Each payday you have great intentions. You swear that this is the month where you aren’t going to spend too much money. You are going to watch every penny and keep your spending under control. Before you know it, you can’t even afford to buy groceries. Is there an answer to your problem? Yes. STOP SPENDING MONEY.
Overspending is a problem which affects many people. Whether you are rich or struggle to make ends meet, you too might find that you spend too much. Some reasons are financial, and others are emotional.
The first way you can get spending under control is to take a look as to why you are spending too much. That is the first step. No one can answer this question but you.
After years of helping thousands of readers (just like you), I’ve compiled a list of the top 12 reasons that people overspend. You might find yourself in one, two or even more!
HOW DO YOU KNOW IF YOU ARE OVERSPENDING?
YOU’VE MAXED OUT YOUR CREDIT CARDS
When there is no room to charge anything on your cards, you might have a problem. In most cases, maxed credit cards signals you are living beyond your means. If you have to continue to charge because you don’t have money, then you are spending too much.
YOU CAN’T FIND A HOME FOR YOUR LATEST PURCHASE
Your temptation might be electronics or handbags. No matter what you love to buy, you might notice you are running out of room to store things. When the stuff takes over your home and is causing clutter, it is time to take a long hard look at how you spend money.
YOUR BUDGET NEVER WORKS
There may be months when you don’t have enough money in your budget to cover your mortgage or food. When you continually spend money on the wrong things, your budget will not work.
That means if you have just $50 for entertainment, do not spend $75. That other $25 has to come from another budget line.
YOU SPEND MORE THAN YOU EARN
Take a look at your credit card balances. You might be paying only the minimum balance because you can’t pay it in full. When you spend more than you make and continue to add more debt, take a look at what you are buying. It might be time to pull back and stay out of the stores.
HOW TO STOP SPENDING SO MUCH MONEY
Now that you can see how you spend your money, the next step is to make a change. You have to stop throwing it away. Right now. Here are the steps to take to control and stop spending money.
1. MAKE A BUDGET
I know, I know. I probably sound like a broken record as I keep bringing up this budget thing. However, it’s true. If you do not have a budget, you have no idea where you are spending your money.
A budget is needed so that you can direct your money where to go each time you get paid. It also helps you know how much you have to available to spend on groceries, clothing, dining out and even entertainment. When you know you have a limited amount to spend on specific categories, you are instantly in control of our spending.
Read more: How to Create a Budget (even if you suck at budgeting)
2. PLAN AHEAD
Meal planning is one thing many people don’t think about when it comes to overspending. If you don’t plan your meals (and stock your fridge and pantry accordingly), you are more likely to run out to eat for dinner. Doing this at $25 a pop 2 or 3 times a week takes its toll on your budget.
Creating a meal plan will not only help you control your spending, but you might also find that you eat (and feel) much better too.
3. USE A SHOPPING LIST
Before you go to the store, it is essential you make a list. Check your fridge, freezer, and pantry so that you are not purchasing items you do not need – especially produce.
There is so much waste of food that expires before you can consume it. That results in you buying items so that they can end up right in the trash can. Make sure you plan your shopping trip and then purchase just what you need, as well as what you can eat before you hit the store the following week.
4. STOP PAYING FOR CONVENIENCE
There is a quick fix for nearly everything. You can find dinners in boxes, small pre-packaged snacks, etc. Rather than purchase convenience items, buy the larger size snacks and then re-package yourself into smaller baggies. You will not only get more out of a box, but you can even control how much you put into each baggie.
There are other ways we pay for convenience. We pay for someone to iron our shirts, wash our cars and even mow our lawns. By doing these things ourselves, we can keep much more money and easily stop overspending.
Read more: How You are Killing Your Grocery Budget
5. STOP USING CREDIT CARDS
We live in an age where our money is all digitally tracked, be it on credit or debit cards. Yes, they are more convenient, but they make it easy to overspend. When you use cash, it is impossible to overspend. You honestly can. Not. Do. It.
I hear all the time that people pay off cards at the end of the month and that they don’t overspend, but that is not the truth for most people. You might think that it is just $10 a week. However, that $10 a week is a hit of $520 over the course of a year. What could you do with an additional $500 in your pocket?
Read more: How to Create a Workable Cash Budget System
6. PAY YOUR BILLS ON TIME
We all have bills. We know when they are due. When you miss the payment due date, you get assessed a late charge. Pay them on time, so you don’t pay more than you need to.
In addition to late fees, not paying your bills on time can have an adverse effect on your credit score.
Learn how to organize your bills, so you never pay them late again.
7. DO NOT LIVE ABOVE YOUR MEANS
Few of us would not love new clothes or a new car. We all would like to make more money or get the hottest new device. The thing is, can you afford it? Is it a want or is it a need?
If you are using credit or loans to get items that you can not afford, then you are living beyond your means and spending money you don’t have. Scale back and make sure that you can honestly afford the house or the car and that it doesn’t ruin your budget and cost you too much.
Read more: Defining Your Wants vs. Your Needs
8. DON’T FALL FOR IMPULSE BUYS
Stores are sneaky about making us spend money. They use signs, layout, and even scents to lure you into wanting to buy more. The thing is, if you purchase something you did not intend to, then you are already blowing your budget and probably overspending.
Another way that you are spending too much is when you plan dinner but then decide at the last minute to go out to dinner instead. Why do that when you have food waiting for you at home (which you’ve already paid for)?
The final reason you may impulse buy is that of emotion. If you feel a rush because of that new item, you may purchase out of impulse and emotion instead of need.
Read more: Stopping Impulse Shopping
9. FIND ANOTHER BOREDOM FILLER
I remember being in an online forum when my kids were little, and we talked about our day. Many of the mothers went to the store every. Single. Day. They said they could not handle being in the house and just had to go somewhere. That resulted in them buying things they did not need.
If you are bored, find a new hobby. If you just need to get out of the house, why not go for a walk or play a game with the kids? Find a way to redirect your boredom so you stay out of the store and stop overspending.
10. USE FINANCIAL GOALS
When you do not have financial goals, you have nothing to work towards. You might want to get out of debt, or you may want that newer vehicle.
Take a look at what you are spending each week on non-essential items. What would happen if you would put that money into savings or paid off your debt instead? How much closer would you be towards getting that new car or being debt free?
Find a goal you want to achieve. Talk to your family and see if you have something you can work towards together. By setting a goal that everyone wants, you will all be more aware of your spending and will contribute towards reaching it more quickly.
11. STOP SPENDING MONEY WHEN YOU TRACK YOUR SHOPPING
I know many people who have tried to use cash, and they say it does not work because they spend it too quickly. There are others I know who spend too much on plastic each month. The reason is that they are not tracking what they spend, which is a reason why they overspend.
If you use cash, this is where the envelope system is most helpful. You will track your spending out of each one so you can see where your money is going. As the envelope amount gets smaller and smaller, you think twice before you pick up that item — because you may not be able to afford it.
You can do this same thing if you use plastic. There are all sorts of tracking apps to help you monitor what you are spending on all of your various categories.
No matter how you pay for items, make sure you are always tracking what you spend – you might be shocked to learn where your money goes.
Read more: Creating and Understanding a Spending Plan
12. DON’T FALL FOR THE SALES
When you walk into the store, pay no mind to the sales. Use your list and stick to it. Don’t fall for the fancy sales signs, smells, and flashing lights to lure you into buying something you don’t need.
Read more: Understanding the Tricks Stores Use to Get You to Spend Money
Before you can gain control of your finances, you need to figure out why you are spending more than you should. Simple changes to the way you view money can make all the difference.
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When you are trying to tighten down the hatches on your spending, you are doing everything possible to stick to your budget.
You are determined to stick to your budget this time around. But, you always hear that budgeting can be hard.
Well, here are some quick budgeting tips that will make sure to stick to your budget.
As most new budgeters learn, they struggle to stick to a budget for their monthly expenses. It is a natural process everyone goes through.
Budget, if you are looking for an easy button, then learn which payment type is best if you are trying to stick to a budget.
Especially if you spend a lot of time on social media, studies have shown you are more likely to overspend. So, you must learn which payment type will have you stick to a budget.
Then, you may be wondering and wanting help deciding which payment type is best for you.
The Optimal Solution Payment Type Solution
The most efficient payment type is something that is instantaneous and there are no fees associated with the transaction.
Cash is the most efficient payment type: Cash payments are usually the most efficient and convenient way to pay for goods or services.
Credit cards can be a less favorable option: Credit cards tend to have high-interest rates and can lead to financial disaster if used irresponsibly.
Debit cards are a great way to keep your spending within your budget: Debit cards should be considered a top priority for budgeting because they keep you within your spending limits.
Developing a budget will help you avoid financial disaster: A budget helps you stay organized and make informed decisions about which payment method works best for you.
Today, there are so many options on which payment type to use in today’s online world.
