You made it! The sun is setting on 2023 and dawning on 2024. Among other personal reviews, the changing of years is the perfect time to refocus on your finances. Let’s spend a few minutes discussing:
Conducting a year-end financial review
Setting goals for next year
Conducting a Year-End Financial Review
We want our year-end financial review to do two important things:
Provide clear, actionable data on our previous year’s finances.
But without requiring days’ worth of time to conduct.
So we’re going to focus the review in 7 major areas:
Spending (including Unexpected Expenses)
Income
Saving
Net Worth
Investing, Allocation, Etc.
Insurance and Estate Planning
Progress on Previous Goals
Spending
Spending is the most time-consuming part of the review. But you can’t skimp here! A poor understanding of household spending is one of the deadliest sins of personal finance. It’s all too easy to assume your spending is under control when it’s not. That poor assumption is the difference between financial health and financial decay.
So – what exactly should you be measuring?
Total dollars spent. Personally, I like measuring monthly.
Categories you spent on. Think groceries or housing or debt repayment. If you’re curious, I shared my personal budget categories here. You should be able to identify if you spent $4000 on groceries…or $8000!
Unexpected expenses. How do you handle unexpected expenses and/or items not covered by your basic monthly budget? This answer is highly correlated to financial success/failure. Ask yourself:
Did your emergency fund do its job this year? Is it in a healthy place right now?
Did you stick to your budget? Or did you allow the allure of “shiny objects” to pull your purse strings in a regrettable way?
Income
What was your household income for the year? How did it change from last year? And how do you expect it to change in the year ahead? Most importantly, how does your income compare to your spending? aka how’s your cashflow?
Saving
How much did you contribute to (or withdraw from) your savings accounts this year? The same for your Roth IRA, your 401(k), or any other savings/long-term investing accounts.
Note: this should only focus on your contributions, not whether the investments in your accounts went up or down.
Net Worth
Update your net worth, tracking all of your assets and debts. How did your net worth change over the year? Personally, this is something Kelly and I have started doing monthly. It gives us a high-level understanding of our household’s financial health.
Net worth does include whether your investment accounts have gone up or down. After all, investing is one of the reasons we’re all here on The Best Interest! 🙂
But I urge you to not let investments/Net Worth fool you during a year-end review! For example, most of us would have seen our net worth decrease in 2022, as it was a bad investing year. The opposite is true in 2023 – the S&P 500 is up 25% year-to-date!
If we measure on Net Worth alone, the poor investment returns in 2022 could “wash away” our other good financial habits. Similarly, the great investment returns in 2023 could “sweep under the rug” our bad habits.
Investing: Allocation, Performance Etc.
The year-end review is a great time to look at all of your investing accounts. 401(k), IRAs, taxable accounts, etc.
First, review your allocation and rebalance as necessary.
“Allocation” is the percentage of stocks, bonds, alternatives, etc. that comprise your portfolio. As different assets perform differently throughout the year, our portfolio allocations drift from their “target allocation.” The act of “rebalancing” is the process of making trades in your accounts to return to that pre-defined “target allocation.”
You should also review your performance.
Are your accounts up? Or down? By how much? The main reason for tracking performance is to understand if your accounts are on-pace with the underlying “benchmarks.”
For example, let’s take a retiree with a 50% stock, 50% bond portfolio. We can look at some basic indicies and see that so far this year:
The S&P 500 (stocks) is up 25%
The bond AGG index is up 2.5%
So, roughly speaking, I’d expect this retiree’s portfolio to be up ~13-14%. If their performance is drastically different than ~13-14% (up or down!), I’d want to understand why. Some reasonable reasons could be:
Their stocks investments are more value-heavy (the Dow Jones is only up ~13% this year) or growth-heavy (the NASDAQ is up ~46% this year)
They own individual stocks instead of owning indexes.
They own individual bonds, not funds.
At the end of the day, this is an exercise in asking, “Does my investment performance match my expectations? If not, why not?”
Insurance, Estate Planning, Etc.
Death isn’t a fun subject. I won’t need to beat it to dea…hmmm..
Nevertheless, you should check annually to make sure:
Progress on Previous Goals
It’s time to check in on last year’s goals. Did you accomplish what you’d hoped in 2023?
If not, why not? The curiosity to ask “why” is the best way to grow.
Setting Goals for 2024 (and Beyond)
Now it’s time to look ahead. What are some of the smartest financial goals you can set for yourself?
Saving
Savings goals take many forms. As your finances improve, your savings goals will evolve.
Perhaps the most basic is saving for an emergency fund. You should have money set aside in your bank account simply to act as a safety net should life get hard.
Retirement saving is another common set of goals. For example, my “basic” retirement savings goals are ensuring I get my employer match on my 401(k), and then maxing out my Roth IRA contributions for the year.
And then there’s “saving for an X” goals. A new house, your first car, a trip to Thailand. When you hope to have large outlays of money, it makes sense to create a savings goal for yourself. Some people call these “sinking funds.”
Reduce/Control Spending
As I wrote earlier, “A poor understanding of household spending is one of the deadliest sins of personal finance.” Controling your spending is a wonderful goal. But it’s easier said than done.
To be successful here, you must measure. You need data. You’ve got to understand how much you’re spending today and set a realistic, measureable goal for reduction.
How to do that “measuring?” I love the budgeting app YNAB. I’m also a fan of simple spreadsheets, if that’s more your style. If you’re looking for something to do today, I’d start by downloading your past 3-6 months of credit card statements and/or bank account statements. What do your transactions look like? How much are you spending? And where?
Increase Income
What can you do to increase your income this year?
Personally, I’m not a fan of recommendations like “find a new side hustle” or “get a second job.” The point isn’t to work ourselves to the bone in pursuit of money.
Instead, I’d focus on questions like, “How can I be more efficient?” or “How can I secure a raise at work?” or, especially in the modern economy, “Will a job/career change lead me to higher income?”
Even a minor pay bump, when magnified by decades, makes a huge difference.
Pay Off Debt
Debt reduction is another common goal, but I recommend caution here. Make sure you separate the math of debt reduction from the psychology of it.
The math says that interest rates matter. Low interest debt (~5% or lower) isn’t that bad, and doesn’t need to be paid off quickly. High interest debts (~8% or more) should be highly-prioritized. Credit cards, for example, with 20%+ interest rates are a five-alarm fire for your finances. The mid-level debts (6-7%) are a coin flip.
But the psychology of debt payoff is highly personal. Some people can’t stand debt, and having a 2% car loan keeps them awake at night. If this is you, I encourage you to priorize your sleep and pay down that low-interest debt! But just know that, mathematically, it’s not optimal.
It’s ok. Personal finance is a mix of numbers and psychology. We’re not automatons, and sometimes our brains trump what the numbers tell us.
The numbers: currently, risk-free savings accounts are paying 4.5% – 5%. Why use $1000 to pay off a 2% loan when you could instead earn 5% interest?
Invest More…
Investing is the flywheel of wealth creation. Put your army of dollars to work creating more dollars. Annual investing goals make sense. Most of my work is focused on investing. I won’t go too deep here. But I’m 100% behind investing early and often.
Put Together a Financial Plan
A financial plan is a bridge between your comprehensive financial ecosystem and your personal values and desired outcomes. The process of financial planning makes you realize, “It’s more than money. It’s about your life.”
A good financial plan is more than that bridge, though. Using another transportation metpahor, a financial plan is a lighthouse in the financial fog. It provides vital direction and (in rough terms) distance to where you need to go.
Considering the number of people whothink, “I have no idea where my finances are…” …I’d say putting together a financial plan is a wonderful goal for 2024.
Go Get Your Goals!
Happy New Year! I hope you had a great 2023 and kickoff 2024 with verve.
I’d love to hear from you if finances are part of your 2024 goals! Drop a Comment or shoot me an email: [email protected].
Thank you for reading! If you enjoyed this article, join 7500+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.
-Jesse
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Inside: Looking for the perfect graduation gift? Check out our selection of clever ways to give money. These graduation money gift ideas are fun ways to celebrate.
Graduations signify transitions from one chapter of life to a new groundbreaking journey. This major milestone should be marked with a special gift.
In various cultures, gifting money presents the ultimate creativity, coupled with practicality. It expresses your wishes for the graduate’s prosperity and financial independence.
We have the best graduation money gift ideas just for you.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
Why choose money gifts for graduates?
Graduates are on the brink of venturing into new territories, whether it’s furthering education, taking a gap year, investing in big-ticket items, or moving to kickstart a career. These steps often come along with substantial financial burdens.
A money gift, therefore, becomes a thoughtful and practical gesture.
A survey by the National Retail Federation recorded cash to be the most popular graduation gift, given by 55 percent of participants. In addition, 43% give greeting cards (often with cash inside), followed by gift cards at 32%, apparel at 14%, and electronics at 10%. 1
Hence, money gifts are not just loved by grads but also cherished by friends and family, making them a comprehensive gifting solution.
Fun and Creative Money Gifts for Graduates
Money Lei
Creating a money lei as a gift for a graduate is a fun and creative way to give cash. To make the lei, start by folding one-dollar bills in a fan shape, then thread them onto a necklace made of string or yarn.
You can add ribbons, faux flowers, or even banknotes of higher denominations to make it even more special. Learn how to make a money lei from this mom.
Money Chain
A fun and inventive way to present cash as a graduation gift is to create a paper chain out of dollar bills. This concept not only represents an inventive method to gift money, but it also adds a decorative touch to the graduate’s celebration.
You can assemble the chain using dollar bills and a stapler, turning it into a creative money necklace. To make it even more special, include a rosette made out of a larger denomination bill like $20 or $50 with the inscription “Congratulations Grad!”
Get detailed instructions on making a money chain.
DIY Graduation Money Cake
Graduations warrant celebration with a cake. How about centering the stage with a splendid DIY graduation money cake? It’s not just a delicious mouthful but also a delightful sight!
This visually humorous and surprisingly straightforward project involves rolling your dollar bills in a circular shape to resemble cake layers. Topped with a mini graduation hat and a congratulatory note, it’s sure to bring smiles for its sheer creativity and attractive bounty.
Better than a diaper cake, and perhaps more loved than a real cake, a money cake makes a clever centerpiece and a graduation gift. Use our inventive DIY money cake ideas to draw inspiration from to build a money masterpiece. Add a personal touch by incorporating your graduate’s favorite colors, stickers, or little decorative items that reflect their personality or interests.
Adding a creative twist to your monetary gift can make it even more memorable too. Spiraling money into a puzzle box, the recipient must solve the puzzle to claim their cash – this adds an element of excitement and challenge. You can choose a puzzle that suits the graduate’s interest, making this fun idea even more personal and thoughtful.
Secret compartments that hold hidden treasure. The recipient must learn how to crack the puzzle to open the secret box.
Graduation Cap Mason Jar with Money Diplomas
This graduation money jar by Must Have Mom not only serves as an impressive cash gift but, courtesy of the graduation cap, neatly doubles as a party decoration too. Handmade with love, filled with cash, and resonating with the graduation spirit – what’s not to like?
Fill the Mason jar with rolled-up bills, each ingeniously crafted to resemble mini diplomas. Secure these ‘diplomas’ with bright ribbons for color pop. Add some coins to represent the small steps it took to achieve this big milestone. Top it up with a mini graduation cap, which you can easily craft with black cardstock and an adorable tassel.
And the best part? It might even inspire your graduate to save!
Pizza Box Filled with Cash
Who doesn’t love pizza? Break up the monotonous way of handing over cash in a dull envelope by presenting it in a faux pizza box. Yes – you read that right! The pizza box filled with cash is an ingenious idea that adds a mix of humor, surprise, and cash!
Craft a pizza out of money bills, each piece folded and clipped like a pizza slice. Etsy and Simplistically Living suggest adding red paper circles with quarters on top for that real pepperoni look.
Learn how to make a pizza is the dough gift.
Graduation Money Box Gift Pull
The graduation money box gift pull bears a unique resemblance to a Kleenex box, offering a creative way to gift money to graduates.
This fun and interactive gift involves attaching money bills end-to-end using transparent tape and then neatly rolling them into a tissue box such that the top bill resembles a tissue ready to be pulled. Decorate the box to give it a celebratory touch, and as the graduate pulls out what they think is a tissue, they’d be pleasantly surprised to find a continuous roll of money instead.
Money Shirt and Tie Origami
The art of origami takes to gifting, adding a personal touch to the otherwise cliched act of gifting cash. Enter the money shirt and tie origami – a creative, fun, and super unique graduation gift.
This cleverly folded shirt and tie ensemble is made from a dollar bill. An epitome of the exciting transition from lecture halls to corporate corridors, it resonates with the graduate stepping into professional life. The stitched proverb “Clothes make the man” truly shines out here, for this crisp white money shirt is undoubtedly a charming symbol of maturity and real-world readiness. Add a quarter or a dime to resemble a metallic tie-pin.
For an in-depth tutorial on how to fold a dollar bill into a shirt and tie, you can look up directions here.
Unique Money Gift Presentation Ideas
Money Tree: An Ever-Growing Investment
In line with the adage, “Money doesn’t grow on trees,” we introduce you to a tongue-in-cheek yet highly symbolic take on this phrase. The Money Tree! (yep, I love to prove my dad wrong!)
This is a creative and innovative way of presenting cash as a gift. It’s also a symbolic nod towards the idea of financial growth and prosperity for the graduate, subtly wishing them monetary abundance throughout their journey.
Fortune Cookie Money Gift
Looking for a fun and quirky way to present money to the graduates on their big day? How about incorporating a little Asian flair and a dash of fun with a Fortune Cookie Money gift? This surprising and unique concept makes for a perfect impression!
The money fortune cookie idea, courtesy of The Paper Mama, is an attractive alternative to age-old gifting methods. Fold your money bills into the shape of fortune cookies and slip them inside a takeaway Chinese box for the ultimate presentation.
Elevate this gift by including a heartfelt note or some thoughtful advice inside each fortune cookie, just like the actual fortune cookies come with hidden messages. Each ‘cookie’ is also a symbol of luck and prosperity.
Zip-Open Money Holder
A Zip-Open Money Holder serves as a stylish and functional way for men to handle their cash, making it a perfect gift for graduates, birthdays, or festive occasions. The design allows for secure storage, and the feature of easily displaying cash by unzipping adds a hint of excitement to the gift-giving process.
With a myriad of styles ranging from minimalist to flashy, you can match the recipient’s personality perfectly.
Emergency Cash Inside Picture Frame: A Lifesaver Graduation Gift Idea
Imagine a rustic shadow box or a sleek modern frame housing a neat arrangement of cash bills under the caption “In Case of Emergency Break the Glass.”
Add a personal touch by including a caring note like “If you ever need help, I’ll be there for you.” This not only gives the impression of a safety net but also reassures them of your ongoing support.
It’s unconventional cash gifting, fun, practical, and literally, their savior ‘in case of emergency’.
Money Balloons to Life You Off Financially!
A truly unique and memorable way to gift money to graduates is to tuck it inside balloons, creating surprising cash confetti.
This sneaky method not only redefines the act of gift-giving, but also adds a fun and exciting element, as the receiver pops the balloon to discover their monetary gift within.
