Home Budgeting & Financial Planning

home budgeting and financial planning

Home budgeting and financial planningMany people feel that home budgeting is a waste of time; however, it’s one of the best ways of ensuring you don’t spend money you don’t have. According to Investopedia, in 2020 the average credit card debt per household reached $7,027. It is true that it’s easier to say it than to do it and for that reason, we decided to gather up the best home budgeting and financial planning experts who gave us different tips and advice on which are the best methods to efficiently stop overspending and start saving. 

How do I Budget for One-Time Expenses? 

Your future self is calling, and they want you to start budgeting quickly, fast, and in a hurry..like yesterday. The only problem is when you think about budgeting; you find you would rather do pretty much anything else, like clip the cat’s claws or bathe the dog.

However, the best way to get over your fear of budgeting is to face it head-on and take the first step in getting started. If you need some motivation to budget for your next large purchase, consider that according to a recent survey by Debt.com, nearly 88% of budgeters report that having a budget has kept them out of debt.

While you can get started budgeting with an app like Mint, You Need a Budget (YNAB), or Zeta, a simple handwritten budget will suffice. All you need to do is simply count how much money you receive each month and what expenses you have to pay each month. However, be sure that you are honest about how much you are really spending on “little expenses ” like eating out, entertainment, etc., your future self will thank you.

Once you know how much is truly going out each month, you can focus on looking for opportunities to save. Did your budget reveal you are paying too much for insurance? Then you may want to spend an afternoon looking for lower-cost coverage. Do you have unused subscriptions for streaming apps or gym memberships? Then spend some time canceling those unneeded bills.

Once you have trimmed the budget as much as your lifestyle will allow, you may want to look for some opportunities to increase your income. Some options might be working more hours or asking for a raise at work. Alternatively, if your employer is not an option, you may want to consider picking up a side hustle or part-time gig.

-Michael Dinich at Your Money Geek

How can I save money when I’m eating out?

Eating out doesn’t have to be as expensive as it is made out to be. There are plenty of ways to save money when eating out while still enjoying a great experience and wonderful food. One of the best ways to cut down on your bill is to drink water, or at most, drinks that offer free refills. Restaurants make most of their money on drinks, especially alcoholic drinks. At $7-$10 a pop, a few drinks can double or triple your restaurant bill. The second best way to save money eating out is to avoid so-called “fancy” restaurants. Restaurants with higher food and drink prices don’t typically have higher prices because you get more or better food, but rather because of the ambiance and prestige that comes from eating there. While eating at a fancy restaurant is nice for a special occasion, making it a regular habit is a sure way to blow your food budget.

-Tawnya Redding at Money Saved is Money Earned

What’s the best way to create a budget? 

Budgeting is a lot like dieting: Most people fail at it the first time around. It’s simple enough to do in theory, but as soon as you get a full-time job, a new car payment, an unexpected bill, and other unexpected expenses, you find your finances are not behaving the way they’ve been. The solution is simple: Create a budget. Once you have your financial priorities in order, the budget will help you maintain your spending habits.

If you’re looking to get out of debt or put yourself in a better financial position, there are three steps you can take to begin a budget. Step One: Define your budget and your goals. Step Two: Set up your monthly budget. Step Three: Follow your budget and stay on track with your goals.

This is probably one of the most important financial planning tools that can be used. The first step to creating a budget is identifying your financial goals.

The next step is to create your spending strategy. You can use a budget and spending strategy in conjunction to save money and improve your financial situation. This involves cutting out unnecessary wants and spending money only on things that bring you value.

The final step is to monitor spending and frequently focus on your short and long-term financial goals to ensure you are on track.

-Ryan Luke at Arrest Your Debt

How can I start investing?

First, take full advantage of your employer match if one is offered. If your employer-sponsored retirement plan is a 401(k) or similar, contribute as much as you can until you get the full match. If your employer offers a 457(b), you may want to prioritize that next because these accounts don’t have early withdrawal penalties. That means you can take money out whenever you want without a penalty.