1. Cash
Cash is a payment type that can be used to reduce debt spending. It is versatile and can be used for a variety of expenses, such as groceries, medical bills, and gym memberships.
Cash is an excellent choice for people just starting to budget and save.
It is more restrained than credit or debit cards. The envelope method of cash budgeting can be used to train your brain to reduce spending. Cash is the most traditional payment method and has the fewest drawbacks. However, you need a safe place to store your cash, and some stores may not accept it.
Benefits of Cash:
Cash is an excellent payment type when your financial goals are to reduce debt spending.
Cash is a finite payment method that prevents you from overspending.
You have a set amount of money to spend each month, so there’s no chance of overspending.
Easy to track with the envelope method: Utilizing the envelope method ensures that you are tracking your spending (i.e groceries, gas, medical bills) and making sure that you aren’t overspending.
Cash is a quick and easy way to pay for goods and services.
No Fees. No maintenance fees or interest rates as credit cards. Cash is just plain cash – printed paper of currency.
You can avoid high fees associated with card transactions: There are no associated fees when paying with cash, making it the cheapest option overall.
Cash discounts may be available. Since you are paying with cash many small businesses offer a cash discount of 2-5%.
You can use cash at any store: No need to carry around extra cards or checks.
It’s easy to get cash: You can easily get cash and make extra cash.
There’s no need for bank account details: No need for bank account details means you’re free from identity theft risks and other inconveniences that come with having a bank account.
Cash allows you to skirt some financial regulations: Because cash payments don’t fall under the purview of many financial regulations, businesses can take advantage of loopholes in the law that allow them to charge higher interest rates on loans or engage in shady business practices. (highly recommended to stay above book)
Cons of Cash:
Possibility of losing or stolen cash: Keep your cash in a safe place!
You need a safe place to store your money: Another disadvantage of using cash is that you may need a safe place in which to keep it – some stores don’t accept it as a payment method.
Why Choose Cash?
Total control over your money, so there’s little chance of unexpectedly running out of funds.
Cash is a great way to stay on budget, as you can easily track your spending and see where you need to cut back.
Unpleasant to spend money with cash, which can help train your brain to reduce spending.
Cash is a quick and easy way to pay: Using cash eliminates the need for banks, credit cards, or other forms of payment.
Verdict: Paying with cash is the best method for budgeting and saving.
Overall, cash is a great payment type when it comes to budgeting. You can immediately see how much money you’ve spent and what needs to be cut back.
You can’t make impulsive buying decisions with debit cards or credit cards.
With a finite amount you can spend, cash is an excellent choice to prevent overspending. According to research, paying with cash can feel unpleasant, which can train your brain to reduce spending as much as possible.
2. Credit cards
Credit cards offer a number of benefits, including convenience, cash back, and the ability to make large purchases or pay bills in case of emergency. However, credit cards also come with credit card debt and can lead to overspending and financial problems if not used carefully.
For many, credit cards are the easiest way to blow your budget because you don’t have control over how much money you spend.
It is possible to overspend with credit cards if you are not mindful of what you charge.
On the flip side, this is a preferred method as many credit cards also offer rewards programs that give you cash back or points for purchases. If you make the conscious decision to use credit cards, you must make payments on time to avoid penalties.
Benefits of Credit Cards
Credit cards are convenient: Convenient to use and don’t have to worry about losing cash.
Use a credit card if you are disciplined and have strict spending habits: If you are disciplined and have strict spending habits, then using a credit card can work well for budgeting purposes.
Flexibility on larger purchases: Some benefits that come with having a credit card include more cash flow as well as being able to make larger purchases.
Credit cards provide support in times of crisis: Many credit cards offer extended services that can help like 24-hour fraud protection, lost wallet services, traveler’s insurance, and many other benefits – check each issuer for details.
$0 Liability on Unauthorized charges: Your credit card company will not be held responsible for any charges that were not authorized by you. This means that if you did not authorize a charge in person, online, or otherwise, you will not be responsible for it.
Fraud protection: Check your credit card issuer, but many offer fraud protection.
New card introductory APR is helpful to pay down debt: The introductory APR for the new card may not last long.
Payments on balance transfer should be manageable: Make sure that the payments on your balance transfer are manageable.
Points: You can accrue points along with your spending which can be a great perk.
Credit card interest rates are significantly lower than payday loans: Interest rates on credit cards are usually much lower than payday loans.
Due Date is After your statement closes. Since your bill cycle is at least another 21 days between the closing date for your statement and the due date, it gives you flexibility. Personally, I still account for the credit card bill in the same month that it was accrued.
Cons of Credit Cards
Potential for credit card debt: When using a credit card, be aware of your credit limit and the interest rate that you will have to pay on your debt. Also one of the categories of debt.
Credit limit often leads people to spend money: The credit limit often leads people to spend money by giving them a false sense of security, when they should stick to a budget and pay attention to their credit card statement and the billing cycle.
Credit card overspending can lead to debt: Consider the purchase if it is essential or delay it if possible.
Ability to easily purchase something you cannot afford. Buying something that you don’t have the money saved up for will cost you interest fees associated and maybe even with a credit card balance transfer.
There are a number of fees associated with a balance transfer: Transfer fee, interest on new purchases charged to the card.
Your introductory APR may not be valid if you make too many payments late: If you fall more than 60 days behind on payments your introductory APR might be canceled and you may face higher interest rates.
Credit score can suffer from debt: When you carry a credit card balance or don’t pay your monthly bills on time, you will lower your credit score.
Avoid carrying a balance: Pay your statement in full each month to avoid paying interest and maximize your grace period.
Key Takeaways on Credit Cards
Make sure to pay attention to the dates: Don’t spend more than you can afford, and make sure you’re making your minimum monthly payments on time so that your debt doesn’t increase over time.
A credit card can be used for budgeting only if you’re very disciplined: If you know that overspending is NOT an issue and you pay the credit card’s monthly balance in full, then using a credit card is fine.
Credit card transactions usually take several days to register in the feedback system: Something to look out for!
You can step back into debit cards or cash if needed: If credit cards are not for you, there are other options available such as debit cards or cash
3. Debit cards
Debit cards are a good option if you want to stick to a budget because the predetermined amount of funds can help you stay within your means. Additionally, debit cards are more convenient than cash and just as accepted as credit cards in most places.
A debit card works more similarly to cash than to credit cards.
They provide an easier way to track your spending and avoid having to carry a lot of cash.
Pros of Debit Cards:
No Need to Carry Cash: A debit card is better than cash because you don’t have to carry a lot of paper money and change around, and they’re also safer.
Debit cards are faster and easier to use: Debit cards work just like credit cards – withdrawing cash, making purchases, and paying bills – but they are linked directly to your bank account, so there is no need to carry around a separate cash envelope wallet or purse for them.
A debit card is a good option if you want to stick to a budget: Debit cards come with a predetermined amount of funds that you can spend from your bank account just like cash.
Tracking payments is easy with debit cards: Your debit payments will appear on your issuer’s dashboard, which you can monitor anytime from any location.
Convenience: Debit cards are more convenient to use and faster than needing to write a check or carry around cash. Plus they don’t add to your debt.
Shopping online is easy. You can use your debit card to make online purchases with your bank account, and digital banking tools make tracking your spending easy.
Points: Some debit cardholders can earn points for spending on their cards, which can be redeemable for rewards such as cash back or gift cards. This is new to compete with credit cards.
Fraud protection is typically offered for free with most debit cards—meaning if your card is stolen or used without your permission, you can get your money back.
No impact on your credit report. When you use a debit card, the funds are actually withdrawn from checking or savings accounts so there is no credit reporting occurring.
Cons of Debit Cards:
An overdraft on a debit card can happen when a purchase exceeds the amount of money in the checking account, leading to overdraft fees.
Funds on hold with fraudulent charges. If your account gets hacked, your losses will be limited since most banks protect their users against fraudulent charges and online purchases with their accounts. However, those funds will be held while they investigate and you may be liable for $50.
No chance to improve your credit score. Since you are not borrowing money, you are unable to improve your credit score.
Debit cards are a great way to keep your spending within your budget and avoid overspending which can lead to many detrimental issues.
Regardless of the overdraft fee, debit cards are still better than cash because they’re safer and easier to carry around.
4. Checks
Checks… do people still write checks? Why yes they do!
Checks offer a few benefits as a payment method, even though they are slowly being replaced by more modern options.
This can help you keep track of your spending and make sure you do not overspend. Additionally, if you ever need to dispute a charge, having a check can be helpful in proving what you paid for.
What is a check?
A check is a written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer from the check writer’s account. The date is usually written in month/day/year format. The signature of the check writer is usually on the line below “Pay to the order of.”
There are three main types of checks:
A cashier’s check is a check guaranteed by a bank, drawn on the bank’s own funds, and signed by a cashier.
A certified check is a personal check for which the bank has verified that there are sufficient funds to cover the payment.