Check out how to make money balloons.
Handmade Money Surprise Bath Bomb
Time for a lovely bath with a hidden surprise! A fantastic way to hide money especially for teen girls!
This unique gift idea of bath bombs also is made with all natural and vegan skin care products. Perfect for small budgets!
Digital-age Money Gifting Methods
Transforming a Venmo Payment into Special Graduation Gift
Building upon this digital-age trend, Venmo introduced the “gift wrap” option, which transforms your usual cash transaction into an endearing cash gift. The payment comes with a short but heartfelt animated GIF intro, which makes the receipt of money all the more special for the recipient.
While Venmo currently does not offer graduation-specific designs, you may utilize the “Just Because” message. Personalize it in your own words, making it relevant to the graduation context. Conveying your wishes and love instantly uplifts the otherwise mechanical act of transferring money.
This digital-age money gift version is ideal if you’re miles apart on your loved one’s Big Day. Despite the physical distance, with Venmo and other such apps, you’re just a few clicks away from blessing the grad with your love, congratulations, and of course, monetary gift.
Money Tree with Gift Cards
A money tree spruced up with various gift cards is an innovative and exciting way to offer a present. This method is not just creative but offers a tangible and enjoyable surprise that surely excites the recipient.
Don’t miss out on purchasing a mix of gift cards from different retailers, topping the whole experience up with a variety of potential shopping sprees. This thoughtful gesture is sure to be appreciated and remember to add a personal touch for an unforgettable gift.
Gift Card in a Congratulations or Graduation Style Gift Box
For a unique and crafty gift presentation, consider placing your gift card inside a mini graduation cap box. This personalized touch not only adds an element of surprise but also highlights the sentimentality of the occasion.
DIY Money Gifts with Step-by-step Instructions
What a sweet Idea!
A unique and sweet way to gift money is by using a glass jar filled with a person’s favorite sweets or candies. Start by choosing a sturdy glass jar, and flood it with your recipient’s beloved candy.
The trick lies in tucking some cash amongst the treats, creating a delightful surprise for the recipient. You can even add a personal touch and a festive aura by attaching a note or decorating the jar appropriate to the occasion, be it graduation, birthday, or holiday.
Learn how to add an element of surprise to your money gift with a glass jar and sweets/candy,
McDonald’s Money French Fries Gift Idea
Everyone loves McDonald’s fries, but have you ever thought of gifting them in money form? The McDonald’s Money French Fries gift idea brings a unique blend of humor and surprise to your graduation gifting game.
This quirky idea involves emptying a McDonald’s french fry container and refilling it with neatly folded bills that mimic yummy fries. This arrangement can be topped off with a note adding to the humor such as, “Did Ronald McDonald ever tell you to keep the change?” or “Want cash fries with that?”
This fun-filled concept comes from Making Memories with your Kids , adding a light-hearted spin to the routine money gifting. Graduates would appreciate this unusual fusion of their fav fast-food chain and a monetary jump-start.
Money Flowers: An Elegant Cash Bouquet
Redefining flower gifting, meet the impressive Money bouquet, an intelligent amalgamation of art, appeal, and worth sure to impress any graduate.
Make the graduation day extra special by gifting your grad a bouquet of flowers with a twist. This project only requires folding skills and a little creativity. Gently roll your money bills to build the cake, then purchase your grad’s favorite flowers.
Plus you can buy the money bill holder on Etsy to make this project easier.
Pre-DIY Money Bouquet
Everyone loves to receive a bouquet of roses! This money gift idea is hidden within the gift. Very attractive present.
This Bouquet is sure to wow for any occasion!
Money Crayons – To Remind Them How Far they Have Come
Consider the charm of hiding money in crayons, an ingenious nod to the recipient’s childhood.
This unique gift idea not only brings back the delightful memory of days spent drawing and coloring with wax sticks, but it also symbolizes the progress the graduate has made, transitioning from using crayons as a child to earning money as an adult.
Learn how to make money crayons.
Investment in Their Future
Express your confidence in the graduate’s future and support their goals with an investment gift. A 529 college savings plan or an investment account is an excellent idea that not only shows your trust in the graduate but also your commitment to their future.
Many grads don’t know how to invest in stocks. So, this may be a great chance to teach them.
It’s not just about money but also a testament to your confidence in them and their dreams. An investment in their future is an invaluable graduation gift that is sure to be appreciated. It’s symbolic, purposeful, and plays a significant part in sculpting their future.
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Indulge in a Money Cake
Lights! Camera! Cake? Hold that thought because we’re going to redefine the whole cake cutting tradition at graduation parties in a fun and profitable way.
Why make a cake when you can make a money cake? It’s an eye-catching centerpiece, a conversation starter, a whole lot of fun, and a cash gift all in one. Inspirations turn dollar bills spiral into a multi-tier cake, complete with a graduation hat on top and maybe even whipped cream at the edges.
“Bake your success,” or let’s say, “Stack your success,” by creating a money cake for your graduate. So, let your creativity flow and gift a homemade cake that’s literally a slice of liquid net worth!
Money Cake Pull Out Kit
Don’t want to make a real cake? Then, opt for the easy solution with a money cake pull out kit! Perfect surprise for graduates with the most versatile and widely-appreciated gift of them all: cash?
We know how you can do it in style: the amazing money cake dispenser, an incredible accessory that you will use on endless occasions.
This complete cash dispenser set includes the special box, cake topper, 1 plastic roll with 50 connected pockets, and printed instructions.
FAQs About Money Gift Ideas For Graduation
A good grad gift with money is one that not only offers financial assistance but also a personal touch, a dash of humor, or a token of encouragement. It makes the recipient feel cared for and supported in their next journey.
Ultimately, a good grad gift with money expresses your congratulations, best wishes for the next chapters, and a monetary boost to help them get a head start in their next big adventure.
These are just creative ideas to make giving money more memorable.
Deciding how much cash to give for a graduation gift depends on several factors including your personal budget, your relationship with the graduate, and the graduate’s level of education.
We have found money gifts for high school graduates typically range from $20 to $300. The study suggests $50 to $100 as an average amount for close family members and friends.
For college graduates, some suggest higher amounts to reflect the monumental achievement. Paying for the Graduate suggests gifting at least $50, but depending on the relationship, you can give up to $500.
Remember, there’s no hard or fast rule determining the perfect amount for a graduation gift. What counts the most is the sentiment behind the gift. Ensure that it’s an amount you can comfortably give, for the graduate, regardless of the sum, will undoubtedly appreciate any cash gift received.
Which Creative Ways to Give Graduation Money Gifts is your Favorite?
Graduation is a momentous occasion and deserves a unique token of appreciation and celebration. Money gift ideas for graduation give you plenty of innovative ways to express your well-wishes, support, and belief in the successful road ahead for the graduate.
Whether it’s a Money Cake, Emergency Cash Inside Picture Frame, a McDonald’s Money French Fries, a Money Rosettes bouquet, or a Venmo payment with a personal message, you’re sure to leave a lasting impression.
Each of these ideas adds a fun and creative spin to the traditional act of gifting money.
Regardless of the amount, it is the thoughtfulness and creativity that will be remembered most by the graduate. I still remember ways I received money that was given unusually.
So, which is your favorite, and what novel money gift would you create for your loved one’s graduation?
Make sure to include these financial adults for young adults as wise wisdom.
Source
National Retail Federation. “Graduation spending to reach $5.2 billion with cash and greeting cards as most popular gifts.” https://nrf.com/media-center/press-releases/graduation-spending-reach-52-billion-cash-and-greeting-cards-most. Accessed December 20, 2023.
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Inside: Learn how many months it usually takes for your budget to start working effectively. Plus explore successful budgeting strategies.
Learning to budget can often be a challenging process, but its benefits are irreplaceable. Initially, it might feel overwhelming, as it involves accounting for every small expenditure, adhering to a fixed financial plan, and exercising self-control.
The frustration often emerges from unexpected expenses or changes in income, like getting a raise or having to make a new car loan payment.
However, this ongoing process ultimately fosters financial discipline, enables goal-setting, offers a clear financial picture, and encourages proactive handling of money matters, making the frustration worthwhile.
According to experts, it could take up to three months to adapt to a new budget.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
The Essential Role of Budgeting
Financial budgeting plays a critical role in managing resources efficiently, informing financial goals, prioritizing initiatives, optimizing financing opportunities, and offering flexibility in various situations.
These reasons make it a highly regarded tool in business and personal finance.
Defining Financial Budgeting
Financial budgeting is a systematic approach to managing your finances by mapping out your income and expenditures over a designated period.
This process provides a framework to guide your financial decisions, which aids in achieving your monetary objectives.
It’s essentially an overview of your financial position, goals, and cash flows.
How many months does it usually take for your budget to start working as a budget should?
As per our expert opinion, it typically takes around three months for a budget to start functioning effectively.
When starting a new budget, it’s normal not to see results immediately.
This time frame allows for adjusting to new spending habits, dealing with unexpected costs, and instilling a sense of discipline and control over your finances. Remember, budgeting requires patience and commitment.
Practicing Efficient Budgeting Techniques
Now, the key to being successful is having a few budgeting tricks up your sleeve.
I can guarantee you that budgeting is actually freeing. This is how you do it!
The Process of Getting One Month Ahead
Getting one month ahead in your financial budgeting means living off last month’s income.
In this practice, you pay November’s bills with October’s income, for example, essentially preventing you from spending money you haven’t earned yet.
To set up this process, create a monthly budget, determine your income and expenditures, establish your spending goals, and ensure your income exceeds your spending. More than likely, you will have to save money to get one month ahead of bills completely. YNAB can help you with this.
YNAB
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YNAB has extra features like goal setting for budgeting, shared budgeting tools for partners.
Option to manually add and upload transactions from accounts each month.
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Familiarizing with Zero-Based Budgeting
Zero-based budgeting is a method where every penny of your income is allocated to different categories, from necessary and discretionary spending to savings and debt payments.
You start each month with a fresh budget, balancing out your expenses and income to zero. This approach demands meticulous attention to detail and is best suited for individuals with a fixed income and predictable expenses.
Executing the Envelope Method
The envelope method involves assigning an envelope (physical or digital) to each spending category, such as grocery or utilities, and putting cash into each envelope for planned expenditure. Once the cash in an envelope finishes, it means you’ve exhausted your budget for that category.
This method, as per expert suggestion, instills discipline and curbs overspending, making it an ideal choice for cash-driven individuals. Connecting this method with digital tracking systems is possible with the cashless envelope system to cater to those using debit or credit cards.
12 Effective Strategies to Make Budgets Work
These strategies not only allow the allocation of resources efficiently, but also help set realistic financial goals, prioritize projects based on their potential cash flow, and explore optimal chances to reach financial independence.
Moreover, having a budgeting plan in place also ensures flexibility to adjust to unanticipated financial challenges, contributing to long-term wealth creation.
1. Determine Goals and Objectives
Start your budgeting process by clearly defining your financial goals and objectives. Are you aiming to buy a new home, fund your education, or build an emergency fund?
Whatever aspiration you have, short- or long-term, incorporating them into your budget amplifies your drive and focus on achieving them.
This goal-driven strategy aligns your budgeting with your needs and wishes, creating a financial roadmap toward your envisioned milestones. Consider these smart financial goals to get you started.
2. Better Planning, Fewer Surprises
Planning your budget effectively requires a thorough consideration of all personal budget categories.
Also, incorporate both short and long-term financial goals into your budget by prioritizing them, such as purchasing a home, taking a vacation, or furthering your education. Regularly reviewing and adjusting your budget accordingly, based on changes in income or unexpected expenses, can also ensure you stay on track.
Utilizing a variety of budgeting tools, like spreadsheets, apps, or budgeting software, can simplify this process and help keep you accountable.
Quicken
Personal finance and money management software allows you to manage spending, create monthly budgets, track investments, retirement and more.
I have used this platform for over 20 years now.
Pros:
Birds-eye view of your complete financial picture.
Conveniently download your spending activities, and automatically categorize them (Quicken connects to over 14,000 financial institutions).
Track investments with it’s features like portfolio analytics, retirement goals, and market comparison.
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Little complex to use at first, the learning curve is moderate.
Yearly subscription-based model to use the platform.
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3. Reduced Financial Stress through Budgeting
A successfully implemented budget significantly reduces financial stress by providing an accurate picture of your financial health.
With a well-defined budget, worries about overspending, living from paycheck to paycheck, or falling into debt diminish. Monitoring and updating your budget will allow you to feel more confident and secure about your financial standing, paving the way to monetary stability.
4. Deciding When to Review Your Budget More Frequently
An effective budget is not a set-and-forget one; it requires regular check-ins and updates. A bill calendar is very helpful.
A recommended starting point is a monthly review. However, when first starting out, you will need to review your budget monthly until you find it working for you.
Other situations may need more frequent check-ins according to changes in income, financial goals, or unexpected expenses.
5. Spot Potential Room for Improvement
Budgeting provides a realistic view of your spending patterns, allowing you to identify areas of improvement.
Upon reviewing your budget, you might notice unnecessary expenditures or categories where expenses consistently exceed budgeted amounts. Such insights help you re-evaluate your spending habits and update your budget accordingly.
This phase coupled with a no spend challenge involves being brutally honest with yourself, taking into account your needs, wants, and financial realities.
6. Analyze Your Expenses and Income
Critical examination of your income and expenses is crucial for successful budgeting. Begin by calculating your total income, then list and categorize your monthly expenses into fixed and variable.
Pinpointing the difference between the totals can highlight whether you’re living within your means.
If your income surpasses your spending, consider investing the surplus.
Conversely, if your expenses outnumber your earnings, think about ways to increase income or decrease spending.
7. Set Limits for Your Budget Items
Setting reasonable spending limits for your budget categories ensures financial discipline. Check each category of spending—groceries, entertainment, or personal care, for instance—and contemplate areas you can cut back.
Ask around to see how much others are spending in certain categories in your neighborhood.
Remember, your budget should be flexible and realistic to your lifestyle, ensuring you don’t feel deprived. Embed small “wants” into your budget to keep the whole process enjoyable and sustainable.
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8. Create a System for Tracking Your Expenses
Creating an efficient system for tracking expenses is vital to maintaining control over your finances. This could be a simple spreadsheet, a manual ledger, or budgeting apps on your smartphone.
Tally every cent spent, dividing your expenses into their respective categories—rent, food, clothing, utilities, etc.
This way, you get a detailed insight into your financial habits and can identify potential areas for savings. The method isn’t as important as its thoroughness in ensuring no expense gets overlooked.
9. Track Your Spending with a Spreadsheet
Spreadsheets are an optimal resource for tracking spending. You can utilize an online template, like Tally, or make one yourself from scratch.
As you spend, record each transaction under the fitting category. This real-time monitoring can help spot overspending, analyze spending habits, and adjust budgets as needed.
So, if you’re a whiz with Excel or Google Sheets, tracking expenses this way might be your best bet.
Tiller Money
Your financial life in a spreadsheet, automatically updated each day.
Tiller is the fastest, easiest way to manage your money with the unlimited flexibility of a spreadsheet.
Update your finances in one place, so you can take control of spending, optimize cash flow, and confidently plan your financial future.
Pros:
Tiller automatically updates Google Sheets and Microsoft Excel with your latest spending, balances, and transactions each day.
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10. Budget for Emergencies
Budgeting for the unexpected is an essential aspect of sound financial planning. Financial emergencies don’t knock before they occur; therefore, creating a buffer in your budget helps you face them without plunging into debt.
As an expert, we suggest an emergency fund of one month of income or at least $1000. Then, start a rainy day fund with three to six months of expenses.
Having these funds built into your budget ensures you’re financially covered for challenging situations such as job loss, medical emergencies, or sudden home repairs.
11. Talk to Your Family About Your Budget
Talking to your family about your budget ensures everyone understands and works towards your financial goals. This discussion becomes especially crucial if you’re budgeting for a household.
I always provide my family with an overview of the budget, explaining how it works and how we can achieve our goals. Being open about your financial plan can foster greater accountability, and cooperation to achieve shared financial objectives more seamlessly.
12. Look for Ways to Make Money
Increasing your income can be an effective strategy to make your budget work better, rather than solely focusing on cutting expenses.
By finding ways to earn more money, for example by taking a part-time job, freelancing, selling unused items, or investing, you add flexibility to your budget and reduce the pressure on spending.
Moreover, the additional income could be directed towards savings, debt repayment, or funding your personal goals as identified in your budget plan.
Financial Budgeting FAQs
Starting a budget begins by assessing your total income, followed by identifying and categorizing your expenses.
Once done, subtract your expenses from your income to understand your financial standing.
Next, set your financial goals—short term and long term.
Then, allocate your earnings across different categories, maintaining a balance between savings, expenditures, and other aspirations.
Review and adjust this plan periodically to ensure it aligns with your financial landscape.
Budgeting should ideally start as soon as a person starts earning money. It’s never too early to begin planning where your money should go, and late starters can still benefit significantly.
Budgeting is a lifelong practice that guides you to live within your means, handle emergencies smoothly, and achieve your financial goals efficiently. It’s an indispensable tool for ensuring monetary success and stability.
Successful Budgeting as an Essential Life Skill
Successful budgeting is undeniably an essential life skill. It not only helps you live within your means but also provides a clear direction towards your financial goals.
Mastering this skill early on can lead to effective financial decision-making, lesser financial stress, and a more secure way of life.
There will be fluctuations in your budgeting, so you can start to forecast your budget. It also reinforces the value of discipline and planning, offering improved self-management and positive monetary habits.
Ultimately, progressing from just surviving to thriving financially is the goal, and disciplined budgeting is a tool to get you there.
This is just one step towards becoming financially independent.
Know someone else that needs this, too? Then, please share!!
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More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
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Inside: Are you struggling to keep up with your variable expenses? Whether it’s groceries, gas, or rent, managing these costs can be daunting. This guide will teach you how to budget for variable expenses and reduce the strain they put on your wallet.
Understanding and effectively managing your variable expenses is a crucial aspect of maintaining financial health.
These are expenses that fluctuate on a monthly basis, such as groceries, fuel, and entertainment. Their inconsistency can make budgeting a challenging task.
For many people, this is where they give up on budgeting because variable costs can sway too much for the average budgeter to know what to do.
Around here at Money Bliss, we know those who efficiently manage their variable expenses tend to fare better in achieving their financial goals. Furthermore, it empowers you to anticipate, plan and manage costs better, and avoid unnecessary financial stress.
Our focus here will be on explaining how variable expenses can make notable changes to your personal budget and offer strategies to manage them effectively.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
What is a Variable Expense?
A variable expense is a cost that changes from month to month.
Unlike fixed costs that are paid at regular intervals and may endure only slight fluctuations, variable expenses undergo a higher degree of fluctuation depending on consumption or quantity used. These expenses can comprise costs such as groceries, entertainment, and fuel for your car.
What primarily distinguishes a variable expense is its potential to vary from one period to the next, making it an important calculation in accounting for a comprehensive monthly budget.
Knowing the intervals of these variable costs can enhance the accuracy of your budgeting, turning this challenging aspect into an opportunity to reduce costs.
What is an Example of a Variable Expense?
Variable expenses typically entail a high degree of personal discretion and vary substantially between individuals. While one person may see dining out as a variable expense, for another, it may be a rare treat. Either way, it is still an example of variable expenses.
Here are a few typical examples:
Groceries: You decide what food to buy, and it depends on your food preference, the number of people at home, and special dietary needs.
Gasoline: This expense is dependent on how much and how far you drive.
Utilities: Electric, water, and gas bills fluctuate based on usage.
Clothing: The cost can vary each month depending on how often and how much you choose to buy, such as seasonal shopping, special occasions, or replacing worn-out items.
Gifts: Costs can fluctuate depending on the occasion, person, and your personal budget for the period, making them unpredictable and potentially impacting your monthly budget plans. Especially for Christmas gifts.
Entertainment: Costs such as movie tickets, concerts, or amusement parks may vary depending on your social life.
Repairs: Costs for home and car repairs are unpredictable and can markedly vary. Essentially, any expense that is not fixed (like rent or car payment) can be considered a variable expense.
Taxes: Yes, even your taxes are variable based on your income.
Don’t forget to use a savings account with one of the popular money saving challenges.
Difference between Fixed and Variable Expenses
Understanding this difference is a significant step toward setting realistic savings goals
Fixed expenses are constant costs that remain the same each month, like rent, insurance premiums, car payments, or childcare. They’re predictable, making them easier to incorporate into your budget without unexpected surprises.
On the contrary, variable expenses fluctuate month-to-month and include items like groceries, utilities, gas for your car, or entertainment. The unpredictability of these costs can cause potential challenges in budgeting and limit the consistency of your financial output.
Nevertheless, variable expenses often present more opportunities for saving.
You have greater control over these costs, giving you a chance to limit expenditure and prioritize savings.
How to Budget for Variable Expenses
Personal budgeting is an essential tool. Despite variable expense’s unpredictability, it is possible to plan for these expenditures by applying practical tactics and strategies.
From using budget apps to examining previous spending patterns, this type of budgeting enables you to maintain control over your finances and make adjustments as necessary.
50/30/20 Budget: An Effective Approach
The 50/30/20 budgeting approach is a simple yet effective method that can help you manage both fixed and variable expenses.
This method suggests you divide your after-tax income into three categories: 50% on necessities, 30% on wants, and 20% on savings or debt repayment.
By categorizing this way, you ensure your most critical outlays (the necessities ) first. You then allocate your income towards discretionary spending (your wants), and finally squirrel away a portion for savings (hopefully 20%) or paying off debts. This budget calculator strategy can serve as a foundation to guide your spending, helping you to stay on top of your finances.
Quicken
Personal finance and money management software allows you to manage spending, create monthly budgets, track investments, retirement and more.
I have used this platform for over 20 years now.
Pros:
Birds-eye view of your complete financial picture.
Conveniently download your spending activities, and automatically categorize them (Quicken connects to over 14,000 financial institutions).
Track investments with it’s features like portfolio analytics, retirement goals, and market comparison.
Cons:
Little complex to use at first, the learning curve is moderate.
Yearly subscription-based model to use the platform.
Zero-Based Budget
A zero-based budget is a technique where you make a budget from scratch or “zero” and allocate every dollar of income towards different categories of expenses until they sum up to zero at the end of the month.
This budgeting strategy, very popular due to the budgeting app, YNAB, can be a rewarding technique that solicits justifying every expense’s worth as you give every dollar a job.
Distributing money toward fixed costs is usually shoo-in, but budgeting for variable costs can be tricky because you won’t know how much you’ll spend on them. The solution is to estimate as closely as possible.
The beauty of a zero-based budget is that it ensures your money is purposefully allocated, leaving no room for unexplained spending especially when used with sinking funds.
YNAB
Enjoy guilt-free spending and effortless saving with a friendly, flexible method for managing your finances.
Pros:
Comprehensive approach to budgeting, helping you plan monthly budgets based on your income.
Offers expert advice, making it suitable for those who require an in-depth, forward-thinking budgeting strategy.
Superior synchronization skills make it the winner in this area.
YNAB has extra features like goal setting for budgeting, shared budgeting tools for partners.
Option to manually add and upload transactions from accounts each month.
YNAB prioritizes user privacy.
Envelope Budgeting System
The envelope budgeting system is a successful method for managing variable expenses. By dividing your income into envelopes assigned to different categories like entertainment, groceries, or transportation, control over fluctuating costs is established.
With each paycheck, you determine a specific amount for each category and stuff that envelope with cash. By strictly adhering to this limit, you thereby avoid overspending.
This hands-on approach provides an exact idea of available cash and creates a stronger sense of financial accountability. In fact, recent data indicates that the envelope system has successfully helped many people stay within their budget, primarily by making expenditures more tangible and easier to track.1
What is most likely the reason variable expenses should be planned after fixed expenses?
When preparing a budget, it’s typically suggested to plan for fixed expenses first before variable expenses.
The primary reason is that fixed expenses are generally non-negotiable costs that are essential to your daily life and take up much of your budget. These costs are predictable and regular, making them easier to budget for.
Variable expenses, on the other hand, tend to fluctuate and often include discretionary spending like dining out, shopping, or entertainment. This category, despite its variability, carries a certain upside as you possess more control over these expenses than your fixed ones.
By planning for fixed expenses first, you ensure to cover your essential needs before budgeting for lifestyle choices and discretionary spending, which can flex more easily around your remaining income.
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Your financial life in a spreadsheet, automatically updated each day.
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Pros:
Tiller automatically updates Google Sheets and Microsoft Excel with your latest spending, balances, and transactions each day.
No more tedious data entry, CSV files, or logging into multiple accounts.
You can customize everything and finally track your money, your way.
Tips to Control Variable Expenditures
Managing and controlling variable spending is an essential aspect of sound financial planning.
Honestly, the more proactive you are in monitoring the continuous changes in variable expenses and introducing strategies to suppress any unnecessary hikes, the faster you will reach your goals.
This section will provide insights into various effective methods to control variable spending, as well as the behavioral adjustments needed for successful implementation.
Tip #1 – Save on fixed and variable costs
Everyone wants to save money and here are a few tips on reducing both fixed and variable costs:
Fixed costs: Considering these costs are more constant, savings can usually only be achieved by longer-term changes. This could be refinancing your mortgage for a lower rate, negotiating a lower car insurance premium, or switching to a cheaper phone plan.
Variable costs: Changes in habits can lead to significant savings. For instance, cooking at home instead of dining out, carpooling or using public transport to save on gas, or unplugging electronics when not in use to save on utilities.
By scrutinizing both types of costs, you can identify opportunities to cut back and increase your savings over time. Being frugal green is a huge topic! Remember, the little things can add up!
Tip #2 – Set expense limits and find ways to save
Budgeting requires discipline, and setting limits on your variable expenses is a big part of that. You can do this in three ways:
Start by reviewing your spending patterns: examine your transaction history to identify areas of overspending. Once you’re aware of these, set spending limits that align with your financial goals. Drawing from my experience, I can assure you that awareness of overspending areas, followed by setting spending limits, can significantly align with your financial goals.
Consider taking part in a no spend challenge. Personally, that is when I realized I spent a lot of money on things that didn’t matter to me in the end.
Adopt practical money-saving habits like adopting DIY approaches (e.g., home repairs, sewing, cooking), utilizing coupons and cash backs, shopping secondhand, or carpooling.
Remember, you have control over your variable expenses, and setting restrictions doesn’t mean depriving yourself. It just means making informed decisions and prioritizing your spending according to your financial goals.
Tip #3 – Use Sinking Funds
A sinking fund is an effective money management strategy that can help handle variable costs. It’s a fund where you regularly set aside a certain amount of money for a specific expense. For instance, you might establish a sinking fund to cover property taxes or unexpected costs (but they will happen) like car maintenance, vet bills, or holiday gifts.
When the time comes for these expenses, you won’t have to scramble to find the money because you’ve already collected a fund over time.
This approach can ease financial stress and prevent unplanned debts, making sinking funds an excellent remedy to unexpected variable expenses. For us, this is when we maximize the placement of our hard-earned money across multiple bank accounts.
FAQs about Variable Costs and Budgeting
While all expenses matter, we generally advise budgeting for fixed expenses first. These are critical costs that typically stay constant month-to-month, like rent or mortgage payments, insurance, and fixed utilities.
Allocating money toward these essential costs first ensures that you’re covering your necessities. Once you’ve accounted for these, you can then budget for variable expenses which are discretionary and fluctuate based on personal usage.
Thus, it helps you realize your spending habits and identify areas where you can cut back if needed.
Yes, entertainment is typically considered a variable expense. These costs vary month-to-month based on your discretionary spending habits.
For instance, your spending on concerts, movies, dining out, or subscriptions can fluctuate based on your lifestyle, events, or personal choices. Remember, since entertainment costs are discretionary, they can often be trimmed when looking to make budget adjustments.
Ready to Master your Variable Budgets?
Understanding the ins and outs of variable expenses and strategizing accordingly can empower you to manage your money more effectively.
By distinguishing between your fixed and variable expenses, budgeting effectively, and identifying potential savings, you’re setting yourself up for financial success.
Whether you’re using the 50/30/20 budget approach, a zero-based budget, or sinking funds, the goal is to ensure your money is being used wisely. It’s all about creating a balance that nurtures a comfortable lifestyle while paving the way toward your future financial goals.
So review your inconsistent costs, implement new financial strategies, and take control of your variable expenses.
The key takeaways is a well-planned budget is not just beneficial for controlling spending, but also integral to your financial freedom.
Source
Ramsey Solutions. “How to Budget With the Cash Envelope System.” https://www.ramseysolutions.com/budgeting/envelope-system-explained. Accessed November 28, 2023.
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Inside: Fixed expenses are a vital part of any budget, and understanding how to account for them is essential to staying on track. This guide will teach you about fixed expenses and how to use them in your monthly budget to keep expenses under control.
Budgeting is the cornerstone of financial stability.
Whether you want to or not, it will take away the stress of money.
A budget is a practical tool that enables you to plan your spending and savings, ensuring a fair share of your income goes towards critical expenses. It also gives you more control over your money, reducing stress and enabling you to meet your financial objectives.
This is something you want, right?
In this post, we will uncover information specifically related to fixed budget expenses.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
Decoding Your Expenses – Fixed and Variable
Understanding expenses forms the bedrock of effective budgeting practices. There are two key types of expenses to consider: fixed and variable.
Fixed expenses are those that remain constant every month, such as rent or car payments.
Variable expenses, on the other hand, fluctuate monthly based on usage or consumption, like groceries, utilities, or gas.
Balancing these two types of expenses forms a significant part of personal budgeting.
What is A Fixed Expense?
A fixed expense is a cost that remains typically constant and is paid at regular intervals. These intervals may be weekly, monthly, quarterly, or annually.
Given their consistency, they contribute to financial predictability and ease of budgeting.
What is an Example of a Fixed Expense?
Here are common fixed expense examples that cover a wide spectrum but predominantly include costs required to maintain a basic standard of living. Here are some examples:
Rent or mortgage payments: This encompasses the regular cost of housing.
Insurance premiums: This could be for your car, health, life, renters, or homeowners insurance.
Loan payments: Regular installments for obligations like student loans and car loans belong to this category.
Utilities: Though they may fluctuate occasionally, regular payments like water, gas, and electricity are often treated as fixed costs.
Subscriptions: Recurring payments for services such as gym memberships or streaming platforms.
Savings: For disciplined budgeters, fixed contributions to saving accounts can be considered a monthly fixed expense. This is how Money Bliss readers save so much money!
The list can extend to include other less common fixed expenses, such as alimony, child support, or back tax payments, depending on personal circumstances.
YNAB
Enjoy guilt-free spending and effortless saving with a friendly, flexible method for managing your finances.
Pros:
Comprehensive approach to budgeting, helping you plan monthly budgets based on your income.
Offers expert advice, making it suitable for those who require an in-depth, forward-thinking budgeting strategy.
Superior synchronization skills make it the winner in this area.
YNAB has extra features like goal setting for budgeting, shared budgeting tools for partners.
Option to manually add and upload transactions from accounts each month.
YNAB prioritizes user privacy.
What is a periodic fixed expense?
A periodic fixed expense is a cost that is regular and predictable but does not occur monthly. These expenses still retain the characteristics of fixed expenses.
They may be caused by quarterly, semi-annual, or annual payment terms and require careful budgeting and planning. Examples include annual subscriptions, car insurance paid semi-annually, or yearly property taxes.
It’s essential to account for these expenses in your budget, dividing the total cost by the number of months until payment to ensure you’re adequately prepared when they’re due.
How to Budget for Fixed Expenses
Budgeting is a crucial financial activity as it helps manage income effectively and ensures all necessities are covered.
Most people use the zero based budget or the biweekly budget as a starting point.
1. Start With Fixed Expenses in Budgeting
Starting with fixed expenses in the budgeting process is essential, as they make up the majority of one’s budget and are typically consistent for longer periods.
When writing out your budget, prioritize fixed expenses such as housing costs, insurance, and childcare. You can use our personal budget categories to find out which expenses you shouldn’t forget.
Upon allocating your income for the month, ensure these bills take precedence over discretionary spending to avoid budgeting errors.
Quicken
Personal finance and money management software allows you to manage spending, create monthly budgets, track investments, retirement and more.
I have used this platform for over 20 years now.
Pros:
Birds-eye view of your complete financial picture.
Conveniently download your spending activities, and automatically categorize them (Quicken connects to over 14,000 financial institutions).
Track investments with it’s features like portfolio analytics, retirement goals, and market comparison.
Cons:
Little complex to use at first, the learning curve is moderate.
Yearly subscription-based model to use the platform.
2. Prioritizing Between Fixed and Variable Expenses
Prioritizing between fixed and variable expenses can often feel like walking a tightrope.
The first step is budgeting for your fixed expenses. Since they make up the majority of your budget and are for longer periods of time, it’s crucial to ensure these costs are taken care of first.
Next, plan for your variable expenses. These costs fluctuate every month and can be adjusted easily.
Finally, you will account for flexible expenses.
As always, don’t forget to save and invest, as this will help with financial sustainability and wealth development.
3. Tools and Techniques for Efficient Budgeting
Today’s digital landscape offers myriad tools and techniques for efficient budgeting, which is great news for you!
Apps and digital tools can facilitate the tracking of expenses in real-time, thus making it easier to discern patterns and identify savings opportunities. Using a line-item budget can help you dig into where your money is going and plan every dollar you earn.
Here are our favorite budget apps.
Regularly reviewing and updating your budget can help you stay on top of changes and future uncertainties.
Tiller Money
Your financial life in a spreadsheet, automatically updated each day.
Tiller is the fastest, easiest way to manage your money with the unlimited flexibility of a spreadsheet.
Update your finances in one place, so you can take control of spending, optimize cash flow, and confidently plan your financial future.
Pros:
Tiller automatically updates Google Sheets and Microsoft Excel with your latest spending, balances, and transactions each day.
No more tedious data entry, CSV files, or logging into multiple accounts.
You can customize everything and finally track your money, your way.
Try Tiller Free
How do I determine whether a cost is fixed or variable?
Determining whether a cost is fixed or variable often comes down to its consistency and its correlation with a factor such as output, usage, or time.
Fixed costs remain constant over time or within certain activity levels; examples include rent and insurance premiums. They do not fluctuate with changes in production or the number of goods sold.
Variable costs, on the other hand, fluctuate in direct proportion to levels of spending, such as groceries or gas.
Understanding this difference can help with accurate cash flow forecasting and effective financial management.
Strategies to Save on Fixed Costs
Now, the key is to try to lower your fixed expenses as much as possible. This will make the biggest difference in your budget.
For example, if your rent for a one bedroom apartment is $1850, maybe you move in with a roommate, and your rent is lowered to $800 per month. That is a savings of $1050, which you can save for a down payment on a house.
Ways to Curb Fixed Expenses
Optimizing your budget often entails finding ways to reduce your fixed expenses. Several strategies can help achieve this:
Renegotiate Your Bills: Reach out to service providers to negotiate lower rates for services such as insurance premiums, Internet, phone service, and more.
Refinance Your Loans: If interest rates have decreased, consider refinancing your mortgage or student loans to lower the monthly payments.
Downsize Your Living Situation: One major way to cut costs is to find a smaller or cheaper place to live.
Cancel Unused Subscriptions: Regular payments for services you don’t use, like gym memberships or streaming platforms, can silently drain finances.
Automate Savings: Regular, automated transfers to a savings account can enforce discipline and consistency in managing money.
Remember, while these strategies can help you cut costs, each individual’s circumstances are different, so personalized considerations should be made.
Which fixed expense would be most difficult to change if money is needed for car payments?
Car payments are a real struggle for most people. Right now, the average car loan is between $516-725 per month depending on a used or new vehicle. 1
As such, your largest fixed expenses are usually the most challenging to change.
If you require more money for car payments, the most difficult expenses to alter would likely be your mortgage or rent payments. Reducing these costs often necessitates significant lifestyle changes, such as moving to a cheaper home or obtaining a roommate.
Other difficult-to-change fixed expenses could include insurance or student loan payments, depending on the terms of your loans or policies.
It’s important to have an emergency fund set up for unforeseen repairs like these to avoid having to drastically change your lifestyle.
Practical Tips for Achieving Financial Stability
Achieving financial stability often boils down to effective management and strategic planning. Here are some practical tips:
Pay Your Bills on Time: This reduces unnecessary fees and interest costs. If this is a challenge, setting up automated payments may help.
Save Regularly: Aim to set aside a certain percentage of income on a regular basis. Automated savings plans are a useful tool for this.
Prioritize Spending: Distinguish between your wants and needs to help prioritize your spending.
Get Insured: Protect yourself from large, unexpected expenses by ensuring appropriate coverage on insurance.
Stay Informed: Regular budget reviews and financial check-ups can help you stay on track and adjust your plans as necessary.
Remember, financial stability is a journey, not a one-time achievement. It requires consistency and patience. So, celebrate your small financial victories along the way!
YNAB
Enjoy guilt-free spending and effortless saving with a friendly, flexible method for managing your finances.
Pros:
Comprehensive approach to budgeting, helping you plan monthly budgets based on your income.
Offers expert advice, making it suitable for those who require an in-depth, forward-thinking budgeting strategy.
Superior synchronization skills make it the winner in this area.
YNAB has extra features like goal setting for budgeting, shared budgeting tools for partners.
Option to manually add and upload transactions from accounts each month.
YNAB prioritizes user privacy.
Start 34 Day Free Trial
YNAB vs Mint
Frequently Asked Questions
Yes, rent is considered a fixed expense. It is a recurring cost that typically stays constant, regardless of changes in your income, spending, or other factors.
The rental or lease agreement specifies the monthly rent expense, which does not change until the lease period ends or is renegotiated.
If fixed costs become variable costs in a personal budget, it can add some unpredictability to your expenses. For instance, if you have a variable-rate mortgage, your payments may change due to the mortgage agreement.
To restore control, consider opening separate savings accounts for each variable expense category, turning these unpredictable expenses into ones that can be anticipated and budgeted for each month.
Fixed costs refer to expenses that do not change with fluctuations in your budget. They are incurred regularly and remain relatively constant, independent of your spending.
These costs are critical expenses necessary to live your life and cannot be quickly modified or eliminated.
Does This List of Fixed Expense Examples Help You?
In conclusion, examining and reducing your fixed expenses can be a transformative step toward achieving financial stability.
Contrary to popular belief, fixed costs are not immutable. With diligence and thoughtful consideration, you can explore cheaper alternatives for health insurance premiums, cell phone plans, and other consistent expenses.
Lowering your fixed costs enables automatic, consistent savings which can then be directed towards settling debt or securing your future. The beauty of this approach lies in its subtlety as this won’t feel like an imposition on your lifestyle.
Therefore, understanding and managing your fixed expenses can indeed play a crucial role in your journey to financial soundness.
It’s not just about making frugal decisions, rather it’s about making smart ones that can reap substantial benefits in the long run.
Now, do you have the traits needed to be financially stable?
Source
LendingTree. “Average Car Payment and Auto Loan Statistics 2023.” https://www.lendingtree.com/auto/debt-statistics/. Accessed November 27, 2023.
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Inside: Are you struggling to make ends meet on a low income? This guide will teach you how to budget money effectively on a low income, so you can live a comfortable life without having to skimp on important expenses.
Let’s face it… Navigating through the budgeting on a low income can often feel overwhelming.
The fear of insurmountable bills, the anxiety associated with rising living costs, and the overall foreboding nature of budgeting often make for a persistently stressful experience.
However, it is crucial to understand that you are not alone in this journey. I have been in your spot as well as many Money Bliss readers.
Regardless of how daunting the budgeting task may appear, we truly believe that with the right guidance and adherence to solid financial principles, you are capable of achieving financial peace of mind.
This process will simply require patience, persistence, and strategic planning. This guide aims not only to shine a light on the struggles of budgeting with a low income but also to offer a beacon of hope.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
How to Budget Money on a Low Income
While it’s true that budgeting with a low income can be tough, proper money management can make it doable.
When you have less disposable income, it leaves you with less leeway in your budget. That’s why you have to be accountable and meticulously plan your spending to ensure financial stability.
So, let’s dig in and you can find success.
Step #1 – Figure out Your Monthly Income
Developing an effective budget starts with understanding your monthly income.
Here’s a step-by-step guide:
List out all income sources: This includes all your regular paychecks, part-time jobs, side hustles, social security, child support, or any other form of income you have. If your income is irregular, say from commissions or seasonal work, it’s advisable to base your budget on your lowest monthly income.
Account for taxes and deductions: To get an accurate picture of your disposable income, you need to factor in taxes and deductions from your earnings. You need to make sure you understand the difference between gross pay and net pay.
Include irregular income: If you occasionally get money from gifts, or sporadically earn from passive income sources like investments, be sure to include these too. As these are inconsistent, it is best to fund discretionary spending with this money.
Personally, I recommend using your net income with budgeting. This will give you an accurate budget that you can truly follow.
This knowledge is powerful when it comes to effective budgeting.
Step #2 – Define your bills and Expenses
Knowing how much you spend and what you spend your money on is another crucial step in budget planning.
The key is to define ALL your bills and expenses. Here are the personal budget categories that cover almost everything you can think of.
Now, you must do the following:
Identify your fixed costs: These are basics that you have to pay monthly and remain fairly constant, such as rent, car payments, and student loans.
Consider flexible costs: These expenses vary from month to month. Examples include groceries, transportation, electricity, water, and gas bills.
Remember periodic costs: Some costs only appear annually or semi-annually. For instance, insurance premiums, car registrations, and property taxes. It’s important to set aside money each month to cover these expenses when they arise. A sinking fund is great for these expenses.
Account for daily spending: Beyond fixed and flexible bills, consider your day-to-day expenses like shopping, subscriptions, and entertainment. Be honest about the little expenses. It’s often the small, frequent purchases that can derail a budget.
Prepare for unplanned costs: Finally, remember to budget for unexpected expenditures such as car repairs or medical bills.
By defining and categorizing your bills and expenses, you can see where your money is going and better manage your spending.
Step #3 – Reach a Zero Budget
A zero-based budget is a strategy that requires you to assign every dollar you earn to a specific expense or savings category, with the goal of having your income minus your expenses equal zero by the end of the month.
Write down your income: From the step before, you already know your total monthly income.
Subtract your expenses: Subtract the total of your monthly expenses (including savings) from your total monthly income. If you’ve correctly accounted for your income and expenses, the result should be zero. This is what it means to have a “zero-based budget”.
Balance the budget: If your income and expenditure don’t balance, adjust your variable expenses and other discretionary spending until they do. This can involve cutting back on nonessential overspending, like takeout meals or unnecessary purchases.
Allocate every dollar: With your budget balanced, each dollar should now have a purpose, whether it’s paying bills, going into savings, or providing for your daily needs.
Many people struggle to hit a zero based budget on the first try. It is common for your expenses to be higher than your income. Thus, a no spend challenge may help you identify what is important to actually spend your money.
Reaching a zero-based budget equips you with a clear picture of your financial status.
Thus, it allows you to use your money purposefully and prevents unnecessary spending. This way, even with a low income, you can still meet all your needs and work towards your financial goals.
What do you do if your budget shows your expenses are more than your income?
When your monthly spending exceeds your monthly income, immediate attention is needed to prevent worsening financial issues. Before panic sets in, consider taking the following steps:
Analyze your budget: Reevaluate and scrutinize your budget. There might be necessary adjustments overlooked or expenses incorrectly categorized. This will give you a clearer understanding of where your money is going.
Prioritize essential expenses: Allocate money to necessities like housing, food, utilities, and debt repayments first. Other less necessary expenditures, like entertainment and dining out, can be reduced or eliminated.
Reduce expenses: After prioritizing, identify areas where cuts can be made. Impulse buys, unnecessary subscriptions, or expensive habits might need to go.
Increase your income: Consider part-time jobs, side hustles, selling unused items, or picking up freelance work to bring in more money.
Seek advice if debt is weighing you down: As a last resort, you may look at ways to lower your interest rate on your debt. These strategies like debt consolidation or restructuring could help make your situation more manageable.
Remember, this situation, while stressful, is not permanent. With careful planning and disciplined execution, you can turn this around and regain financial stability.
Taking Control of Your Budget When Income Doesn’t Cover Your Expenses
Now, this is where you need to learn to manage your money wisely. You are in control of where you spend your money.
Many truly believe with a higher income all of their financial problems go away. From my research, most people end up with bigger money problems, the same spending habits, and still living paycheck to paycheck even with a higher income.
So, let’s reign in what you can do today to make your budget feasible.
1. Prioritize Essential Bills and Expenses. The key is to identify which expenses are truly essential to your livelihood. All remaining expenses, like entertainment or eating out, should be considered secondary and only met after the primary expenses have been satisfied.
2. Participate in a No Spend Challenge. A No Spend Challenge not only helps you save money rapidly but also makes you cognizant of your spending habits, helps identify non-essential expenses, and guides you towards a minimalist, sustainable lifestyle. Start with a no spend month.
3. Reduce your Housing Expenses. Housing costs can be one of the most significant expenses. Look at ways to downsize, negotiate rent, refinance your mortgage, or get roommates. Or even housesit permanently.
4. Be Cognizant of Bad Spending Habits. Some examples include impulse purchases, expensive convenience, not comparison shopping, or paying too much. By becoming aware of your spending habits and making conscious choices, you can break the cycle of unnecessary spending and start saving money with the penny challenge.
5. Skip the Expensive Coffee Shop. Choosing to forgo your daily coffee shop run can result in surprisingly significant savings. Implementing just this one change could save you over $600 a year!
6. Use Public Transportation to Save Money. The costs of owning a car – gas, maintenance, parking, and insurance – can quickly add up. So, look for public transportation as an alternative or even cycling, carpooling, or walking.
7. Take Advantage of Free or Cheap Entertainment. When living with a low income, entertainment expenses can quickly eat into your budget. Good news for you! There are plenty of things to do that don’t cost money.
8. Cut Back on Grocery Spending. By implementing simple strategies such as meal planning, cooking at home, cutting down on processed food and reducing waste, you can maintain a healthy diet while significantly reducing your grocery bills. Don’t forget to use those discounts and coupons!
9. Stick to Your Shopping List. Preplan your purchases before stepping into a store. This is a powerful tool in curbing those impulse purchases which can inflate your expenses substantially.
10. Start Meal Planning. Meal planning is a practical and economical way to manage your food budget. By planning your meals for the week, you can control your grocery spending and eliminate waste.
11. Stockpile Goods That Will Stay Stocked Up Long Term. Remember, the goal of stockpiling is to save money, not to transform your home into a supermarket. Purchase enough to last a few months and focus on items that you’re certain to utilize. Here are the best foods to buy when broke.
12. Pack Your Own Lunch and Skip Eating Out. With an average meal out costing around $10, you could easily save $200 a month by packing lunch from home. Over a year, that’s $2,400 in savings!
13. Drink Water and Avoid Processed Foods. Shifting dietary habits can be a significant change, but your commitment to a healthier lifestyle can reap both health and financial dividends. It’s an investment in a life of wellness and economic sustainability.
14. Take Advantage of Discounts when Shopping. Remember, the goal of shopping with discounts is to spend less on what you need, not to buy more than you need. So, make sure to use coupons wisely, shop sales, buy off season, and use Cashback apps like Rakuten and BeFrugal.
15. Avoid Impulse Purchases. By avoiding impulse purchases, you give your budget room to breathe and create an opportunity for savings. This makes a significant difference over time, especially when money is tight.
16. Apply for Discounts on Utilities and Services. Many utility companies provide low-income home energy assistance programs. The same is true for internet service. Contact your service providers to check your eligibility.
17. Get Free or Discounted Goods Through Charities. Charities, faith, professional, and local organizations often offer grants for people experiencing financial hardship. Utilizing them can be a lifetime as they help you stretch your budget further and provide necessary support in times of financial struggle. Don’t be afraid or too proud to ask for help when you need it.
18. Get Outside. Reconnecting with nature can provide you with cost-free entertainment and a sense of tranquility that’s hard to find elsewhere.
19. Avoid Unnecessary Expenditure. While each person’s definition of “unnecessary” may differ, the key to budget management is curbing expenditures that don’t add substantial value to your life. A common culprit could be brand-name goods or late fees.
20. Start the Practice of Saving with a Mini Savings Challenge. The Mini-Savings Challenge can pave the way to a habit of saving regularly, even on a tight budget. Essentially, this challenge consists of setting aside a small amount of money each day or week, gradually increasing the amount over time.
21. Show Gratitude. While it may seem less directly related to finance, practicing gratitude is indeed integral to efficient budgeting and financial wellness. Remember, financial success isn’t just about making more money. It’s also about appreciating what you have and recognizing the steps you’re taking towards your goals.
Inciting Additional Income Avenues
Okay, this section is how you take a low income and increase your money. While cutting back spending is helpful, creating more money will help you to reach money success faster. This will take the strain off.
1. Look for Ways to Earn Extra Income
Boosting your income, no matter how minimal the increase, can help cover necessary costs and elevate your financial standing.
Here are some ideas using your current job:
Work Overtime: If possible, consider getting more extra hours at your current job. Earnings from overtime or extra shifts can be significant.
Negotiate a Raise: If you’ve been with a company for a while and demonstrated your worth, it might be time to discuss a raise. Prepare well for this conversation with evidence of your productivity and value.
Every extra dollar earned can be put towards savings, paying down debt, and creating better financial stability.
2. Leverage Side Hustles for Extra Money
Side hustles have become an increasingly popular way to earn extra money online in your spare time. They allow for flexibility and can be a great supplement to your current income.
Start a Side Hustle: These can be a great way to make use of spare time to earn extra cash. This could be anything from driving for a rideshare company, offering freelance services, tutoring, delivering food or groceries to selling homemade goods online.
Sell Unused Items: You probably have items in your home that you no longer need. Selling anything from clothes to electronics or furniture can be a good source of income.
Passive Income: From writing an eBook to renting out a room in your house or investing in stocks, creating passive income streams can provide extra money over time.
Remember to choose a side gig that fits your schedule, interests, and skill set. Not only could it bring in extra money, but it could also turn into a passion project, making the work feel less like a chore.
3. House Sit for Extra Income
House sitting can be a viable option for those looking to generate extra income, especially if you’re flexible with your time and location. It typically involves looking after someone’s home (and sometimes their pets) while they’re away.
Not only is house-sitting a way to earn money, but it can also offer a free place to stay. Hello – you just lowered the biggest expense in your budget. However, remember that taking care of someone else’s home is a huge responsibility, so only take on tasks you’re confident you can handle.
Get started by building your profile on Trusted Housesitters.
4. Items You Don’t Need Anymore
Selling items you no longer need or use can both declutter your home and add to your income. It doesn’t just have to be big-ticket items; even small routine household items can yield returns.
While this may be difficult to do, look for items in good condition that you and your family no longer need or use. If you have extra baby stuff, you can rent it on BabyQuip for extra money.
Remember, while selling items won’t provide a consistent income, it can be a great one-time source of extra cash especially if you have these highly popular flipping items in your house.
Baby Equipment Rentals with BabyQuip
Have you heard about BabyQuip? They are the #1 baby equipment rental service offering clean, safe, and insured baby gear.
Whether you are traveling or just don’t want to purchase, this is a great idea to check out.
Learn More
5. Pick up a Part-time Job
When you’re on a limited income, picking up a part-time job can be a reliable way to supplement your earnings. You are trading your time for money.
Many of these jobs that pay weekly offer valuable experiences, skills, and possibly even room for growth and advancement. Remember to save and plan for any taxes due as a result of your increased earnings.
Smart Use of Technology in Budgeting
Taking advantage of personal budgeting tools can make managing your finances easier. They can help track expenses, create a budget, and set saving goals. Here are some popular options:
You Need a Budget (YNAB): YNAB helps you create a budget and live within your means, educating you on effective money management along the way.
Simplifi by Quicken: This app crunches the numbers to show how much money you have for day-to-day spending after accounting for bills, goals, and savings.
Empower: This free tool offers a comprehensive financial dashboard that includes budgeting features and investment tracking.
Tiller Money: If you want a more manual approach, you can use Google Sheets or Excel to create a customizable budget spreadsheet.
Remember, the best tool is the one you use consistently. Try a few options to see which one best meets your needs and preferences. Every tool has its pros and cons, but all aim to help you control your finances effectively.
Empower Personal Wealth, LLC (“EPW”) compensates Money Bliss for new leads. Money Bliss is not an investment client of Personal Capital Advisors Corporation or Empower Advisory Group, LLC.
Our Top Pick
YNAB
Enjoy guilt-free spending and effortless saving with a friendly, flexible method for managing your finances.
Pros:
Comprehensive approach to budgeting, helping you plan monthly budgets based on your income.
Offers expert advice, making it suitable for those who require an in-depth, forward-thinking budgeting strategy.
Superior synchronization skills make it the winner in this area.
YNAB has extra features like goal setting for budgeting, shared budgeting tools for partners.
Option to manually add and upload transactions from accounts each month.
YNAB prioritizes user privacy.
Start 34 Day Free Trial
YNAB vs Mint
Access Paychecks Early with Digital Banking Apps
With the rise of digital banking, access to innovative financial tools like early direct deposit has become more accessible, even for those with low incomes. These services can be crucial lifelines between paychecks or in case of emergencies.
Here are a few platforms that offer such services:
Chime: Once you set up direct deposit with Chime, you may get your paycheck up to two days earlier than at a traditional bank.
Current: Current, a mobile bank account, provides users with paychecks up to two days in advance.
Varo: Varo also offers early direct deposit for its users, helping you gain access to your money more quickly.
Clair: Clair’s on-demand pay solution lets you advance a portion of your paycheck before payday. This can be particularly helpful when navigating financial crunches.
It’s important to note that while accessing your paycheck early doesn’t give you extra money, it does provide more flexibility in managing your finances and can help avoid overdraft fees or high-interest loan options in times of need. As with any financial tool, it’s essential to use early paycheck access wisely and not rely on it for regular spending.
Current | Future of Banking
Build your money future with Current. Get paid faster, build your credit history, earn points, and more – all in one place.
Plus boost your savings with high interest rates on your savings, save automatically with Round-Ups, set your goals, and more.
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FAQs
Saving money on a low income can seem challenging, but a few strategic changes and smart habits can make it achievable.
Engaging in a money-saving challenge can be a motivating way to encourage disciplined saving, helping you to creatively manage your finances and significantly boost your savings plan over time.
Remember, the key to saving on a low income is to stay consistent, patient, and adaptable in your approach.
Surviving on a low income budget can be challenging, but strategic planning and careful spending can help you manage your finances effectively.
The focus as Dave Ramsey likes to say is on your four walls – food, utilities, shelter, and transportation.
Remember that it’s okay to adjust your budget as you go. Circumstances change, and so should your budget. Review your budget regularly to ensure it’s still working for you and adjust as needed.
Budgeting when you’re broke might seem like an uphill battle.
The key is to make sure you stick to your budget and track your spending consistently. Don’t hesitate to reach out to local charities, government programs, and non-profit organizations for assistance.
Remember, being broke is often a temporary situation, and even small steps towards better budgeting can compound into big changes over time. Try to stay positive and focused on your financial goals.
Now, How do you Survive on a Low Budget?
Surviving on a low income involves careful planning, budgeting, and making the most of available resources. While it may seem challenging, it is indeed possible.
Every small step you take towards frugal living, such as sticking to a budget, reducing unnecessary expenses, or earning extra cash, can lead to considerable savings in the long run.
Remember, it’s also important to invest in yourself – whether that’s asking for a raise at work, learning a new skill, or starting a side hustle.
The journey of living on a low income can be tough, but it also offers an opportunity for creativity and gratitude for the essential things in life. With a positive mindset, some patience, and careful budgeting, you can not only survive but thrive, even on a low income.
The goal isn’t to just get by but to build a financially stable future.
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Inside: Intuit bought its popular Mint app and now it shutting down leaving users scrambling to find an alternative. This guide will help you understand Intuit’s decision to move Mint to Credit Karma and provide a list of alternatives for personal finance management.
In an era where personal finance apps are thriving more than ever, the shutdown news of Intuit’s Mint app comes as a shock for many.
When I heard the news, I couldn’t believe my ears… moving Mint’s feature to Credit Karma – a credit repair app?!?!
Once I got over the shock, I knew you wanted the best information out there to decide on what to do next.
Our guide here is dedicated to helping Mint users navigate the ongoing changes and prepare for what’s next in their personal finance journey.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
The Downfall: Intuit’s Decision to Shut Down Mint
Mint has always been a beacon in the realm of top budgeting apps; mostly due to the fact it was free.
However, Intuit’s decision to close Mint marks the end of an era. Yet, there is a teaser… Mint is propelling people to Credit Karma.
Here is a statement in the Mint App News:
“Credit Karma is thrilled to invite all Minters to continue their financial journey on Credit Karma, where they will have access to Credit Karma’s suite of features, products, tools and services, including some of Mint’s most popular features.”
Mint App News1
Mint’s commendable service, free albeit with ads, which has been helping many people manage their finances effectively, will be missed by Minters—time to understand why this happened.
Why is Mint Shutting Down?
A surprising fact is that a free personal finance app like Mint isn’t a sustainable business. Most free apps have marginal direct costs associated with their services, unlike personal finance apps. They heavily rely on expensive data aggregators to gather the necessary financial data, causing a steady revenue loss for Mint per free user.
Intuit’s model has never been able to cover these costs leading to a revenue crisis. That was a key reason why I believe Intuit decided to shut down Mint. While Intuit denied Mint’s expenses being material in their quarterly earnings calls in 2023, they did note however they are looking to grow their consumer base across all of their products. 2
The Controversy Surrounding Mint’s Shutdown
While the financial reason behind Mint’s closure is understandable, this decision has provoked a wave of consternation among the users. Massive user outcry on Reddit underscores the integral role Mint played in their lives, and some even accuse Intuit of abandoning its commitment to free financial management resources.3
Given the fairly recent acquisition of Mint into Intuit, this may be surprising for many including these Twitter users.10
Not totally surprised to see this move to kill @Mint by @Intuit. @CreditKarma had plans to compete directly with Mint while independent & it makes sense to have a single consumer portal.
Very worried about the execution. 😬 https://t.co/pki8J3R2lg
— Adam Nash (@adamnash) November 1, 2023
Intuit is shutting down budgeting app Mint and is trying to get people to instead use Credit Karma, an app without any budgeting functionality https://t.co/j2AXvLtd6F
— bart (@bart_smith) November 2, 2023
Pt 1/2 Opened my @mint app today to find that they had moved the platform over to Credit Karma! What the hell!? And worst of all, they got rid of all of the features that I liked about Mint! I loved Mint, it helped me take my personal finances seriously!!
— Trevbotplaya (@trevbotplaya) October 25, 2023
When is Mint shutting down?
Yes, Mint is being shut down. Mint’s curtains will be drawn on January 1, 2024.
From this date, users will no longer be able to access their accounts or use any Mint services as we know them today.
So, don’t be caught off-guard; stay prepared and choose the right alternative before Mint bids adieu. We have other options below to help you guide this transition.
Mint User’s Guide: Next Steps to Credit Karma
Okay, one piece of advice I always give at Money Bliss is to plan and carve your own money journey. So, let’s move from panic to planning:
What should Mint users do now?
It’s natural to feel perturbed by Mint’s shutdown. Yet, the smart step is to immediately switch to planning mode.
Some crucial actions include exporting your transactions from Mint for future use and deleting your account once you have secured all necessary information.
In this interim period, also make sure to explore personal finance app alternatives, considering their features and support services, to find one that fits your needs perfectly.
Starting Afresh: Alternatives to Mint App
In light of recent events, here are the best apps available for Minters.
Switching to a new personal finance app might feel daunting initially, but there’s no need to worry. This era offers a wide array of options, many of which employ advanced technology and provide a user-friendly experience.
Look for apps that offer seamless data importation from Mint with a CSV file, comprehensive financial overview, dependable security features, and preferably, competitive pricing as well.