Remember to be fully invested with your employer-sponsored plan; your investment won’t grow if it is sitting in cash. This happens more often than you might think! Also, pay attention to which funds your employer offers; sometimes, these funds can have high fees. If you aren’t sure where to start with your employer-sponsored plan, an easy option is a target-date fund if those are offered.

Regardless of fees, you should still take full advantage of the employer match. But if the fees are 1% or higher, investing any additional money in these accounts might put a strain on your returns. The 457(b) is a powerful account to have, but if you have that option, you’ll have to weigh that luxury if you also have high fees.

All of these accounts are pre-tax, meaning contributions are not taxed, but withdrawals are. After contributing as much as you can to your employer-sponsored accounts, you may want to contribute to a Roth IRA. These accounts are only taxed when the money goes in, which is very helpful if marginal tax rates increase (or if your income is higher in retirement).”

-Bob Haegele at Modest Money

How can I save money when I’m a student?

Use time to your advantage and be patient to save money.

If you know certain products you want in a grocery store go on sale only on Thursdays only, be patient, and wait out grocery shopping until Thursday. The key takeaway here is to best use your insider knowledge to best leverage additional ways to save, whether it bringing coupons, using a 5% cashback credit card, or using a bike for transportation to reduce gas usage.

Recognize, that there are many applications to using your knowledge to save even more money. Realize, budgeting is a mental battle that can be won, but requires being strategic and ultimately, self-discipline. Remember, be rational with your money and just think before spending. Budgeting and saving money is all about being realistic and conscious about your everyday spending habits.

FangWallet

What are some easy ways to save money? 

Looking for easy ways to save money? Here are a few of my favorites.

Eat meatless meals. Meat is typically one of the biggest grocery expenses and by simply eating one meatless dinner a week, you can save significantly!

Stop buying name-brand groceries. Not only do they cost more, but many times they don’t taste much different. At the very least, give the store brand a try before going with the name brand. You might be surprised at how many generic brand items you end up loving!

Use your freezer. Get into the habit of freezing leftovers and foods that you won’t use right away. This will reduce your food waste significantly!  You can also save money by stocking up when foods that freeze well go on sale. If it’s something you use regularly, buy extra and simply freeze it for easy savings!

Switch to cloth napkins. You can either buy a few sets or sew up your own. Either way, this is such an easy way to save!

Swap babysitting. Find another friend/family that you can swap babysitting with when you want a date or have an appointment that you can’t take your kids along to. Taking turns means you don’t need to worry about the cost and you also don’t need to feel bad bothering someone about watching your kids.

Pack your own lunches and snacks. The cost of eating out and buying individual snacks both add up quite quickly! Even spending just $20 a week on snacks, coffee or lunch will set you back over $1,000 a year!

-Lydia Beiler at Thrifty Frugal Mom

How can meal planning help me save money?

I remember when I first got married and laugh at myself. It was the first time I’d ever been fully in charge of household finances, and you could tell. I bought groceries whenever, and whatever I wanted, and cooked whatever popped into my head for dinner.

Cut to a month or two later, tallying up grocery receipts and being shocked by how much money I was spending just to feed two people. Yikes!

This experience taught me that meal planning goes a long way in saving money on groceries.

How? It’s really pretty simple!

Meal planning helps you make conscientious ingredient decisions. You can take note of the foods you tend to fall back on when you don’t have a plan or are busy, as well as ingredients you use that are more pricey, and create a plan to avoid those things. For instance, when you know you have a busy day coming up, you can plan to cook a chicken ahead of time or put it in the slow cooker so it will be ready when you get home, to avoid picking up a pricier rotisserie chicken at the store.

Meal planning informs what ingredients you need for the week, so you won’t find yourself throwing up your hands on a Thursday because you have nothing to cook. You planned, shopped, and now you have ingredients, so there’s no need for expensive pizza delivery.

