lodging. There is a wide range of options to consider when it comes to picking out a place to stay, including hostels, hotels, motels, bed and breakfasts, or apartments. Or, if a trip includes camping, those accommodations can include cabins and tents.

Rather than being brand-loyal to a particular hotel, utilize travel sites like Hotels.com to compare costs at different chains. After all, most travel time is spent sightseeing and exploring, not inside the room.

The closer accommodations are to major attractions, the more expensive they will be. Consider staying somewhere off the beaten path to save money.

When traveling with a group of people, split the cost of accommodations. For example, rent a house or condo with multiple rooms and divide the costs. If your destination is more remote, consider renting an RV. For as low as $175 per night, you can comfortably sleep 10 adults and still come in under $20 per person per day.

Budget for food

One of the trickiest line items in a vacation budget is food. To save some money in this area, choose a place to stay that has a kitchen – or at least a refrigerator and microwave. Eat some meals there, and then splurge a few times by going out to eat at local restaurants.

Another great way to save money on food is to stay in a bed and breakfast or a hotel that includes breakfast. Some chains like Homewood Suites or DoubleTree offer both a kitchen area and a hot breakfast, which helps in saving money. Drinks bought while eating out can quickly add to a bill, so buy wine or beer for the room to keep that travel budget in check.

When budgeting for meals, try going out for lunch instead of dinner. Lunch is usually cheaper than dinner, and many of the same options are offered for less. It is also usually not as tempting to order pricey alcoholic beverages during lunch.

Related: How to Find Cheap Gas Nearby (When You’re On the Go)

3. Make a list of smaller expenses

Once the larger expenses are planned out, figure out the extras, like sightseeing, entertainment, and gifts.

Research potential vacation activities and local places to visit. Go online to get an idea of the associated costs, and budget accordingly.

Don’t forget to plan for any necessary vaccines if traveling abroad, as well as gifts to take back home. Build a buffer into the budget to account for any surprise expenses. It’s always best to plan for more, and then spend less.

4. Determine the monthly savings

Once a rough vacation budget has been established, it’s time to figure out how to pay for it. Take the total amount and divide it by the number of months left until the trip. For example, if the vacation date is in nine months and the cost of the trip is approximately $2,700, $300 must be set aside every month.

If that amount seems too large, there are two options: adjust the timeline or make some extra money.

If necessary, push the trip out by a few months until enough money can be saved, or figure out how to bring in some extra income. There are many different ways to make money on the side, and help to reach that savings goal.

5. Vacation budgeting doesn’t end there

Those travel budgets won’t do much good if they aren’t followed. It is important to track costs and stay on top of spending while on vacation. Don’t stress out over every penny, but don’t go overboard, either. It wouldn’t be fun to see some nasty surprises on the bank or credit card statement later.

One of the easiest ways to track expenditures while traveling is with a budgeting tool like Personal Capital. Alternatively, keep on top of spending with an Excel spreadsheet or even with a pen and paper. Whatever the method, keep it updated and check it regularly.

Bonus Tip: Draft an itinerary

While it’s not necessary to create an itinerary when budgeting for a vacation, it really helps stay on track. The best way to do this is by using an Excel spreadsheet. Make a rough outline with a separate entry for each day of the vacation. Fill in all of the travel information and any scheduled activities like sightseeing tours.

Make a separate column to the side and list out all potential vacation activities. Group together any events that are in the same area of town and write down approximately how long each one would take. Now slot them in under the different day headers for either the morning or afternoon.

Try to group together activities or sightseeing that will occur in the same part of town. Food and restaurant options can be added in after the schedule is roughed out.

Itineraries are meant to be flexible, not restrictive. Move things around to find the right balance. Note the associated cost of each entry on the list.

Add all of the expenses together at the bottom of the spreadsheet to estimate the total travel budget. Remember that it’s not necessary to follow the itinerary word for word. Use it as a planning tool and focus on enjoying the trip.

Creating a Travel Budget Is Well Worth the Time

Even though it may seem like creating a travel budget can be a hassle, in the long run, it will make vacations far more enjoyable.

Having a vacation budget means not stressing about money after the trip. It allows for advanced planning and time to save up enough money. Budgeting for a vacation means that it will be easy to relax and have a good time, knowing that everything is in the budget and ready to be paid for.

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