Diving into Details: A Comparison of Mint Alternatives
When comparing Mint alternatives, consider factors such as user interface, functions, cost, and customer feedback. Each app has its unique strengths.
For instance, YNAB stands out for budgeting, and Quicken shines in terms of portfolio management, while Simplifi offers a user-friendly interface. You may pick a budget app based on your budgeting preference, such as budget by paycheck or zero based budgeting.
Research thoroughly to find the app that delivers your personal financial needs the best.
YNAB
YNAB, or You Need a Budget, stands out for its award-winning budgeting system. It’s not a clone of Mint, but rather, it takes a unique approach to helping people proactively track spending and work towards financial goals.
YNAB stands out in personal finance management since it allows for utmost user control with its four simple pillars:
Give Every Dollar a Job
Embrace Your True Expenses
Roll with the Punches
Age Your Money
Additionally, YNAB presents flexible customization options for category names, a feature that enhances user experience, along with an open-source toolkit for extensive reporting while maintaining supreme user data privacy.
Learning Curve: YNAB requires diligence and customization in its early stages, but offers a robust set of personalized budgeting tools once users cross the learning curve.
Import Existing Mint Transactions: Yes 4
Price: Free 34 day trial and then a subscription-based model of $14.99 monthly or $99 annually.
Most people struggle with YNAB because of the steeper learning curve as well as getting one month ahead on their money. This is YNAB’s rule #4 to age your money, which is a smart money move and one we do personally.
No need to compare YNAB vs Mint anymore.
YNAB
Enjoy guilt-free spending and effortless saving with a friendly, flexible method for managing your finances.
Pros:
Comprehensive approach to budgeting, helping you plan monthly budgets based on your income.
Offers expert advice, making it suitable for those who require an in-depth, forward-thinking budgeting strategy.
Superior synchronization skills make it the winner in this area.
YNAB has extra features like goal setting for budgeting, shared budgeting tools for partners.
Option to manually add and upload transactions from accounts each month.
YNAB prioritizes user privacy.
Start 34 Day Free Trial
YNAB vs Mint
Simplifi
Simplifi by Quicken is a budgeting app that strikes a fine balance between complexity and simplicity.
Cheaper than a gallon of gas per month, Simplifi by Quicken a great bargain that offers a clean, intuitive, and clutter-free interface. It allows users to effortlessly track their spending, monitor savings goals, capture bills, and more.
Learning Curve: Simplifi is smooth due to its user-friendly interface and detailed instructions
Import Existing Mint Transactions: Yes 6
Price: Starting at $2.39/ month for new users
Simplifi has been rated as a preferred choice for people who want a fuss-free app to manage finances.
simplifi
Manage your money less in 5 minutes each week.
Reach your money goals with confidence!
“The easiest, most comprehensive way to both see where your money is going and plan for future expenses.”
Start FREE Trial
Quicken
This is the personal finance software I have been using for over 25 years.
Quicken offers robust personal finance management tools that make it easier to track expenses, income, and investments. Many people complain their budgeting feature isn’t up to par, but their cash flow reporting overcomes this as you can see your spending and plan accordingly.
Quicken Classic Deluxe: Robust & feature-rich | Best for power users
Quicken Classic Premier: Robust & feature-rich including investment| Best for serious users
Quicken Classic Business & Personal: Best-in-class business features integrated with our flagship personal finance product
Quicken might be the most suitable option for current Mint users due to its compatibility and ease of use. Unlike Mint, Quicken is not free, but its expansive features such as detailed expense tracking, report generation, and robust investment tracking arguably justify the cost. Plus you can add attachments of receipts into the transactions.
Learning Curve: Quicken may present a significant learning curve for beginners.
Import Existing Mint Transactions: Yes 5
Price: Starts at $4.19/ month for Quicken classic for new users. All plans have a 30 day money back guarantee.
It’s a perfect match for anyone requiring a comprehensive personal finance tool. You can sync between multiple devices as I covered in my Quicken review.
Quicken
Personal finance and money management software allows you to manage spending, create monthly budgets, track investments, retirement and more.
I have used this platform for over 20 years now.
Pros:
Birds-eye view of your complete financial picture.
Conveniently download your spending activities, and automatically categorize them (Quicken connects to over 14,000 financial institutions).
Track investments with it’s features like portfolio analytics, retirement goals, and market comparison.
Cons:
Little complex to use at first, the learning curve is moderate.
Yearly subscription-based model to use the platform.
Save 40% on New Memberships
Our Review
Monarch Money
Monarch Money’s unique selling point is its robust data connectivity. Armed with state-of-art financial transaction infrastructure that integrates with various data aggregators, Monarch promises effective budgeting and financial planning. It’s not free but offers a 7-day free trial to test its features.
Its subscription charges are $14.99 per month or $99.99 per year, a fair trade for its impressive service.
This is the latest top budget app to surface as true competition.
Learning Curve: Monarch Money boasts an intuitive and user-friendly interface, making the learning curve minimal and easy for new users.
Import Existing Mint Transactions: Yes 7
Price: Try Monarch Premium for free for 7 days. Then choose between the $14.99/month or annual $99/year plan.
Monarch Money facilitates financial planning with goal setting and forecasts, allows Mint transactions importation for history preservation, has customer-driven rapid development, provides a multi-user platform for collaborative financial management, is available across multiple platforms, and provides efficient customer service.
Tiller Money
Tiller Money might be the perfect solution for spreadsheet enthusiasts. This unique budgeting tool uses spreadsheets to manage finances and daily transaction updates. It is highly customizable with categories and reports to help you stay on top of your spending.
Tiller Money is a definite contender in the personal finance app scene.
Learning Curve: While Tiller Money requires a basic understanding of spreadsheets, users can easily customize it to suit their personal budget needs.
Import Existing Mint Transactions: Yes 8
Price: Starts with a free trial for 30 days and then charges a reasonable annual fee of $79.
A notable feature is its ability to pull and categorize credit card transactions, providing an in-depth view of spending habits.
Tiller Money
Your financial life in a spreadsheet, automatically updated each day.
Tiller is the fastest, easiest way to manage your money with the unlimited flexibility of a spreadsheet.
Update your finances in one place, so you can take control of spending, optimize cash flow, and confidently plan your financial future.
Pros:
Tiller automatically updates Google Sheets and Microsoft Excel with your latest spending, balances, and transactions each day.
No more tedious data entry, CSV files, or logging into multiple accounts.
You can customize everything and finally track your money, your way.
Try Tiller Free
Empower
Empower, formerly known as Personal Capital, is a comprehensive personal finance app that provides tools for managing income, expenses, assets, and liabilities.
With its intuitive interface, Empower users can seamlessly track their spending, create custom budgets, and even get insights into their net worth which can be updated on a monthly basis, thereby aiding in effective financial management. Additionally, their retirement planner is one of the best available – plus for free.
Learning Curve: Empower has a relatively intuitive interface, making the learning curve fairly manageable for new users.
Import Existing Mint Transactions: No 9
Price: Free to use
The downfall is Empower provides wealth management services, so there is a heavy sales pitch to bring assets under management.
Empower
Empower offers powerful tools to help you plan your investment strategy along with basic budgeting features and a great net worth tool.
As a free app, Empower can help you to save money, save time, and even make more money.
Get Started
Empower Personal Wealth, LLC (“EPW”) compensates Money Bliss for new leads. Money Bliss is not an investment client of Personal Capital Advisors Corporation or Empower Advisory Group, LLC.
How to Move From Mint to Credit Karma?
Yep, I gave you the alternatives to Mint first.
Yet, the goal for Intuit is to move to Credit Karma. The core issue right now is while we do know which features will be transferred from Mint to Credit Karma. We are not sure as Minters if we will like the new layout and features offered with Credit Karma.
Right now, the budgeting feature will not be offered at Credit Karma, which I know for many Money Bliss readers is a big feature lost.
Learn more on how to move from Mint to Credit Karma.
Intuit’s Current Portfolio of Products
Intuit buying out Mint in 2020, you may be wondering about the current products offered by Intuit. 10
Intuit offers a range of financial and tax preparation products, including
Most notable is the success of TurboTax and Credit Karma.
Frequently Asked Questions
Once Mint shuts down, it’s crucial to know that Intuit will no longer have access to your financial data. All account and transaction information associated with your Mint profile will be deleted permanently from Mint’s databases.
To prevent any loss of important financial information, make sure to export all your transactions from Mint before the shutdown date arrives.
This highlights the importance of regularly backing up financial data as you may not know the next steps a company has for their product.
Yes, you can migrate your Mint data to a different personal finance app before Mint shuts down.
After you export your transactions from Mint, you can then import them to your new finance management app, ensuring you seamlessly carry over all essential financial information and continue managing your finances smoothly. However, bear in mind that the steps to do this may vary depending on the app you choose as your next financial companion.
Coping with the Closure: Dealing with the Loss of Mint
For long-time Minters, Mint’s shutdown can feel like losing a trusted companion. It’s natural to feel a sense of loss and uncertainty. I completely understand. That is why I haven’t switched from Quicken because of the long-term history.
However, remember that technology promises continual growth and evolution. There are numerous other personal finance apps out there, likely even better ones suited to your needs.
So, take a deep breath, do your research, and move on to the next chapter of your financial journey with confidence.
Source
Intuit MintLife. “Intuit Credit Karma welcomes all Minters!” https://mint.intuit.com/blog/mint-app-news/intuit-credit-karma-welcomes-minters/. Accessed November 1, 2023.
Intuit. “Event Details – Intuit Investor Day 2023.” https://investors.intuit.com/events-and-presentations/event-details/2023/Intuit-Investor-Day-2023/default.aspx. Accessed November 1, 2023.
Reddit. “Thoughts on the Mint shutdown from Monarch CEO (and first Mint product manager.” https://www.reddit.com/r/mintuit/comments/17llnbu/thoughts_on_the_mint_shutdown_from_monarch_ceo/. Accessed November 1, 2023.
YNAB. “File-Based Import: A Guide.” https://support.ynab.com/en_us/file-based-import-a-guide-Bkj4Sszyo. Accessed November 1, 2023.
Quicken. “Quicken for Windows: Importing Address Book Records From Another Program.” https://www.quicken.com/support/quicken-windows-importing-address-book-records-another-program. Accessed November 1, 2023.
Quicken Simplifi. “How to Manually Import Transactions.” https://help.simplifimoney.com/en/articles/4413430-how-to-manually-import-transactions. Accessed November 1, 2023.
Monarch. “Move data over from Mint to Monarch.” https://help.monarchmoney.com/hc/en-us/articles/4411877901972-Move-data-over-from-Mint-to-Monarch. Accessed November 1, 2023.
Tiller. “How to Easily Export Mint Transactions to a Spreadsheet.” https://www.tillerhq.com/exporting-mint-transaction-data-into-a-google-sheet-spreadsheet/. Accessed November 1, 2023.
Empower. “Am I able to see more than 3 months of data in Empower Personal Dashboard after I first link my account?” https://support-personalwealth.empower.com/hc/en-us/articles/201170160-Am-I-able-to-see-more-than-3-months-of-data-in-Empower-Personal-Dashboard-after-I-first-link-my-account-. Accessed November 1, 2023.
Intuit MintLife. “Intuit to Acquire Mint.com.” https://mint.intuit.com/blog/press/intuit-to-acquire-mint-com/. Accessed November 1, 2023.
Know someone else that needs this, too? Then, please share!!
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More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
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Inside: Are you thinking about moving out? This guide will help you identify the costs of moving, calculate how much you need to save, and advice on expenses. You need to learn and plan for the practicalities of living on your own.
Taking the leap to move out and start living independently is a significant milestone.
However, it’s important to ensure you’re financially prepared for this exciting new chapter in your life.
One vital step you need to take is to start saving money, essential for covering your future expenses, emergency fund, and even fun activities. Through careful budgeting, consistent saving, and efficient spending, you can make the transition smoother and stress-free.
Around here at Money Bliss, we focus on the need to save money before making a purchase or taking the next step, so you will be better equipped and stay debt free.
This way, you can fully enjoy the freedom and responsibilities that come with having your own place.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
Why is Moving Out on Your Own Important?
There comes a time in one’s life when one feels the need to spread their wings and live independently. We all wanted to move out at 18 – I remember!
This crucial step, however, requires substantial planning. Yet, most just jump right to moving out.
The key thing you must do? Save. But, why so important?
Here’s why: independence means bearing your own expenses. Rent, groceries, utilities, they’re all on you.
Plus, unforeseen emergencies are less shocking when you have a well-stocked safety net.
What’s a good amount of money to have before moving out?
The amount you need to move out depends on many factors.
However, on average, you should aim to have between $6,000 and $12,000 stashed away before you pack your bags.
This sum would cover initial moving costs, deposits, furniture, essentials, and a few months of rent.
Remember, it’s not just about surviving your first month. You’ll need enough to keep you comfortable while you’re settling into your new life.
How much should I save before moving out?
Remember, there isn’t a “magic number.”
Yet, many wonder is $5000 enough to move out?
Your savings should cater to your housing costs, which ideally should not exceed 1/3 of your monthly income. Besides, factor in regional cost of living, moving expenses, and an emergency fund.
What determines the amount needed?
The amount to save before moving out varies greatly. It hinges on factors like your targeted living area because there is a wide fluctuation of HCOL vs LCOL areas, your projected expenses, and your income level. The rent in one city might be higher than in another.
As well as your personal lifestyle choices and spending habits will greatly affect monthly expenses.
Evaluation: Your Financial Status
Your financial status, including current income and expenditures, plays a crucial role in determining the proportion of your earnings you should save before moving out.
If you have a higher income with lower outlays, you can save more, whereas having roommates can significantly cut down your living expenses, enabling better savings.
A careful review of these factors allows you to create a realistic saving plan tailored to your unique financial circumstances.
You need to make sure you are on track to how much money should you have saved by 25.
Assessing your current income
Take a deep look at your income. How much do you earn each month? How regular is this income? These are vital questions.
Your net income (what you earn after taxes) sets the tone for what you can afford. This is the amount listed on your paycheck.
Learn more about gross pay vs net pay.
Understanding your debt load
Debt can be a significant hindrance when contemplating moving out. How much do you owe monthly?
You need to consider your debt-to-income ratio. This is what mortgage lenders do to figure out if I make 70000 a year, how much house can I afford.
If your debt is taking up more than 30% of your income, you need to be careful on how much you spend on rent and other mandatory expenses.
Learn how to pay off your debt faster using Undebt.it.
Know Your Expenses: Breaking Down the Costs
I’ll be honest. This is what most people overlook when they move out or even purchase a new home.
For instance, the couch I loved couldn’t fit into our new house. Sigh.
Now, is the time to learn how to save 5000 in 6 months.
Identifying the cost of moving
Moving costs can bite! They depend on relocation distance, packing supplies, and the complexity of the move.
Movers can range from hundreds to thousands. According to Moving.com, the average costs for a studio or one bedroom range from $501 – $985. 1
Thankfully, you are young and you can pay friends for help with pizza. But, you still need to account for a moving truck if needed.
Hidden costs you need to consider
When moving out, some costs aren’t glaring. These include fees for installing new services, delivery fees for new furniture, or penalties if foregoing a current lease. Yes, these hidden costs can pile up!