You can take advantage of store sales with meal planning. Look at your weekly store sales flyers and then put recipes on your meal plan using those ingredients. This not only saves you money but can be a great way to add diversity to your meals.

-Elise at The Frugal Farm Wife

How can people spend money without feeling guilty?

Guilt comes from feeling like you should be doing something “better” with your money. But if you can make sure your money is going to those “better” places, then any spending can be done guilt-free.

Start by tracking your spending, then make a plan to have your money going toward your financial goals.

-Rob Bertman at Family Budget Expert

How can I save money on my monthly bills? 

Almost everyone is overpaying on their monthly bills. From rent/mortgage, insurance, electricity, water, internet, cable, and cell phone, it can be downright depressing to think of how much you have to pony up each month.

Luckily, there are ways to reduce your monthly bills and make them less painful. Many monthly bills like cell phone, internet, and cable/satellite TV are negotiable with your service providers and sizable discounts can be had by a simple phone call. Service providers want to maintain their customers so they don’t lose them to their competition, and they will lower your monthly rate to retain you as a customer.

Simple steps to get your bills lowered:

-Prepare before you call. Search online for competitors in your area and get their rates. You can use this as leverage when calling your service provider to obtain a lower rate for yourself. Just by saying, XYZ provider is offering a cheaper rate and you’re thinking of switching providers, you will get their attention.

-When calling your service provider, you’ll get a prompt that will ask the reason for your call. Answer with, “Cancel Service.” You aren’t really calling to cancel your service, but it will get you to the best representative that can give you the biggest discounts on your bill.

-When you do get a rep on the line, tell them you are happy with your service and don’t want to change your plan, but are calling to see what can be done to lower your monthly bill.

-Don’t accept their first offer! Instead ask, “What else can you do to lower my monthly bill without changing my plan or service?” It’s likely they will find additional discounts for you.

-Be polite when you call. You catch more bees with honey!

If you don’t like to haggle or the hassle of making these annoying calls yourself, there are professional negotiators who will do this for you. The Best of these negotiating services Rated #1 by CNBC for 2021 is BillCutterz. They are A+ Rated by the BBB and have been lowering bills for their customers for twelve years. The average savings they achieve for their customers is $300 per year per bill. If they don’t save you money, there is no charge. If they do save you money, they simply split the saving with you.

-Barry Gross at BillCutterz

What’s the best way to save for my kids’ college?

The best way to save for your kid’s college is through a 529 plan. This is a tax-advantaged account that you can use for education expenses. Money goes into the account post-tax, grows tax-free, and can be withdrawn tax-free so long as the funds are used towards qualified educational expenses. In many ways, a 529 plan is like a Roth IRA, but for education rather than retirement.

Many states also offer a tax deduction when you contribute to a 529 plan. If your state offers a tax deduction for 529 plan contributions, then you have another reason to save for college.

Ideally, you want to start saving for college as early as possible. That’s because the more time you give yourself, the more your savings can grow. My wife and I started saving in a 529 plan for my son as soon as he was born. Even if you can’t afford to put a lot of money into savings, a small amount can still make a difference down the road.

-Kevin Ha at Financial Panther

How can I stop spending money I don’t have?

If you’re struggling to stop spending and overspending, my biggest tip would be to move your money into separate funds from the minute you get paid. What I mean is to set up automatic withdraws from your bank account on payday to go into separate savings accounts or fund accounts within your bank.

Online banks like Ally and Qube make this possible and SO easy to set up. This will help you make sure that all of the things that need to get paid – like bills, groceries, and adding to savings – all get done BEFORE you can spend. This helps get rid of the feeling of “I’m so rich” on paydays only to feel like “I’m so broke” 3 days later because you’ll *look* like you have less in your bank, but really, it’s just out of sight out of mind. Getting used to not spending takes some time, but when the money isn’t even in the checking account anymore, it makes it so much easier. