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Tag: Zero-Based Budgeting

Posted on April 1, 2021

8 Best Budgeting Apps: We Weigh the Pros and Cons of Each

Budgeting is an essential foundation of personal finance. But while there are great apps available to manage your overall finances, you may not need a financial adviser, a bill cutter or recommendations for the best credit cards.
There are several things to consider when you’re looking for a good budgeting app:

How to Determine the Best Budgeting App for You

Price: Tiered plans priced at .97 a month, .97 a month and .97 a month

  1. What we liked about Mvelopes was the ability to access it by laptop. But the Mvelopes desktop interface looks like it came straight out of Windows 2000.
  2. It’s easy to make a zero-based budget through the app, because you can change values based on what you anticipate making.
  3. Final verdict: By the name, you can guess it’s best for envelope users, but you can use any type of budget beyond that. Unfortunately, it has some of the same bank syncing limitations as the free apps — but you pay for it.
  4. You can buy individual add-ons for additional features like repeat notifications or advanced filtering. You can get all the available add-ons for .99 per year. It’s a great price compared to other apps with annual membership.

Price: annually

The 8 Best Budgeting Apps We Found

Overall, the app and website are really nice. You can make a monthly savings goal, mark bills as recurring and see how much you have in your “pocket” for the day, week or month. You’ll have to play around with it to make sure PocketGuard is sorting everything right, but once you do that, it’s very hands-off.

Honeyfi: The Overall Winner

A woman holds a cell phone
Chris Zuppa/The Penny Hoarder

It has some features EveryDollar doesn’t. For example, it lets you roll over any unused cash to the next month’s envelope, and it reports on your spending by envelope or month.
Available on: Apple and Android
Available on: Apple and Android
Available on: Apple and Android
Available on: Apple and Android
Available on: Apple and Android
Final verdict: It offers affordable transaction syncing, but we don’t know what budgeting method you’d use for PocketGuard. It’s a good accompaniment, but we wouldn’t use it as a sole budgeting app.
Final verdict: It offers affordable transaction syncing, but we don’t know what budgeting method you’d use for PocketGuard. It’s a good accompaniment, but we wouldn’t use it as a sole budgeting app.
One cool feature is “sweeping envelopes.” At the end of the month, if you have cash left over in an envelope, you can “sweep it” to your savings account, debt payoff or investment account envelope.
User experience. Are you OK with ads? Credit card offers?
We think it’s the best app on our list. And no, they didn’t pay anyone at The Penny Hoarder to say that.
What we don’t like is that after you sync your bank accounts, neither the web version nor the app will upload previous transactions. If you want to start from scratch, this is fine. But if you’re trying to start a budget mid-month? Not so good.
If you have a partner, you can communicate about transactions within the app and limit what transactions your partner can see. <!–

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Honeyfi has no web-based budgeting option, but the capabilities of the app more than make up for it. Syncs with accounts? Yes Final verdict: If you have a joint account with your partner, Honeyfi is a no-brainer. You can customize your budget based on whatever budgeting method you prefer and sync all your bank accounts at only per month.


Honeyfi is technically a budgeting app for couples, but single people shouldn’t write it off. You can easily add two of your email accounts and be your own domestic partner.

Posted on February 11, 2021

Zero-Based Budgeting 101

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Putting your money to work is one of the best ways to maximize your financial potential. Whether you make six figures a year or minimum wage, every dollar you bring in is an opportunity to make more.

But strategically allocating your finances is about more than just funneling money into your investment accounts. It’s also the best way to plan and save for the things that are most important to you, like a vacation to Bali or a down payment on a new home.

Zero-based budgeting is one of the most popular ways to do this. Read on to find out if this strategy is right for you.

What is Zero-Based Budgeting?

Zero-based budgeting, also known as zero-sum budgeting, centers around the principle that every dollar in your budget should be categorized. At the end of the month, a zero-based budgeting system lets you know where 100% of your income went.

The difference between a regular budget and a zero-based budget is that a traditional budget allows leftover money to sit in your checking account. A zero-based budget would require that you move those extra funds to savings, debt payoff, or some other goal. If productivity, efficiency, and structure are important to you, then this system might be just what you’re looking for.

Money coach Nick True of Mapped Out Money and his wife Hanna have been using a zero-based budget for seven years. Using this budget has forced them to spend their money in a way that more closely reflects their goals.

“A zero-based budget has helped us be efficient with our money and consciously spend it in a way that aligns with our values,” he said.

How to Create a Zero-Based Budget

Start by making a list of all the categories where you spend money every month. These may include:

  • Housing
  • Transportation
  • Debt including student loans, credit cards, and personal loans
  • Savings
  • Groceries
  • Utilities and internet
  • Health insurance and medical expenses
  • Childcare
  • Entertainment
  • Subscriptions and memberships
  • Personal care
  • Pets
  • Gifts and charity

Then, decide how much you want to allocate for each specific category. Use your monthly credit card and bank statements to estimate a realistic figure.

One feature of zero-based budgeting is that you use last month’s income to determine how much you can spend. This way, you’re only using money that’s already in your bank account and not relying on a future paycheck. That’s why zero-based budgeting is particularly helpful for consumers with a variable income.

Once you’ve written everything out, subtract the expenses from the income. On conditions that your expenses exceed your income, you’ll have to revise the budget to cut costs.

If you have money left over, you need to assign it to a category. If you don’t, you’re more likely to spend it on something non-essential instead of putting it toward a long-term goal. This is the essence of zero-based budgeting.

How to Implement a Zero-Based Budget

After you’ve created a budget, you have to start tracking and categorizing your expenses. It’s best to do this every day, or at least once a week because it can get overwhelming if you wait any longer. Find a routine and schedule that’s easy for you to stick to.

If you keep overspending in a certain category, stop and consider if you need to increase the amount in that category – or find ways to remove the temptation.

You should also remember that a zero-based budget is not static and that you should change the budget when necessary. If Christmas is coming up, for instance, you may want to allocate more money in the gifts category.

How Does it Compare to Other Budgeting Methods?

A zero-based budgeting system may require more maintenance and diligence than other types of budgets. Because you have to give each dollar a job, that means you also have to track each dollar that you spend. This can be time-consuming and frustrating.

If you have an unexpected expense in a zero-based budget, you’ll have to revise your budget or use your savings.

“For example, I recently had to take my cat to the vet, and the bill was more than I currently had sitting in my pets category,” True said. “So I moved money from clothing and dining out over to the pets category to cover it for the month.”

Because you have to classify each transaction, zero-based budgeting forces you to confront how much you actually spend. If you keep overspending on take-out or random Amazon purchases, your budget will tell you. You can’t hide your spending habits from a zero-based budgeting system.

Other Budgeting Systems

If a zero-based budget sounds too confusing or difficult to set up, here are some simpler alternatives:

50/30/20 Budget

The 50/30/20 budgeting method, developed by Senator Elizabeth Warren, is a simple budgeting system that works well for beginners.

The method involves dividing your monthly income into three categories: 50% toward needs, 30% toward wants, and 20% toward saving/debt payoff. When you make a transaction, you’ll classify the item as a need, want or saving/debt payoff.

The 50/30/20 system is easy to use because there are so few categories, leaving room for personalization and improvisation. It’s a good choice for someone who wants to budget regularly but finds zero-based budgeting too involved or too restrictive.

Cash Envelope

The cash envelope system involves using physical cash to pay for all eligible expenses. You decide how much to spend and withdraw the cash from your bank account, then you divide it into envelopes labeled with the category name.

For example, if you’ve allotted $500 to groceries, you would withdraw $500 in cash and put it in an envelope marked “groceries.” That $500 is supposed to last you the rest of the month. If you spend it before the month is over and still need groceries, you’ll have to take money from other categories, dip into your savings or find a way to earn more money.

This system is great for people who prefer a more analog approach, or for anyone who needs a little extra help to avoid overspending on certain categories.

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