Even, the costs to put blinds up at your new place! A room darkening shade can easily set you back $50; I know, I like my sleep.
So, be sure to consider them when saving for your move.
Setting Up a Personal Budget
A budget plays a crucial role in being financially stable. Period.
Call it adulting if you want to, but you cannot spend more money than you make. That is a recipe for a disaster and way too much debt.
By adhering to a well-planned budget, one can prevent financial stress to ensure financial security and start your journey to financial independence.
How to start a personal budget
Starting a personal budget is simple.
List your income and expenditures. Include rent, groceries, utilities, subscriptions, and yes, even luxuries.
The goal is to spend less than you earn.
Then, you can save and plan for your future.
That means you may not be able to afford everything you want. And using credit cards to fill the gap isn’t smart.
The 50/30/20 budget rule explained
For many, the 50/30/20 rule serves as a rough guide for managing your finances.
It suggests allocating 50% of your income to necessities, 30% to wants, and 20% to savings.
This is a beginner-friendly method to manage spending without feeling overwhelmed.
Starting to use a budget app is extremely helpful.
YNAB
Enjoy guilt-free spending and effortless saving with a friendly, flexible method for managing your finances.
Pros:
Comprehensive approach to budgeting, helping you plan monthly budgets based on your income.
Offers expert advice, making it suitable for those who require an in-depth, forward-thinking budgeting strategy.
Superior synchronization skills make it the winner in this area.
YNAB has extra features like goal setting for budgeting, shared budgeting tools for partners.
Option to manually add and upload transactions from accounts each month.
YNAB prioritizes user privacy.
Avoid These Budget Downfall
The most common expenses that are forgotten are irregular expenses such as vacations, weddings, or holiday spending. These variable expenses do not occur on a consistent schedule.
To manage these, note these big-ticket events on a calendar, estimate their cost, divide by 12, and contribute that amount to a high-yield savings account each month, offering you a guilt-free way to cover these costs without stressing over money.
Make sure you remember all of your expenses by checking out this full list of personal budget categories.
Creating and Managing an Emergency Fund
Why an emergency fund? It provides you with a safety cushion.
This fund prevents unexpected expenses from ruining your plans or sending you spiraling into debt. It acts as your financial parachute when you need it the most.
Around here at Money Bliss, we consider it a staple in financial wisdom.
Ideal size of an emergency fund
As a rule of thumb, your emergency fund should cover at least $1000-2000 in savings. This will provide money to cover a car breakdown or new car tires. Honestly, the goal is never to use your emergency fund.
However, you may look at a bigger rainy day fund that will cover 3-6 months of living expenses. This will provide you with a comfortable safety net against unexpected events like job loss or medical emergencies.
But remember: start small. Even $1,000 can buffer you from financial shocks. Check out these mini savings challenges.
Enough Money for One Year
A year’s worth of savings may sound excessive.
However, it provides unmatched stress relief and financial stability that can be life-changing, especially for young adults.
This tip will change your financial landscape immensely and provide you with more opportunities than you can imagine.
You can handle life’s ups and downs more easily when you have an entire year’s expenses sitting in your bank account.
Raisin
Simply select one of the high-yield savings products offered by their network of federally insured banks and credit unions to begin your savings journey.
You can open a free Raisin account in just a few minutes!
Compare Rates
Better Planning for Potential Bills and Fees
When preparing to live independently, don’t forget to plan for unanticipated costs.
Rental fees and deposits explained
When you rent, you’re likely to encounter a range of fees.
First off, you’ll have to foot a security deposit – typically equal to one and a half month’s rent. This upfront cost acts as insurance for landlords against damages. If you leave the place in top shape, you’ll get your full deposit back!
Additional fees could include application fees or non-refundable move-in fees like background checks. Know what you’re paying for before you sign the lease.
Utilities and recurring expenses
Electricity, gas, water, and internet – these utilities fall on your shoulders when you’re living solo.
These costs can eat a hole in your wallet if unchecked!
To avoid surprises, ask for estimates before signing a lease or find a place that includes utilities.
Other recurring expenses? Consider subscriptions. Gym, Netflix, Spotify – they all add up!
Trim
Perfect for the person who hates to hassle with canceling subscriptions and checking spending.
Trim adds value in such ways as canceling old subscriptions, setting spending alerts, checking how much users spent on ride-sharing apps the previous month, and automatically fighting fees.
Learn More
Go for a Trial Run Before Moving Out
Adopt the practice of “paying rent” beforehand by setting aside a third of your income into a dedicated savings account which can test your financial readiness for the move. See if you can move out and afford it before you actually move.
Remember, being savvy with money while planning to move out involves carefully auditing your spending over the last 3-6 months and developing a budget that accounts for future expenses, savings, and essential purchases.
This may save you headaches in the future.
Smart Moves: Making Rent Like a Boss
You need to understand how you are starting to make financial decisions.
In fact, reading this financial advice for young adults would be helpful.
Understanding rent payments.
Rent payments can be daunting as prices for a single bedroom apartment are $1700/month. 2
Many landlords may tenants to earn at least three times their rent.
Payments are usually due on the first day of the month. Late payments can lead to hefty fees!
Stay organized by setting reminders or setting up auto-pay.
Considering a roommate.
On the fence about getting a roommate? It’s worth considering!
A roommate can drastically cut your living expenses. Half the rent, half the utility costs… that sounds like a sweet deal.
On the flip side, you may have less privacy and there can be disputes.
However, with clear communication and shared responsibilities, it can be a great experience. It’s a great option if your income is tight. Choose wisely!
Opting for second-hand furniture
Furniture expenses can add up quickly, but there’s a savvy solution: opt for second-hand furniture! Yes, it’s cool to be frugal.
In fact, vintage pieces can add character to your home. Perhaps snag a few items from your parent’s home, Buy Nothing Group, or thrift stores. It’s not about being cheap, but about being smart!
You can always upgrade later.
Key Takeaways Before Taking That Leap
Moving out with roommates not only gave me a firsthand experience of independent living but also exposed me to the nuances of financial management. These initial steps helped me understand budgeting and the importance of balancing expenditures with earnings.
Then transitioning into renting my own place, I was armed with the knowledge I gained and was better prepared to face the challenges, creating a smooth transition to living completely on my own.
Checklist before getting your own place
Before making the big move, have you:
Saved enough to cover deposit, rent, moving, and utility hook-up fees?
Started a personal budget, tracking income and expenses?
Drafted a rough spending plan using the 50/30/20 budget rule.
Built an emergency fund?
Discussed potential apartment rental fees and deposits?
Considered recurring expenses and variable expenses?
Weighed the pros and cons of having a roommate.
Looked into second-hand furniture?
Can you comfortably cover living expenses with your income?
Have you accounted for all possible costs? Think of moving costs, utilities, groceries, health insurance, and more.
Have you considered the cost of living in your preferred location?
How stable is your income? Can it sustain your independence long-term?
Check out this first apartment checklist.
Frequently Asked Questions (FAQs)
Before moving out of your parents’ house, aim to save at least $5,000. But, you want to start off financially sound, so aim higher like $10,000. This amount would ideally cover your moving costs, early rent payments, and the setting up of utilities.
Remember, the real magic figure depends on your cost of living and your current income.
Put simply, saving $1,000 a month is excellent!
As an expert, Money Bliss often recommends saving at least 20% of your income each month. If you can stash away $1,000, you’re well above this bar.
Remember, every little helps when working towards financial independence. Check out our 52 week money saving challenge to get started.
Start Saving for How Much Money I Need to Move Out
Taking the leap into independent living can feel daunting. But with careful planning, budgeting, and saving, it’s an exhilarating journey.
The best advice I can give someone who is looking to move out is to plan ahead for the journey in front of you.
Remember, having anything between $6000 and $10,000 saved up is an excellent starting point.
As you navigate your financial freedom, adopt the 50/30/20 rule for managing expenses. Around here we call it the Cents Plan Formula.
Most importantly, stay prepared for life’s unexpected twists with an emergency fund. And don’t be shy to make some smart moves like considering a roommate or opting for second-hand furniture.
The journey towards independence is rewarding and fun – as long as you’re financially prepared. So pop that calculator, get budgeting, and start saving for your own place!
Source
Moving.com. “Moving Cost Calculator for Moving Estimates.” https://www.moving.com/movers/moving-cost-calculator.asp. Accessed October 25, 2023.
Rent Cafe. “Average Rent in the U.S.” https://www.rentcafe.com/average-rent-market-trends/us/. Accessed October 25, 2023.
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Inside: Are you looking for an affordable budgeting app that offers a range of features? YNAB may be the perfect choice for you! This guide will compare YNAB vs Mint, highlight their key features, and help you decide which is best for your needs.
Are you trying to make a choice between Mint and YNAB for managing your financials?
Here’s a comprehensive overview that would definitely point you in the right direction.
Both Mint and YNAB have proven to be efficient and reliable online budgeting tools, but their offering varies in some aspects.
While Mint shines with its free budgeting tools and comprehensive credit score and report management capabilities, YNAB stands distinguished with its robust features and specialist credit management options, making it worth its fee for some users.
Herein, we dive into the similarities, differences, and unique functionalities of both platforms to help you decide which one best aligns with your financial management needs and lifestyle.
As a finance expert, I’ve seen both YNAB and Mint apps work wonders for different people.
In my opinion, both have unique value. Novices may find Mint’s overview helpful, while more determined budgeters might prefer YNAB.
Remember, it’s perfectly fine to use both if it aids your long-term money management.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
What is YNAB?
YNAB is a budgeting software I’ve utilized that provides detailed financial tracking and education for effective money management. Also, known as you need a budget app.
Adhering to its unique Four Simple Rules for Successful Budgeting, every dollar is assigned a specific task. YNAB operates via an online account or a mobile app, involving color codes and features like ‘The Inspector’ for efficient budget overview. However, it’s important to note that YNAB caters only to the zero budgeting style and charges a monthly subscription fee.
This is a great budgeting method as it gives you a cash flow budget plan for your money.
Overall, YNAB helped me gain control over my finances by setting realistic goals, getting one month ahead on bills, and focusing on each dollar’s purpose.
What is Mint?
Mint is a free, all-in-one finance platform owned by Intuit that can be used to easily manage my money.
It links all accounts in one place for easy tracking and includes features such as budgeting, credit score monitoring, and bill tracking.
For instance, Mint categorizes transactions, monitors changes in my credit score, and sets up budgetary limits.
With over 30 million users, Mint is a leading free tool in personal finance management.
A step up from Mint would be Intuit’s Quicken platform or Simplifi budget app.
Comparison of YNAB and Mint Apps
Mint is a comprehensive, free budgeting app, that provides an overall view of your finances. It links to your accounts, tracking and categorizing spending, while also offering savings tips. Conversely, YNAB, a paid app, focuses on giving users control over budgeting. It will link to your accounts and encourage a proactive role in handling finances.
These are two of the budget apps available on the market.
1. YNAB vs Mint: Features
YNAB and Mint are both renowned budgeting apps, but they possess some notable differences.
While both support account linking, goal setting, and spending tracking, Mint pulls ahead with its investment and credit score tracking features.
YNAB distinguishes itself with a forward-thinking, zero-based budgeting strategy and benefits like manually adding transactions. Think budget by paycheck style.
From the ease of use standpoint, both are equally user-friendly.
2. YNAB vs Mint: Budgeting Snapshot
YNAB offers a rigorous, manually updated budgeting snapshot that employs a zero-based budgeting philosophy. This feature provides a detailed outlook, encouraging users to assign every dollar a job.
On the other hand, Mint has an automated tracking system that offers an all-in-one snapshot of all financial accounts and spending categories.
Mint integrates your accounts, offering useful tips and an overview of your finances. Conversely, YNAB requires a manual categorization of income and expenses but affords more budgeting control. Similar to using the ideal household budget percentages.
The budgeting snapshot in Mint is best suitable for individuals seeking a hands-off approach, while YNAB is ideal for those who prefer an in-depth, hands-on budget strategy.
A great way to move digital from your budget binder with envelopes.
3. YNAB vs Mint: Goal Setting
The Goal Tracking feature in YNAB allows users to set various budgeting goals such as saving targeted amounts of money or conversely working towards getting out of credit card debt. This in-built functionality provides a structured pathway for users to stick to and pursue their financial objectives effectively.
Your interaction with your YNAB account through the goal-tracking tool ties back to YNAB’s four Simple Rules for Successful Budgeting, aiding in fiscal responsibility.
This innovative feature assists individuals in staying focused on their planned budgets, ensuring they are empowered to make strides toward their unique financial goals.
Mint however doesn’t offer this feature.
4. YNAB vs Mint: Interface
While YNAB is ideal for meticulous budgeters prioritizing forward planning, Mint is perfect for those seeking an easy-to-use, comprehensive glimpse of their financial standing.
YNAB’s interface is focused on budgeting, featuring tools for expense tracking, goal setting, and manual transaction input.
In contrast, Mint offers a comprehensive overview of your financial health, automatically categorizing expenses, tracking investments, and offering set-up alerts.
5. YNAB vs Mint: Categorization
Mint offers automated categorization of transactions, which eases the process of budgeting for the user. However, it doesn’t allow the removal of default categories, and the addition of new ones might take time due to server communication.
On the other hand, YNAB allows a deeper level of categorization, with an option to visually nest categories, and more effortless editing of these categories.
In my opinion, Mint’s categorization feature suits a casual budgeter looking for automation, while YNAB would be ideal for those desiring granular control over their personal budget categories.
6. YNAB vs Mint: Mobile App & Cross Platforms
Both YNAB and Mint offer comprehensive personal finance management via mobile apps, compatible with iOS, Android, and desktops.
YNAB stands out with its Apple Watch integrations and a slightly better syncing experience based on user reviews on Trustpilot1.
YNAB also syncs across a desktop app as well.
7. YNAB vs Mint: Alerts
Mint provides a wide selection of alerts, including low balances, upcoming bill payments, over-budget warnings, ATM fees, and unusual expenditure notifications.
These comprehensive alerts from Mint give a more thorough financial pulse check but can be overwhelming for some.
On the other hand, YNAB recently added live push notifications based on your preferences.
8. YNAB vs Mint: Syncing
YNAB leads the game when it comes to synchronization, outshining Mint. While Mint supports numerous banks, issues with synchronization often lead to grievances among its users. YNAB, on the other hand, offers smoother syncing and fewer complaints, proving its superiority.
Many users find YNAB’s syncing consistent and reliable.
Personally, I believe that if you prioritize seamless syncing and don’t mind spending $14.99 a month, YNAB becomes a clear choice.
However, if you’re okay with potential sync issues and prefer free usage, Mint could be more suitable.
It’s crucial to pick according to your priorities and needs.
9. YNAB vs Mint: Savings Accounts
Mint offers automatic expenditure tracking and classifies my spending into categories, providing a comprehensive view of where my money is going.
YNAB, on the other hand, empowers me to manually budget my net income each month, ensuring I don’t overspend and promoting a proactive approach to saving.
10. YNAB vs Mint: Investment Tracker
Mint offers investment tracking features, allowing users to view their investment portfolio and monitor performance.