A personal check is one that you write yourself and that is not guaranteed by the bank.
Pros of Checks
Checks are still a payment option: Checks are one of the traditional payment methods, but it is slowly dying out because of modernization.
Physical written record. It can be helpful to have physical copies of checks in addition to digital records through the bank.
You need to make both digital and physical copies of the check: Save check stubs but also transfer the information to a budgeting system.
Cons of Checks
Saving check stubs is helpful, but you still need to transfer the information to a budgeting system: Useful for tracking spending, but you’ll likely want more detailed records than just check stubs.
Not as convenient as credit or debit cards.
5. Apple Pay or Apple Cash
Apple Pay is easy to use and convenient since you only need to connect your smartphone to your cards and bank accounts via the app.
It is easy to use since you just hold your phone up to the reader and wait for the payment screen to appear.
You can even get cash back with apple pay.
Pros of Apple Pay:
Apple Pay is easy to use and convenient: You only need to connect your iPhone to your cards and bank accounts via the app.
You don’t need to carry any extra cards or cash: No need for additional cards or cash when you’re out and about
You can use Apple Pay on different devices: You can use Apple Pay on your iPhone, iPad, and Mac.
Transactions are secure: Your transactions are secured with Touch ID or a passcode.
Set up Spending Limits for each user. This way you can make sure you (or others with authorized access) are not spending more than you intended. Learn how.
Protection of Data during transactions. Your actual credit card number is changed to a different digital number, which allows limits your card number’s exposure.
Cons of Apple Pay:
Not widely accepted (yet). This method of payment is 100 percent guaranteed. While many stores offer apple pay, not all do quite yet.
The same rules apply if you load apple pay with a debit or credit card drawbacks include late fees, interest rates, and overspending: Keep that in mind when choosing Apple Pay as your payment method.
6. Mobile wallets like Google Pay, Samsung Pay, Venmo, or Zelle
Mobile wallets are digital payment systems that allow you to pay for items with your smartphone. Many people find mobile wallets are very convenient and becoming a traditional method of payment (such as credit cards).
With mobile wallets, you are making digital payments without having to carry around cash or cards using just your smartphone.
Mobile wallets are easy to use and provide instant payment convenience, making them perfect for shopping online.
Pros of Mobile Wallets:
Mobile wallets use credit cards and debit cards: Connect your smartphone to your bank accounts and use it for digital payments.
Mobile wallets are easy to use and convenient: Instant payment convenience makes them perfect for shopping online as well.
No need for cash or cards: No need for cash or cards.
Strong secuirity features provide privacy and security features that ensure your personal information is safe from data breaches and unwanted charges.
You can make purchases without having to show your identification: You can make purchases without having to show your identification.
Additional Layer of Security. Additionally, mobile wallet data is protected with verification, such as fingerprints.
Cons of Mobile Wallets:
With Zelle and Venmo, it is easy to send money to the wrong person or add an extra zero and send more money from planned. More often than not, it is difficult to recover your money.
You need to be disciplined when using a mobile wallet: Pay attention to late fees and interest rates, as well as the amount you spend in a month.
7. Prepaid Cards or Gift Cards
A prepaid card or a gift card could be right for you. The advantage of these is the mere fact that you reached the limit is enough to deter overspending.
It can make you think twice about whether you need to purchase an item or not.
Pros of Prepaid Cards and Gift Cards
Easy to use: Prepaid and gift cards are easy to use and manage your finances with.
The mere fact that you reached the limit is enough to deter overspending: It can make you think twice about whether you need to purchase an item or not.
No strings attached: No need to worry about any fees associated with the prepaid card once activated.
Privacy: The prepaid card does not track your spending or use any personally identifiable information.
Credit Score Doesn’t Matter: Your credit score does not matter when obtaining a prepaid card.
Cons of Prepaid Cards or Gift Cards
Losing a prepaid card is not a fun experience. Contact the prepaid card issuer right away to protect the funds on the prepaid card.
Fraud protection: Consider whether your prepaid card issuer offers any theft or fraud protection, as not all providers offer this feature.
Prepaid cards have limits on how much money you can load onto them, which can be frustrating if you need to make a large purchase.
8. PayPal
PayPal is a very convenient way to pay for items online or in person. It is widely accepted and used by many people.
PayPal is a digital payment service that offers convenience and ease of use. You can use them to send money to people or pay for online purchases.
However, because these services can only be used online, they should not be relied on as your sole method of budgeting and tracking expenses. Instead, consider Paypal in combination with another budgeting tool, like a spreadsheet or app, to get a fuller picture of your spending.
Pros of PayPal:
PayPal is one of the most popular online payment methods: Widely accepted and used by many people.
You can use them to send money to people or pay for online purchases: Help you review your spending prior to purchase.
Cons of Paypal:
EasyTarget for phishing scams. A phishing scam is when someone tries to trick you into giving them your personal information, like your password or credit card number. They might do this by sending you an email that looks like it’s from PayPal, but it’s not. Or they might create a fake website that looks like PayPal. If you enter your information on these sites, the scammers can then use your account to make purchases or send money to themselves.
Reputation for poor customer service. This is evident in their customer service ratings, which are some of the lowest in the industry. The majority of complaints against PayPal revolve around poor service received when asking for assistance with fund freezes and account holds.
9. Cryptocurrency (ie: Bitcoin)
Cryptocurrencies offer a new and innovative way of handling payments. They’re not yet widely accepted, so there’s potential for businesses to get in on the ground floor with this new technology.
However, because cryptocurrencies are so new, it’s uncertain if they will be regulated or not. This could pose a challenge for businesses down the road.
Pros of Crypto
Not subject to the same regulations as traditional currency, which makes them appealing to those who want to avoid government intervention.
The valuation of Crypto changes rapidly. If you are smart with crtyple this is a great way to spend your crypto coins.
Cons of Crypto
Cryptocurrencies are not accepted everywhere: Cryptocurrencies are not accepted by most organizations yet, which it makes it difficult to use them in day-to-day life.
It’s unclear if cryptocurrencies will be regulated: It’s uncertain if cryptocurrencies will be strictly regulated or not. This poses a challenge for those who want to use them as a payment method.
Bitcoin and other cryptocurrencies are still in their infancy: Bitcoin and other cryptocurrencies have only been around for a few years, so they may still face challenges in the future.
Here are the most popular budget apps today:
Other Payment Methods:
ACH payments
ACH Payments is an excellent way to pay bills and other financial obligations: You can easily set up a billing cycle for recurring payments, making it safe and convenient.
Fewer people are aware of your transactions when using ACH payments, reducing the chances of fraud or theft.
Key Facts:
Fewer people know about your transactions when using ACH payments, reducing the chances of fraud or theft.
Your checking account information is not shared or accessed by the system in any way.
You can quickly pay bills and other expenses with ACH payment: Financial institutions offer this as part of their deals.
When setting up recurring bills with ACH payment, you are aying your bills on time is important for maintaining a good credit score.
Pay attention to your check account balances: Make sure you have enough funds in your check account to avoid paying overdraft fees.
Money orders
A money order is a document that orders the payment of a specified amount of money. Money orders are convenient because they can be bought at many locations, including post offices, banks, and convenience stores.
To get a money order, you will need to fill out a form with the payee’s name, the amount of the payment, and your contact information. You will then need to purchase the money order with cash or a debit card.
To cash a money order, you will need to take it to a bank or post office. You will need to show identification and sign the back of the money order. The teller will then give you the cash for the payment.
More secure than cash: Money orders are more secure than cash because they don’t require a bank to make the transaction.
Less convenient: money orders are less convenient because you must purchase them in person.
Able to trace. They are also more secure than cash because they can be traced if lost or stolen.
Wire Transfers
Wire transfers are a more secure way to transfer money than traditional methods like checks and cash. These are sent through the banking system and are usually processed within two business days.
Typically, wire transfers are used when sending and receiving large sums of money (over $10000).
More secure than cash: Wire transfers are more secure than cash as the bank verifies there is enough money to make the wire transfer.
Fees involved with using a wire transfer. Most institutions charge for handling a wire transfer.
What method of payment is best?
Cash is the most widely accepted form of payment, but debit and credit cards are very popular.
The payment method that is best for you depends on which one helps you to stick to your budget and spend less money. The goal is to be financially stable.
What method is best for sticking to a budget?
There are several different types of budgeting methods that people use in order to manage their finances. Many people focus on using the 50/30/20 method, in which each percent corresponds to a different category of expenses.
There are plenty of budgeting tools available today to make sure you stick to your budget.
You need to find what works best for you. At the end of the month, you want to spend less than you make. That is the winning combo!
1. Budgeting App
There are many budgeting tools available online, which can be helpful as it can be easier to track your progress and budget over time.
You can use various popular budgeting apps like Quicken, Qube Money, or Simplifi.
These apps can help you track your spending, set goals, and stay on track with your budget.
2. Paper and Pen or Simple Spreadsheet
Some people find that they prefer using a simple spreadsheet or paper budget. This may be due to personal preference or because they find it easier to understand and use.
Additionally, using a paper budget may help you stay more organized as you can physically see where your money is going.
Options to get you started include our own budgeting spreadsheets or using an automated system like Tiller.
3. Envelope budgeting method
The cash envelope system is a good way to stick to a budget because it is rigid and based on envelopes and cash. You can’t get more money until your cash payday. So, this system helps you track your spending and budget better.
However, using only cash can have drawbacks as having large amounts of cash on hand can be risky.
The envelope method gives you a sense of control over your spending and makes it more tedious to write down your transactions. If you find writing down your transactions tedious, the envelope method may be too much for you.
4. Know Your Budget Categories and Track expenses
Tracking expenses is essential to move ahead financially: Knowing what you have spent in each category will help you make better financial decisions.
Be specific with your budgeting categories. Don’t make it too complicated. Always remember to include household items, clothing, and groceries when tracking expenses.
5. Prioritize your Budget Plan
A budget can provide a realistic picture of your finances, help reduce stress related to money matters, and guide you toward achieving your goals.
Creating a budget can help ensure that you are able to meet your financial obligations and still have money left over for savings and other goals. A budget can also help you track your spending so that you can make adjustments if necessary.
Make a budget plan: This will help you stay on track and make sure that you are spending your money wisely.
You decide where to spend money: A budget helps you set future goals and achieve your financial goals.
Creating a budget can help reduce stress: If you tend to get stressed about money matters, creating a budget can give you peace of mind.
A budget has other benefits beyond financial ones: If you want to achieve something in life, creating a budget can help guide you in the right direction.
See where to cut back spending. You can also look at your past spending habits to see where you can cut back. Sometimes it may be necessary to save more in order to achieve long-term goals, like buying a house or having a wedding. Always be mindful of your budget when making payments and spending money.
It’s a three-step process that involves basic math: Making a budget is simple and requires only basic math skills.
Stay on track: Making a budget plan will help you stay organized and keep track of your expenses.
A budget plan will help you stay on track and make sure that you are using the best payment type for your budget.
Making a budget is an easy way to save money. By following a few simple steps, you can keep track of your expenses and make sure that you are spending your money wisely.
Which type of payment is best for sticking to a budget?
One of the main pros of using cash as a method of payment is that it is the most efficient way to keep track of your finances. This is because it is very easy to budget when you are only dealing with cash.
However, many people prefer debit or credit cards are the best type of payment. They are more convenient than cash and can help you keep track of your spending. However, if you have a bad credit history or a low credit score, credit cards may not be the best option for you.
Cash payments are the most efficient: Most convenient and easiest to keep track with cash envelopes.
Credit cards allow you to accrue points along with your spending: These are a great benefit and one that can be a perk if handled well as part of your budgeting process. As long as pay them off in full each month to avoid credit card debt, high-interest rates, and other negative consequences.
Debit cards are also a good option for sticking to a budget. They can be used like credit cards but with less risk of debt.
Cash-based payments are a newer option and are more reliable: May not have as many negative consequences as other payment methods such as credit cards or loans.
What Not to Use when you are Trying to Stick to a Budget
You need to steer clear of these types of payments if you want to be financially stable person.
Personal loans
Personal loans are a risky way to budget. However, if you need the money for an emergency or unexpected expense, a personal loan can be a lifesaver.
There are many risks to consider and other ways to lower your spending before resorting to a personal loan.
Loans can cause budgeting problems: Loans can mess up your budget and make it difficult to stick to spending plans.
Taking out a personal loan just for the sake of having money can disrupt your budgeting: Consumers often borrow money in order to pretend they’re doing better financially than they really are.
Borrowing money is usually not a good idea: When you borrow money, you may find that you cannot handle seeing low checking account balance, which can lead to deeper debt problems.
Payday Loans
Payday loans are a bad option for someone looking for a long-term solution. They are expensive, and there is a high chance that the person will not be able to pay back the loan.
The interest that is charged is also high, and it can add up quickly.
Write bullet points about what happens with a payday loan
Payday loans can trap people in a cycle of debt, as they are often unable to pay back the loan in full on the due date.
When someone takes out a payday loan, they are borrowing money from a lender in a short amount of time, usually two or three days.
Payday loans are often expensive, with interest rates that can be above 300%.
Debt Consolidation Loans
Debt consolidation can be a good way to manage your debt because it can result in a lower monthly payment and extended payments may impact your financial plan. You can use a debt consolidation calculator to estimate how much debt you can afford before taking out a consolidation loan.
Debt consolidation loans also provide convenience because they have lower interest rates than payday loans. However, be careful when consolidating your debt because it is possible to overspend and lose your introductory APR.
You may be able to pay off your debt with one monthly payment: A consolidation loan often results in a much lower monthly payment than all of your previous monthly payments combined.
Extended payments may impact your financial plan: Take a look at how these extended payments will impact your financial planning.
You can estimate how much debt you can comfortably afford: use this tool – Tally .
It is possible to overspend with debt consolidation: If you spend more money than you planned on your day-to-day expenses, this could increase your debt. Consider if the purchase is necessary or if it can be delayed.
You may lose your introductory APR: If you fall more than 60 days behind on payments, you will likely lose your introductory APR and may even trigger a penalty interest rate.
You need to be careful when transferring a balance: Transferring a balance can also forfeit your grace period and you’ll need to pay interest on new purchases charged to the new card.
What type of payment method is best for sticking to a budget?
There are a variety of payment methods available, and each has its own benefits and drawbacks. It’s important to choose the payment method that’s best suited for your business and budget.
A payment method that allows you to stick to a budget is the best option.
FAQs
There are three main types of payment methods: cash, debit cards, credit cards, and cash-based payments.
The envelope budgeting method is a simple way to create a budget. You will need envelopes and divide your money up into the different categories that you spend money on. You will then put the corresponding amount of money into each envelope. This method can be helpful if you have a hard time sticking to a budget.
The zero-based budgeting method is a more methodical way to create a budget. With this method, you track every penny that you earn and spend. This can help you to see where your money is going and make adjustments accordingly.
A debit card is a plastic card that is linked to a checking account. Customers can spend money by drawing on funds they have already deposited. An overdraft on a debit card can lead to overdraft fees, which have high-interest rates.
A credit card is a plastic card that allows customers to borrow money up to a certain limit in order to purchase items or withdraw cash. Using a credit card can help build credit or improve your credit score.
There are a few different ways to use a credit card. You can use it to check your balance and review your spending history, which can be helpful in staying accountable.
Credit cards also offer online tools which make the analysis of your spending easier which can be helpful in tracking your budget.
Finally, you can use a credit card to rebuild your credit score by using it responsibly and paying off the balance in full each month.
Which payment type can help you stick to a budget?
When it comes to choosing a payment type that will help you stick to a budget, there is no one-size-fits-all solution.
The best payment method for you will depend on your specific needs and preferences.
When you are creating a budget, it is important to consider which payment type will help you stay on budget. Different payment types work better for different people, so it is important to experiment and find the one that works best for you.
As I stated for me, I have learned how to use credit cards to maximize cash back. But, I learned how to budget with cash when first starting.
Please pay attention to your budget and how it changes over time, as different payment types may work better at different stages of your life.
Consequently, I hope that this guide has given you a better understanding of the different payment types available and helped you narrow down your options. There are a variety of payment types that can help you stick to a budget, so it’s important to research each one carefully.
I highly recommend using an app to track your expenses and know where you spend your money. By developing a budget and choosing the right payment type, you can stick to your financial goals.
Know someone else that needs this, too? Then, please share!!
Hello! Today, I have a great debt payoff story from Sarah. Sarah is a Southern California mom of 3. She blogs over at Let’s Talk Mom Business about the budgeting and frugal living strategies she and her husband used to crush $100,000 in debt while living on one income.
Shortly after having our second child 6 years ago, my husband and I decided that we wanted to get serious about paying off our debt.
We had been making our monthly payments, but we weren’t really making any progress. Some months we were even adding to our total debt by paying for unanticipated expenses on our credit card.
I am a stay-at-home mom so we were living on one income, and we knew that carrying such a large amount of debt was dangerous, especially without much of a savings.
We outlined a strategy to budget by paycheck using a zero-based budget, and I created a budget binder to help us track our finances.
This strategy helped us pay off $100,000 in 4 years on a single income while growing our family (and we’re NOT rich!).
Other debt free stories to read:
Where Did Our Debt Come From?
When my husband and I got married, I was completely debt free thanks to my parents’ help with college and a car. My husband’s debt wasn’t over the top, but he did have around $35,000 in school loans.
The rest of the debt was accumulated in the first several years of our marriage. My husband needed to have $20,000 worth of dental work done over a 3 year period.
We also moved quite frequently for my husband’s job, and we sold a home after only owning it for a short period of time. We took a fairly substantial loss on the home after all of the real estate fees.
And we can’t forget credit cards and car loans on two new cars. We had essentially been living slightly above our means month after month causing us to rack up around $12,000 in credit card debt.
In total, we had just slightly above $100,000 in total debt.
How to Create a Plan that Works for Your Family
I truly believe that there is no one size fits all approach to budgeting, because every family has different priorities and resources. There’s no set amount you should spend in a specific category or save as an emergency fund. Those things are very different from family to family.
The very first thing we did was to sit down and talk about our goals and priorities along with what we were willing to give up.
Like most couples, my husband and I are different in the way we view finances and how we prioritize things, so we needed to compromise on things like eating out, clothing purchases, leisure activities and vacations.
This conversation helped us outline spending categories and set realistic goals around how long it would take us to pay off our debt. You may decide to be more or less aggressive on your debt payoff time table than us based on your own goals.
Our main priority was that I continue to stay home with our kids, so we had to outline our budget in a way that allowed us to pay off debt but also add to savings to protect ourselves from things like unexpected job loss or large emergency expenses.
Next, we printed out 3-6 months worth of financial statements to include checking account, savings accounts, credit cards, and loans. We wanted a realistic picture of what we were actually spending each month in our budget categories. For example, we thought that we were spending $800 per month on groceries, but we found out we were actually spending around $1400.
I find that a lot of people, ourselves included, believe they spend far less than they actually do in many areas of their lives. Looking at our spending history over several months gave us a more accurate picture of our spending habits.
The Budgeting Method We Chose
We are paycheck budgeters who use a zero-based budget to track our finances. I am the one in charge of our family’s finances, and I have been a pen and paper person over budgeting apps since the beginning. We could never figure out an app that both of us could stay consistent with.
Budgeting by paycheck means that you create a mini budget for each individual paycheck. When you receive a paycheck, you essentially write out all of the bills that fall within that given paycheck. You then take the amount that’s left over and assign that to your variable expenses like groceries, entertainment, dining out, and so on. You can adjust how much you spend in these variable categories to open up income to allocate towards debt and savings.
You assign every single dollar of that paycheck a job until you have zero dollars left to plan for, which is a zero-based budget.
Who does Paycheck Budgeting Work Best For?
I honestly think that we will always be paycheck budgeters, even if we have a lot leftover at the end of the month some day in the future. I believe in assigning a job to every single dollar and being intentional with finances.
That being said, paycheck budgeting is amazing for people living paycheck to paycheck like us. I really struggled with a monthly budget, because if you give me $800 to spend on groceries for a month, I’ll spend $600 of it in the 10 days leaving nothing leftover at the end of the month.
With paycheck budgeting, you’re setting goals for a shorter period of time, which I find much easier to track and stick to.
The System We Set Up for Our Finances
When we first started budgeting by paycheck, I had a sticky note on my desk that listed the paycheck amount along with all of the bills that needed to be paid with that paycheck.
When it came to our variable expenses, savings, and debt, I was kind of flying by the seat of my pants tracking everything and tallying totals. I decided to create my own budget binder to track all of our personal finances in one place. I ended up with a 25 page budget binder that I use to track and manage all of our money.
I follow the same steps every month to track and document our progress towards various financial goals.
How We Track Our Finances Step-by-Step
Step 1: Print Out a Blank Monthly Calendar
Each month we print out a blank monthly calendar and write down which days we receive paychecks along with due dates and amounts for our fixed bills. This helps me see which bills I will need to pay within a specific pay period.
I also write down any special events where we may need to spend money outside of our normal budget. This could be things like holidays, birthdays, scheduled date nights, kids’ extracurriculars, scheduled car maintenance, or pretty much anything that’s anticipated but not typical to every single month.
This gives me a really good picture of what to expect for that month so I minimize surprises.
Step 2: Outline a Monthly Budget
I know I said that we budget by paycheck, but I still outline a monthly budget at the beginning of every single month. Seeing the bigger picture of a month helps me set up more realistic spending goals in our variable categories.
I use the monthly calendar that I created to account for any unusual expenses and adjust our budget accordingly for the month.
A monthly budget is also really helpful if your rent or mortgage is a very large portion of your budget. We have been in positions over the years where our housing expense has been 40-50% of our monthly income. That means a mortgage or rental payment will take up most or all of an entire paycheck. A monthly budget helps plan for how much you need to roll over from a previous paycheck to cover all of your expenses.
Step 3: Break Your Month Into Pay Periods by Paycheck
Once I have a good picture of our monthly income versus expenses, I can budget by paycheck. We receive paychecks every other week (bi-monthly), so I set up two mini budgets within each month.
For each paycheck, I write down the amount of income received and list all fixed expenses such as utility bills with their amounts. I then calculate how much we have leftover after fixed expenses to allocate to our variable expenses including: groceries, dining out, entertainment, and miscellaneous.
Once I’ve assigned a budget to our variable expenses, I calculate how much we have leftover in that paycheck to assign to debt payments and savings. After I’ve accounted for these, we should have zero dollars leftover in our calculation.
Step 4: Set Up Systems to Follow-Through
Of course it’s amazing to have our budget outlined and ready to go, but it’s only a bunch of numbers on some paper without a plan to actually stick to it.
The first thing we did was to automatically withdraw our savings from each paycheck. This went towards a retirement account and an emergency savings. The amounts were taken out of each paycheck automatically so that we weren’t tempted to spend that money. We basically adjusted to a new paycheck amount.
As soon as the paycheck hit our checking account, I immediately made our debt payments. We found that if we waited until the end of a pay period, we overspent on variable expenses and weren’t able to pay off as much as we wanted.
Once our savings was transferred and our debt payment was made, we were left with the money that would go towards fixed expenses and variable expenses.
The Simple Method We Use to Track Our Spending
When we were in the midst of our debt journey, things were really tight. We set up a realistic plan that we felt we could both stick to, and we knew that if we swayed from that plan we would be living outside of our means.
Cash envelopes were (and still are) all the rage at the time, but I did not like the idea of carrying a large sum of cash around me with me. I was scared I would lose an envelope and our entire grocery budget would just vanish.
I also didn’t want to have a several different check accounts with their own debit card linked to it to create a digital version of cash envelopes. It just felt too complicated.
To track our variable spending each pay period, I created my own cashless envelope system. I created three envelopes to track our spending:
One was marked food and covered our grocery spending and dining out as a family.
The second was considered miscellaneous and covered any family entertainment, random purchases at the store, or anything that didn’t fit within a category.
The third was my husband’s lunch and coffee budget for work. He liked to go out occasionally, so this gave him the freedom to do that.
I put the ‘food’ and ‘miscellaneous’ envelopes in my minivan. I’m the one doing the bulk of the shopping, and we’re typically all together as a family in that vehicle on the weekends. I used these envelopes to collect receipts and track spending on the outside of the envelope. This made it easier to transfer everything over to my budget binder.
How to Communicate as a Couple
Before jumping into our debt journey, my husband and I hardly ever discussed our finances unless something major was happening. About every 2-3 months we would take a look at our accounts and wonder why our debt was adding up so quickly when we didn’t feel like we were overspending.
The way we worked to improve our communication was to start weekly money meetings. These weekly money meetings became a part of our budget binder and walked us through our progress and any challenges each week.
We were able to identify areas we were overspending sooner so that we could make adjustments before it got out of hand. It also reduced arguments since there were never any surprises.
Each of us has an area where we struggle to reign in our spending, so it helps us hold each other accountable. Also, seeing all of the numbers on paper regularly really helps to keep our motivation levels up.
Related content: Family Budget Meetings – Yes, You Need To Have Them
What About When Debt is Paid Off?
After 4 years we were finally able to say that we were debt-free! It would be so easy at that point to loosen up, but we set our sights on new goals. We don’t have debt anymore, but we are still living on tighter margins where we have to be really intentional about saving money.
Our goals have shifted to more specific savings goals, and we are using the same paycheck budgeting method to do that. This method really helps us avoid lifestyle inflation and falling back into the debt trap.
Related content: What To Do After You Pay Off Debt
Final Thoughts
Paying off a large amount of debt often feels like a huge mountain you’ll never be able to overcome. I can still remember feeling slightly hopeless that our financial situation could actually change just a few years ago.
You can create a budget that is easy to track and allows you to live a little. Long periods of feeling deprived make it hard to stick with it. Prioritize your goals and find a system that works for your family.
It is so worth it on the other side when you’re able to plan for the future rather than paying for what happened in the past.
Do you have debt? What are you doing to eliminate it?
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Budgeting is not easy!
It can be stressful and complicated to stay on top of your finances.
It takes willpower, discipline, patience—but also creativity and flexibility in order for us to stick with it long enough that we start saving money as well.
A budget binder with envelopes is the perfect tool for keeping everything organized.
With this very simple and easy-to-use tool, you can organize all of your budgets and actual spending for multiple cash envelope categories in one place—all within an envelope that easily fits into a purse or wallet!
The hardest part is finding one that suits your needs.
In fact, 65% of Americans have no ideas how they spent their money last month.
In this post, we are going to review the topic budget binder with envelopes, so you can make a logical decision on what is best for you.
Why you should use a budget binder?
A budget binder is a great way to keep your finances organized. It can help you track your expenses, stay on budget, and save money.
In addition, with budgeting, you reduce your spending and plan for the future.
There are several ways to use a budget binder:
Set spending limits so you can save money
Label envelopes with category names like “groceries” and “dining out.”
Add money to an envelope as you spend it in that category, even if it’s not the last envelope for that category.
If there is leftover money at the end of the month, put it into savings or your emergency fund (or use it next month).
This type of detail will help you stay organized and aware of your spending habits. Learn more on how to create a budget binder.
Are budget binders worth it?
Though budget binders are not a new concept, they are still worth using to help you stay on top of your spending.
By recording where each penny goes, you can more easily track your progress and make necessary adjustments along the way.
Budget binders can be found in both digital and printed formats. They are often sold on Amazon, but they may also be bought online from other sellers like Etsy.
Budget binders are a popular way to stay organized and save money.
What to include in your budget binder
A budget binder is a place where you can keep all of your financial information in one spot–including accounts, receipts, and other important paperwork. This will help you stay up-to-date on your spending and make it easier to track expenses.
There are some key items that you should include in your budget binder so that it’s most effective for you.
It’s also helpful to have a section for current account statements and recent receipts.
When it comes to personal finance, the organization is key.
A great way to get your budget in order is by using a budget binder with cash envelopes. This method is very simple and can be customized to fit your own needs.
If you want to organize your budget in a simple way, then consider using a budget binder with envelopes. This will help you to easily separate your expenses into different categories.
Here are the best budget binders with cash envelopes to choose from.
This budget binder is a great way to organize your finances. It is lightweight and easy to carry, making it convenient for use at home, work, or school.
The A6 size fits easily in your handbag or backpack, and the money pocket and cards holder make it easy to keep your important documents safe and secure.
Additionally, waterproof sticker labels make it easy for you to categorize everything you need to carry with you.
This budget binder is a great way to organize your finances. It comes with money saving envelopes for cash, as well as inserts that can go into the A6 ring binder. You can also carry it with you anywhere thanks to its handy zipped up holders.
This SOUL MAMA A6 Budget Binder with Cash envelopes is the perfect way to budget your money. It comes with pre-printed inserts for saving money, and the color scheme is half holographic purple and half white. The labels are also written in beautiful rose gold font.
The material makes it both quality and tear-resistant, while the waterproof and soft-to-the-touch design keeps your documents safe. Plus, there’s a 100% satisfaction guarantee, so you can be sure that you’re making a sound investment.
This budget binder is a great way to organize your finances. The faux leather binder has a pen loop and card pockets, which are perfect for hiding passports, ID cards, bank cards, and other important things.
Plus, the personalized holographic design will make you feel like a boss!
There are a variety of cash envelope options to help organize your budget. The most common are envelopes for Mortgage/Rent, House bills, Car payments, Car insurance, and Groceries. You can find specialized envelopes or create your own system.
Label each envelope with the name of the category and the amount you plan to spend each month. When the money is gone, it’s gone!
You can find purchase add-ons with extra envelopes and budget tracking sheets in their shop.
Clever Fox cash envelopes are tear-resistant, water-resistant and durable, making them the perfect option for budgeting.
This Clever Fox cash envelope system is perfect for organizing your budget. The set includes a carrying case, 12 budget sheets, and enough envelopes to track all of your purchases and what you have left to spend. Each envelope has a different color for each budgeting category, so you can stay on top of your spending with ease.
I love the Clever Fox Cash Envelopes for Budget System because of its great features.
The tracker has a zippered storage case to keep everything together and each envelope has a blank category label. When you lift the flap, there’s another label with plenty of space to write down the details! Plus, the quality is fantastic and I love how they include purchase trackers with every set.
Recently, I stumbled upon this super cute budget book that is perfect for organizing your finances.
This A6 budget binder comes with a customized cash envelope system, which will help you stay on track with your budget.
You can choose the color of your binder, the font for your personalization, and the vinyl color. You can also choose to have your name printed on the front of the binder as well as a phrase of your choice.
The quality of the book exceeded my expectations, and the best part is that it’s just so darn cute! If you’re looking for a custom budget binder, I would highly recommend this one.
This SKYDUE Budget Binder comes with 12 envelopes for cash, which makes it easy to keep track of your budget. The binder also has 16 self-adhesive labels to help you stay organized, and it fits in your handbag, backpack, suitcase, or desk.
In addition, the SKYDUE Budget Binder with 12pcs Cash Envelopes is perfect for college students.
The binder and sleeves are made from durable materials that can withstand wear and tear, while the cash envelopes are a great way to start using the sinking funds saving method. Plus, the pouches are big enough to hold a decent amount of money without being too bulky.
A customized cover is a great way to personalize your budget binder!
This starter set gives you all the basics you need to get started. You can have a maximum of 8 envelopes in your binder for a comfortable fit, but feel free to adjust this number according to your needs.
The binder was well put together and the customer service was amazing. The money was well spent and there are many customers very happy with the final product.
A personalized cash envelope binder is a great way to organize your budget.
You can customize the binder with any name or wording in any font color! The set includes a binder and 5 personalized cash envelopes.
This is a great way to start budgeting and get your finances under control.
This cash envelope wallet is perfect for budgeting. It has RFID blocking to keep your cash safe and a heavy duty wristlet to make sure it stays with you.
There are 12 cash envelopes included so you can get started right away, and the vertical design of the envelope makes it easy to add and remove bills or track your spending.
Personally, I like the plastic tabbed cash envelopes because they are durable and small enough to be taken out of my planner system without getting squished. The vertical orientation is easier to see, which helps me keep track of how much money I have left in each category.
In addition, this binder comes with access to a library of 50+ A6 printable pages. There are 12 monthly budget sheets included helping you build your budget and get organized. With this system, you can take control of your finances and see where your money is going.
This budget binder from TNHomegrowndesigns is a great way to start organizing your finances. It includes everything you need to get started, including cash envelopes and a money holder. The cash envelope system is a simple way to budget your money, and this binder makes it easy to do.
You can choose the color and number of envelopes you want, as well as have it customized with your name. This is a great way to organize your budget in a simple way.
Budget Binders with Envelopes DIY
If you’re looking for a low-cost option to organize your finances, consider using a DIY budget binder with envelopes.
This approach allows you to maintain control over your spending even during income fluctuations. Plus, by using airtight plastic bags to store the envelopes, you can save money on buying new folders!
How do you make a budget binder with envelopes?
Honestly, it is just as easy to create your own budget binder as it is to buy one pre-made.
Here are the supplies you need:
The benefits of making your own are personal customization and adding what is important to your personal situation.
For more information, learn how to create a budget binder.
How to organize your budget in a simple way
There are a few different ways to organize your budget:
Income and Expenses: This is probably the most common way to organize a budget. It separates your income from your expenses, so you can see how much money you have coming in and going out.
Fixed and Variable Expenses: This way of organizing a budget separates your fixed expenses, like your rent or car payment, from your variable expenses, like your grocery bill. This can be helpful in seeing where you spend money.
There are a few different ways to organize your budget, but we think starting with a zero based budget is best.
How much money do you save with the envelope system?
The envelope system is a popular way to budget and helps people save money faster.
It works by allocating specific amounts of money to each category of expense and putting that money into an envelope. When the envelope is empty, you can’t spend any more money in that category. This helps people stay within their budget and avoid overspending.
If you need to save money on a tight budget, then the envelope system is helpful.
In fact, many people have had great success with saving over $5000 using the 100 envelope challenge.
Tips for sticking to your budgeting system
When it comes to sticking to your budget, there are a few things you can do to make it easier.
For starters, don’t spend more than you can afford.
If you have debts or other expenses, make sure you factor those into your budget as well.
Also, be sure to set realistic goals and limits for yourself- if you try to cut back too much, you’re likely to give up before you even start.
At the same time, don’t be afraid to experiment a little bit and try new things with the money you have. Just because something is outside of your budget doesn’t mean you can’t enjoy it sometimes!
By being smart about how you spend your money, you can stick to your budget without feeling too restricted.
Which Budget Binder with Cash Envelopes is your Favorite?
A budget binder is a great way to organize your finances and keep track of where your money is going.
Cash envelopes help to visually budget your money. You can use them to plan and budget for what you are going to spend each week or month. This will help you stay on track with your finances and change your future for the better.
In this system, you will have separate envelopes for each category of your budget, such as rent, groceries, and utilities. This will help you track your spending and stay within your budget by paycheck method.
Know someone else that needs this, too? Then, please share!!
There’s been a lot of talk about budgeting here at Get Rich Slowly. For instance, Kristin recently wrote about her adventures using the envelope system. I wrote about the reasons your budget might be failing. And, a variety of guest posters and staff writers have touched on the topic with articles like these:
How I kept to my budget and still have everything I want
Budgeting: The Most Important Thing You Can Do With Your Money
How to Build a Better Budget
When One Partner Won’t Budget
However, among the articles on budgeting systems and strategies, there has been very little written on using a zero-sum budget, which happens to be the budget that I use and love. So, I wanted to write about why I’m a zero-sum budget enthusiast, why I think they work so well, and how you can harness the power of the zero-sum budget for your own financial well-being.
Why Should You Use a Zero-Sum Budget?
In my opinion, a zero-sum budget is superior because it forces you to “spend” every dollar that you make. And, no, I don’t mean you should spend it on dinner at Outback or a weekly mani/pedi. Instead, you allocate all of your earnings into the different categories that your finances require. You don’t need an Excel spreadsheet or a complex software program to use a zero-sum budget. In fact, all you really need is a pen, paper, and the desire to begin budgeting for your benefit. So, how do you begin using a zero-sum budget?
Follow these simple steps:
Step 1: Determine how much you make Whether you’re paid hourly or salary, you need to figure out how much money you make on any given month. So, you need to ask yourself a few questions. For instance, “How many paydays fall within this month?” And, “How much will each paycheck be?” For salaried workers, this should be fairly easy. For those with a fluctuating income, it can be much more difficult. However, one of the easiest ways to make a zero-sum budget work for your family is to get all of your finances “one month ahead.” Easier said than done, I know. But, using that method, a fluctuating income won’t matter as much. Since you’re using this month’s income for next month’s bills, it will be much, much easier to plan.
Step 2: List your bills Once you determine how much money you’ll make this month, you need to figure out how much money you need to spend next month. Using pen and paper, write out all of your monthly bills, estimating bills that fluctuate, like utilities. You’ll also need to set a reasonable allowance for spending categories that you’re trying to keep under control (like groceries and gas). And, don’t forget about bills that are paid quarterly or seasonal expenses. The best way to make a zero-sum budget work is to include everything.
I’ll use a generic version of one of my old budgets as a real-life example:
Mortgage: $1,426
Electric: $200 (estimate)
Gas: $25 (estimate)
Groceries: $500
Daycare: $500
Internet: $35
Fuel/Miscellaneous: $200
Cell Phone: $55
Health Insurance: $377
Life insurance: $77.31 (paid quarterly)
Trash: $56.25 (paid quarterly)
Total: $3,451.56
Of course, everyone’s categories will be different. Obviously, you’ll need to include all of your bills including any debt payments that you make on a monthly basis. Make sure to list all of your bills (even the ones that you’re trying to forget!). Confronting them is the first step to making them disappear for good!
Step 3: Compare and contrast This is where it gets fun, I think, and why using a zero-sum budget can be life-changing for so many people. Once you see your monthly income and your monthly bills on paper, a clear picture of how much money is left over emerges. You might find that thousands of dollars are being spent on “wants” each month. And, you could use that knowledge to begin saving that money instead. Regardless, once you determine how much money is left over after you pay all of your required expenses, you can decide what to do with the rest.
If my husband and I earned a net income of $7,000 for the sample month, we would update our zero-sum budget to reflect the overage:
Mortgage: $1,426
Electric: $200 (estimate)
Gas: $25 (estimate)
Groceries: $500
Daycare: $500
Internet: $35
Fuel/Miscellaneous: $200
Cell Phone: $55
Health Insurance: $377
Life insurance: $77.31 (paid quarterly)
Trash: $56.25 (paid quarterly)
Short-term savings: $1,500
Long-term savings: $1,500
Vacation Fund: $548.44
Total: $7,000.00
But, what if nothing is left? If you’re spending every penny you earn, it’s probably time to reconsider that strategy. Start by making a list of things you could live without. Some possibilities include cable television, eating out, or excessive entertainment spending. And remember, everyone’s priorities will be different. Although I do just fine without cable television, I have no desire to feed my family on a bare-bones grocery budget. You may feel exactly the opposite. And, as J.D. so eloquently put it, you have to do what works for you, whatever that is.
Step 4: Spend all of your money on paper Once you determine your own excess cash flow, you can decide where that money will serve you best. For instance, if you’re still in debt, you can decide to pay X number of additional dollars toward those debts. Many people, including me, tackled their debts using the snowball method. Using this method, you focus on one debt at a time, paying over as much as you can until that debt is demolished. Then you can move on to the next.
Or, if you don’t have any debts to contend with, you can allocate all of your extra cash toward your savings or investments. Obviously, it doesn’t have to be all or nothing. You can choose to tackle your debts and continue saving at the same time. It’s up to you. However, the key is to go ahead and transfer the money you have allocated to savings right away. That way it doesn’t get squandered on those dinners at Outback, weekly mani/pedis, or anything else.
Step 5: Track your spending If you have a preset spending limit for your zero-sum budget categories, you’ll need to check in periodically throughout the month to “see where you’re at.” I’ve found this to be particularly helpful when it comes to grocery and miscellaneous spending. I have a tendency, in fact, to completely blow through my grocery budget if I don’t watch myself. ($8 organic oregano, anyone?) So, to combat my grocery spending weakness, I usually check my spending about once a week. And for the most part, when it’s gone, it’s gone. This often means that we’re eating freezer food and leftovers by the end of the month, which seriously annoys my kids. But, it works!
Step 6: Make adjustments Your zero-sum budget may be an epic failure for the first few months. And, that’s OK. You’ll probably need to make some adjustments to get it just right. Maybe you need to add a little buffer to your grocery category. Or, add some wiggle room to the entertainment portion of your budget. Whatever it is, making adjustments shouldn’t be seen as a failure. In fact, it’s just part of the budgeting process.
One More Thing
Unless you want to have a specific budget category just for emergencies, an emergency fund is a crucial part of using a zero-sum budget. Having an adequate emergency fund means that a surprise car repair or medical bill won’t knock your entire financial plan off track. And, whenever you have to tap into your emergency fund, it’s important to replace the funds you use. You can do this by budgeting to add to your emergency fund in the following month (or months) until it’s back to its former glory.
Have you ever used a zero-sum budget? If so, did it work? Also, please feel free to share your favorite budgeting strategies below.
I recently came across an interesting statistic. According to a poll from Harris Interactive, 41 percent of people rarely or never redeem their credit card rewards. It almost hurts to know all of those rewards are going to waste. A more recent study found that 73 percent of Americans are enrolled in rewards programs but have no idea how many points they have.
That used to be me. I discovered the magic of rewards points sometime right after college, when I finally started to take an interest in my financial situation. I wondered what the large number looming above my account number was, and, next thing I knew, years of unknowingly accumulating rewards points turned into a $100 statement credit.
Since then, I’ve been taking full advantage. I use my credit card like a debit card, budgeting and paying off everything I spend. My card doesn’t carry a fee, and I don’t rack up consumer debt — I just earn points. And as modest an amount as it may be, I always get a little excited when I periodically redeem my rewards.
How do you use your rewards?
Mad money
Here’s something about me a lot of people don’t know: I like buying clothes. This may seem uncharacteristic for a couple of reasons, one being that I call myself frugal, and, second, I dress like crap. Still, I love buying clothes. Mostly cardigans.
But I also don’t like spending money right now, because I’m trying to save up for something that I deem more important than fashion. There’s certainly nothing wrong with spending your money on cardigans. But for someone who’s trying to save, cardigans have become a weakness.
To make myself feel a little better, I automatically categorize my cash rewards as “shopping money.” This gives me a small budget to occasionally indulge a temptation.
Obviously, I could just as easily budget for this using my income, and the numbers would be the same. Maybe this is a silly psychological mind game I play with myself, but hey, it works, as it satisfies my nagging inner consumer.
Goals
After college, my goal was paying off my student loan debt. I used any and all extra cash I’d earn from anything, including rewards points, to accomplish that goal.
But again, that was student loan debt. If you’ve got consumer debt, you probably don’t want to put out a fire by playing with one. In fact, I’d be careful about using a credit card altogether.
Travel
I have a cash back card now, but even when I had a points-based rewards card, I never redeemed my points for travel.
With my old card, the travel deals were really terrible — I could always find cheaper flights without them — so I’d just redeem my points for cash, because they were worth more that way. If I can get more in cash than the trip is worth, I’m going with cash.
But this doesn’t take into consideration luxury travel — fancy hotels and first-class flights. Instead of comparing value using the cheapest travel option, some people might prefer to use their rewards points to pay for things they couldn’t otherwise afford. Guest writer Hilary Stockton wrote about her own experiences with luxury travel using a travel rewards card. She makes a compelling argument, and the photos don’t hurt, either.
I’m not experienced in this area, so feel free to elaborate on how you determine the value of your rewards travel.
Stuff
There’s also the option of trading your rewards points in for Stuff, but according to this report, that’s a terrible idea:
“Merchandise awards typically return only one cent in value for each point or mile spent, and that is only if you consider the product’s full retail price. In fact, cardholders are getting less than one cent in value for their points…when they likely could have purchased the items at a discount and received additional rewards from using their credit card for the transaction.”
Donate
Some people feel a little guilty about getting free money, even if it is, ultimately, part of a sales promotion from a large credit card company. Redeeming your rewards for a cash donation to a charity might be a good option for those feeling a little guilt-stricken or those who just want to do a good thing. Just make sure the amount they donate is the equal of or greater than the value in cash; otherwise, you might as well just give cash.
(I understand there are other ethical concerns about using credit cards, namely dealing with small businesses and transaction fees. That’s perhaps a topic for another post, but yeah, I understand that donating to a charity doesn’t assuage those larger concerns.)
Set and forget
There’s also the option of simply redeeming your points for statement credit and not putting too much thought into it, which is just fine, too. I also used to do that. It’s not as fun, but your budget is the same either way. I have Capital One’s Cash Rewards card now, and they even offer an option for auto-redemption.
Other Fun Hacks:
Combining With Other Programs
A few times now, I’ve booked travel on Priceline or Expedia using Mypoints.com. I log onto the site, go to Priceline, then use my credit card to pay for the ticket and also use my frequent flier number. Thus, I rack up airline miles, rewards points and Mypoints (which I later redeem for gift cards).
Churning
Holly wrote about this a while back, and while I lack the stamina for churning, she was able to take advantage of several credit card offers. She did warn about the possibility of this affecting one’s credit score, but churning has really worked for her.
My Rewards Work for Me, Not the Other Way Around
I earn points on things I already buy; I don’t buy things just to earn rewards.
Here’s an example. When I wrote about revisiting the envelope system, a couple of readers were concerned about losing rewards by paying with cash. But the thing is, earning rewards doesn’t dictate my spending or my budget. Sure, I use my rewards for mad money, but I’m not going to make significant decisions about my budget based on earning more rewards. So if the envelope system helps me to save hundreds of dollars a month, well, then, I’m just going to have to stand to lose the $3.56 I’d earn in rewards by using my card for groceries.
Rewards are awesome, but they’re an ancillary bonus, not something I consider a steady profit.
My rewards card also offers higher percentages of cash back at certain stores. I’m careful not to get so caught up in the coolness of rewards points that I spend money at places I wouldn’t otherwise spend money.
However, I love Trader Joe’s. Unfortunately, the store by my house is almost always packed, and I hate looking for parking, so I usually shop a little farther up the road at Ralph’s. But when I discovered I could earn a significantly higher cash back percentage at Trader Joe’s, I dealt with the parking headache.
As I mentioned, I use my rewards card like a debit card. I used to actually be able to put money on my card so that it would carry a credit. From there, I’d simply use up that credit until my balance reached $0.00. I’d still rack up points, but I was never carrying a balance on the card. But when I switched to the Capital One card, this was no longer possible; they don’t allow me to pay anything more than my balance. So I have to be a bit more careful, but hey, that’s what a budget is for.
At any rate, these are my experiences in dealing with rewards programs. Like couponing or any other frugal tactic, I don’t spend a whole lot of time analyzing the many ways I could save, because, at some point, my time is more valuable. But I still enjoy taking advantage of the rewards. So what are your experiences? How do you redeem your rewards, and what frugal tricks have you learned along the way?
I first read about the envelope system back in college. I used it regularly, but after graduating and paying off my debt, I sort of abandoned it. I’d gotten a hold of my finances, and I figured I could budget safely without having to use this tactic. I could afford to give myself a break.
Then, last month, I realized just how much of a break I’ve given myself over the years, especially when it comes to food. Upon examining my expenses for the year, I complained to Brian:
“Hey, why am I always paying when we go out? I know it’s the 21st century, but come on!”
“What are you talking about?” he argued. “I always pay!”
“Then why did I spend upwards of $400 this month?” I asked.
“I don’t know, but so did I.”
“No,” I argued. “There’s no way we spent a grand on food in just four weeks.”
Turns out, we did. We’ve been spending a ridiculous amount on food and groceries. And while it hasn’t put us in the poor house, it’s still a waste. It’s a waste because there are things we want to save up for — a house, maybe. Who knows if that’s what we’ll want in a few years? But when we get there, it would be nice to know we have the option and didn’t squander it on burgers and beer.
“We’ve got to start using the envelope system,” I declared.
“What’s the envelope system?” Brian asked.
“We take a set amount of cash from our paychecks and stuff it an envelope,” I explained. “And that’s the only money we can use on groceries and dining out.”
“I don’t like it.”
Brian doesn’t enjoy frugality as much as I do. For him, it’s more of a means to an end. Still, he knew it was the right thing to do if we wanted to stop spending like maniacs.
It’s been almost a month since I’ve returned to the envelope system. Here’s what I’ve learned (and re-learned).
I Overestimated My Frugality
I forgot how much power tangibility has. I stopped using the envelope system years ago because, as I mentioned, I was earning more and was financially independent. My debts are paid, I have an emergency fund and, each month, I auto-deposit into my retirement and savings accounts. All of this convinced me that I was on top of my finances; I didn’t really question my thrift. And maybe I had a good hold on my finances, but I also spent $400+ on food in one month. In fact, in one week, I’d spent $90 on groceries and another $80 on restaurants.
And hey, sometimes in life, things happen and maybe you do spend crazy money like that. Or maybe you really love food, and you earn enough to spend money on what you love. But the thing is, I didn’t even think twice about it. Oh, sure, I noticed I was blowing my budget a little every now and then. Life happens. A friend comes into town one month; I throw a party the next. But I was blowing my budget by the hundreds on a regular basis, and maybe I was in denial, but I failed to admit that.
Being restricted by cash helped me understand how liberal I was being with my debit card.
Expect the Unexpected
This week, we had a couple of friends unexpectedly come into town. They wanted to go out and enjoy the city, and we wanted to show them around. Of course, dinner was involved, because you can’t come to Los Angeles without eating Umami Burger.
“We just won’t go out this weekend,” I told Brian. He argued that their visit shouldn’t come out of the envelope money, as it was unexpected. We talked about it for a while and eventually realized that most of our overspending is usually due to the unexpected: A friend comes into town. It’s someone’s birthday. We have to bring a pie to an impromptu potluck. The things that don’t happen every month keep happening every month. Thus, when we calculate our food budget, we should expect the unexpected.
Planned Splurges Are More Enjoyable
A couple of Saturdays ago, we headed downtown with some good friends. These friends know where all the best spots are to eat, drink and play. We knew we were going to spend money, so before we left, we talked about how much cash we should bring. We decided on $60. Taking out $150 every Friday, this would give us $90 for the week, which should be plenty.
Going out that day, we were conservative with our money. We still enjoyed each spot we visited, but we didn’t spend carelessly, as we knew the $60 would have to last us the entire day. We were more conscious of what we wanted to spend money on. This kept me from ordering cheese fries when I wasn’t even that hungry to begin with. Under the old system, I would’ve ordered the fries without thinking about my budget. Under the old system, my budget was something I dealt with later — I already spent $240? Okay, then I’ll try to only spend $10 for the rest of the month. But using cash made the budget something I had to consider as I was spending. This made budgeting much more effective. No kidding, right?
That day, we held back enough to enjoy the most delicious bowl of ramen later that night. I’d been looking forward to that Ramen all day. Knowing that we planned for this splurge made it all the more tasty.
Leftover Money Feels Awesome
This week, we’ll actually have $12 left over. It’s just $12, but the fact that we stayed within our budget feels great — because it wasn’t hard. We didn’t go out as much, and when we did go out, I ordered less food. I only paid money for things I really wanted. And I don’t feel any different; I don’t feel as if I missed out on anything.
I thought it would be painful to return to the envelope system. It’s a little surprising that spending less has been so easy.
Another thing I learned: it’s important to make a regular habit of looking at the big picture when it comes to my finances. I assumed I was being a good little saver who just had a few occasional unexpected expenses. I didn’t take a step back and consider that I was being haphazard about my spending.
These days, I’m in a much better financial position compared to my college days. The ramen I eat now is a little more sophisticated, a little more expensive. My lifestyle and savings goals now are different than they were in college, but the envelope system works just as well now as it did back then.
Iâve been so excited about this giveaway. We ran a giveaway for the Divide-It cash envelope system wallet a few months ago and it was one of our most popular giveaways ever. So I’m thrilled to be doing another giveaway with A Time for Everything — a blog and handmade business run by a husband andRead More
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