In contrast, YNAB lacks this feature, not providing any investment tracking at all.
As a user, if you highly prioritize tracking investments in one place, you may lean towards using Mint. Conversely, if investment tracking is less important to you than budgeting, YNAB’s strong budgeting emphasis, despite its lack of investment tracking, makes it a considerable option.
11. YNAB vs Mint: Learning Curve with your Finances
YNAB has a steeper learning curve, necessitating a proactive approach to money management by assigning every dollar a purpose. Thus, YNAB gives you a free 34-day free trial to understand how to use the app.
Mint, however, requires minimal user input post-account linkage and auto-categorizes your spending. For sheer ease of use, Mint might appeal to novices looking for automated budget tracking.
On the other hand, users wishing to take charge of their finances might appreciate YNAB’s proactive, behavior-altering approach. Despite having a steeper learning curve, YNAB offers an abundance of online tutorials and customer support, making the learning process manageable and rewarding.
The same is true when you are learning to use the biweekly budget template.
12. YNAB vs. Mint: Data Security
Data security is a paramount concern when utilizing online budgeting apps as they deal with sensitive financial information.
Apps like YNAB and Mint incorporate stringent security measures to protect user data.
For instance, YNAB uses a one-way salted and hashed password system and data encryption.
Mint, on the other hand, employs two-factor authentication and a Touch ID sensor for iOS for enhanced security.
Nonetheless, it’s important to note that while these apps provide bank-level security, Mint does anonymize and sell user data to advertisers.
13. YNAB vs Mint: Advertising
YNAB derives income primarily from subscription fees offering an ad-free experience, holding a straightforward revenue model. In contrast, Mint generates income through affiliate commissions by advertising financial products to users and selling anonymized user data!
Mint, contrastingly, is a free app reliant on ads and sells anonymized user data for third-party advertisements.
From my perspective, if avoiding ads and preserving data privacy matters to you, YNAB’s approach might be more appealing. However, if you prefer a free service and don’t mind the ads, Mint would be suitable.
14. YNAB vs Mint: Customer Support
When evaluating the customer support of Mint and YNAB, it’s evident that YNAB takes a more well-rounded approach.
With a commitment to respond to email queries within 24 hours, YNAB also provides educational resources such as the “get started” class, their blog, and user forums. This is in contrast to Mint, which, despite offering live chat support, has had reports of slow response times.
Both platforms offer online training materials, but YNAB seems more comprehensive and responsive in its support-providing role. Overall, YNAB appears to be the preferred choice when customer support is a primary consideration.
15. YNAB vs Mint: Cost
Mint is a free, ad-supported budgeting app while YNAB is a subscription-based model of $14.99 monthly or $99 annually.
However, for individuals seeking in-depth surgical budgeting capabilities without concerns for associated costs, YNAB’s price might represent a great investment.
Given the claimed average user saves $600 in two months and $6,000 in the first year.2
For those budgeting with minimal funds, the free price tag of Mint might be more attractive, but you are giving away your privacy.
Pros and Cons of YNAB vs Mint
Our Favorite
Key Features:
YNAB offers a comprehensive approach to budgeting, helping you plan monthly budgets based on your income. It also offers expert advice, making it suitable for those who require an in-depth, forward-thinking budgeting strategy.
YNAB’s superior synchronization skills make it the winner in this area. YNAB has extra features like goal setting for budgeting, shared budgeting tools for partners
YNAB provides an option to manually add and upload transactions from accounts each month, a feature that Mint does not offer.
YNAB prioritizes user privacy, requires an opt-in to access budgeting data, and doesn’t sell user data.
Key Features:
Mint offers a centralized platform for monitoring all your financial accounts, including credit cards and bank accounts.
It provides a complete financial overview at a glance through the auto-population of data from linked accounts.
Mint’s features include detailed reporting in multiple categories, free credit score access, and exceptional compatibility with financial institutions.
The service is free, funded by ads and offers, and it best serves those who wish to categorize spending, budget their monthly expenses, and access all financial details from one place.
Lack of investment tracking feature
Customer service is only accessible via email, which might not be ideal for urgent queries
Steep learning curve which requires time and effort to navigate through.
Mint, which belongs to Intuit, automatically accesses all data and sells the data. Thus, an intrusion of privacy.
Budgeting feature doesn’t enable effective planning of future expenses.
Mint suffers from more technical glitches and synchronization issues.
Ads included in the free version of Mint can be obtrusive and may deter users.
$14.99 monthly or $99 annually
Free to Use, But Served Ads and They Sell your Data.
Offers a 100% money-back guarantee at any point of use.
Does not require credit card information to signup, a departure from the usual free trial model)
Our Favorite
Key Features:
YNAB offers a comprehensive approach to budgeting, helping you plan monthly budgets based on your income. It also offers expert advice, making it suitable for those who require an in-depth, forward-thinking budgeting strategy.
YNAB’s superior synchronization skills make it the winner in this area. YNAB has extra features like goal setting for budgeting, shared budgeting tools for partners
YNAB provides an option to manually add and upload transactions from accounts each month, a feature that Mint does not offer.
YNAB prioritizes user privacy, requires an opt-in to access budgeting data, and doesn’t sell user data.
Lack of investment tracking feature
Customer service is only accessible via email, which might not be ideal for urgent queries
Steep learning curve which requires time and effort to navigate through.
$14.99 monthly or $99 annually
Offers a 100% money-back guarantee at any point of use.
Does not require credit card information to signup, a departure from the usual free trial model)
Key Features:
Mint offers a centralized platform for monitoring all your financial accounts, including credit cards and bank accounts.
It provides a complete financial overview at a glance through the auto-population of data from linked accounts.
Mint’s features include detailed reporting in multiple categories, free credit score access, and exceptional compatibility with financial institutions.
The service is free, funded by ads and offers, and it best serves those who wish to categorize spending, budget their monthly expenses, and access all financial details from one place.
Mint, which belongs to Intuit, automatically accesses all data and sells the data. Thus, an intrusion of privacy.
Budgeting feature doesn’t enable effective planning of future expenses.
Mint suffers from more technical glitches and synchronization issues.
Ads included in the free version of Mint can be obtrusive and may deter users.
Free to Use, But Served Ads and They Sell your Data.
Who should use YNAB?
From my experience, YNAB works best for those who are ready to seriously manage their money and spend some time learning a new budgeting approach. Its use of the zero-based budgeting system not only makes you more intentional with your money but also demands active participation in decision-making.
YNAB’s ability to link to your accounts and its multitude of educational resources available are admirable features I’ve used.
YNAB offers detailed financial tracking and built-in education, but its monthly subscription fee and suitability for a specific budgeting style may be limiting for some.
However, it comes with a monthly or annual cost – a worthy investment for those searching for a robust, hands-on, and future-focused budgeting tool. Most YNAB budgets agree they save multiples of the subscription cost.
However, it can be less suitable for those not ready for a hands-on approach or those sensitive to subscription pricing.
Who should use Mint?
On the other hand, Mint is an all-in-one app that automatically tracks and categorizes your spending.
Based on my experience, Mint is an excellent tool for novice-level budgeters seeking to track their expenses, set budgets, and manage their finances with ease. This budgeting app allows a comprehensive view of all your financial accounts, which differentiates it from YNAB.
If you’re comfortable seeing ads and not needing investing features, Mint could be a perfect fit. However, if you require the ability to assign multiple savings goals to one account or a bill pay feature, YNAB may be more suitable for you.
Therefore, Mint is most applicable for beginners seeking a free and user-friendly budgeting platform.
YNAB vs. Mint: Which is better for you?
As a content writer and budgeting app user, I find Mint and YNAB are unique in their offerings.
Mint automatically tracks and categorizes your spending, providing an intuitive picture of where your money goes, ideal for beginners in budgeting.
In contrast, YNAB promotes a proactive approach, helping to set and monitor budgets, hence perfect for those with specific financial goals. To sum up, Mint offers a simplified, passive overview, while YNAB is excellent for a detailed, forward-thinking approach to managing finances.
Personal preferences and needs really influence the choice here. Do you need intricate control and don’t mind paying a fee? YNAB might be your fit. Prefer automation and want a free option? Mint could work for you.
YNAB vs Mint: Verdict
As an expert in personal finance tools, I’ve explored both YNAB and Mint.
In my experience, there are distinct differences between YNAB and Mint. For my readers, I recommend YNAB.
YNAB, with its laser-focused approach towards budgeting, is a boon for individuals needing extensive assistance in the budgeting arena. You learn to assign every dollar with intention, thereby gaining a higher degree of control over your finances.
This proactive approach will help you to be financially independent faster.
To sum up, if detailed budgeting is your priority, choose YNAB.
YNAB
Enjoy guilt-free spending and effortless saving with a friendly, flexible method for managing your finances.
Pros:
Comprehensive approach to budgeting, helping you plan monthly budgets based on your income.
Offers expert advice, making it suitable for those who require an in-depth, forward-thinking budgeting strategy.
Superior synchronization skills make it the winner in this area.
YNAB has extra features like goal setting for budgeting, shared budgeting tools for partners.
Option to manually add and upload transactions from accounts each month.
YNAB prioritizes user privacy.
Start 34 Day Free Trial
However, for a more holistic financial insight with less emphasis on budgeting, Mint might be the better choice.
Now, make sure to check out our Quicken Review.
Source
TrustPilot. “YNAB Review.” https://www.trustpilot.com/review/ynab.com. Accessed on September 27, 2023.
YNAB. “YNAB Pricing.” https://www.ynab.com/pricing/. Accessed on September 27, 2023.
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Regardless of how you celebrate, the right credit card can help you hold on to more of your cash this holiday season.
Chase Freedom Flex℠
Wholesale clubs.
Select charities.
Discover it® Cash Back and select Discover cards
Amazon.com.
Target (in store and online).
Both cards earn 1% back on all other non-bonus-category spending. You must activate the 5% categories to be eligible for bonus rewards.
Chase cardholders can activate bonus categories online or in the Chase app by Dec. 14, 2023, and bonus rewards can be earned retroactively. For eligible Discover cards, bonus rewards can be earned starting from the date cash-back categories are activated online.
Here are some tips to maximize your bonus categories this quarter:
Overall tip: Set your default payment method
Whether you’re earning cash back with Chase or Discover, you’ll want to set your card as the default payment method for each eligible bonus category. This will ensure you don’t miss out on bonus rewards when you pay.
PayPal is widely accepted by online merchants, and even by some brick-and-mortar stores. Regardless of where you use it, add the Chase Freedom Flex℠ to your PayPal account and set it as your primary payment method, if you haven’t already.
Shopping on Amazon or Target.com? Set your Discover it® Cash Back or other eligible Discover card as the default card in those accounts.
Optimizing the Chase Freedom Flex℠
Use PayPal, both in-store and online
Most people associate PayPal with online shopping — but did you know you can also use PayPal to checkout in-store at some major retailers like Best Buy and Walmart, and even for in-flight purchases with United Airlines? According to PayPal, the payment platform is now accepted at millions of small and large merchant locations globally. That huge acceptance footprint should make it even easier to maximize your rewards this holiday season. Just be sure to set your Chase Freedom Flex℠ as the preferred payment card in your PayPal app so you don’t miss out on that bonus cash back.
🤓Nerdy Tip
Rewards won’t “stack” if you make one transaction across multiple bonus categories. For example, if you make a qualifying charitable contribution through PayPal, you’ll only be eligible to earn up to 5% cash back on that transaction.
Buy in bulk at wholesale clubs
From cleaning supplies to bulk food items and beyond, wholesale clubs like Sam’s Club and BJ’s offer a great way to stock up on supplies you’ll use well after the holiday season. With some thoughtful spending, you can lock in that bonus cash back for items you won’t use until 2024. Just be aware of exclusions: You won’t earn bonus cash back on gas or other in-club services like cell phone plans, insurance or travel packages.
Another major caveat: Costco stores don’t accept Mastercard, meaning you can’t use the Chase Freedom Flex℠ (which runs on the Mastercard payment network) for in-club purchases. However, you can still earn bonus cash back by using your card through the Costco website. This works even for purchases you make online but pick up at your local store.
Make a charitable donation
The holidays are a perfect time to give back. If your personal budget allows for charitable giving, you can earn bonus cash back for using your Chase Freedom Flex℠ to make a donation to select charities (see below for a complete list). Be sure to account for any transaction fees you may incur for using a card before making the donation. If the fee is greater than the rewards you’ll earn, you’d be better off writing a check. Depending on your tax situation, donations to a qualifying charity may be tax-deductible, leading to additional savings.
List of eligible charities
American Red Cross.
Equal Justice Initiatives.
Feeding America.
Habitat for Humanity.
International Medical Corps.
International Rescue Committee.
Leadership Conference Education Fund.
NAACP Legal Defense and Educational Fund.
National Urban League.
Thurgood Marshall College Fund.
United Negro College Fund.
UNICEF USA.
United Way.
World Central Kitchen.
Out and Equal.
Chase Freedom® and Chase Freedom Flex℠ bonus rewards categories for 2023
Q1 (Jan. 1-March 31)
Grocery stores.
Fitness clubs and gym memberships.
Q2 (April 1-June 30)
Amazon.com.
Q3 (July 1-Sept. 30)
Gas stations and electric vehicle charging.
Select live entertainment.
Q4 (Oct. 1-Dec. 31)
Wholesale clubs.
Select charities.
Optimizing the Discover it® Cash Back
Earn cash back from your couch
In today’s busy world, Amazon has become synonymous with convenience. From electronics to pet food, you can shop from your couch for almost anything at the world’s largest retailer. And through the last quarter of 2023, paying with an eligible Discover card can earn you bonus cash back.
Qualifying purchases include those made on Amazon.com and through the Amazon app, including digital downloads, Amazon Fresh orders, Amazon Local Deals, Amazon Prime subscriptions and items sold through third-party merchants.
If you don’t need to make an immediate purchase, reload your Amazon gift card balance and grab that bonus cash back for a future purchase. Amazon also sells a selection of third-party gift cards. If you’re making a purchase at another retailer, first see whether Amazon sells a gift card to that retailer. You could earn bonus cash back on the gift card purchase, then use the gift card with the other merchant.
Target bonus cash back
Jeans? Groceries? A new flat-screen TV? Whatever you’re looking for, there’s a good chance Target sells it. And for the fourth quarter of 2023, purchases made in Target stores, at Target.com and on the Target app all qualify for bonus cash back with your eligible Discover card. If you’re shopping online or in the app, be sure to make your eligible Discover card the default payment method.
Gift cards make for a perfect stocking stuffer, and Target stores carry an extensive selection of third-party gift cards. Just head to the gift card rack and get rewarded for rewarding your friends, loved ones or colleagues.
Discover bonus rewards categories for 2023
Q1 (Jan. 1–March 31)
Grocery stores.*
Drugstores.
Select streaming services.
Q2 (April 1–June 30)
Restaurants.
Wholesale clubs.
Q3 (July 1–Sept. 30)
Gas stations.
Digital wallets.
Q4 (Oct. 1–Dec. 31)
Amazon.com.
Target, including Target.com and the Target app.
*The grocery stores category does not include grocery purchases at Walmart or Target or at other superstores or wholesale clubs.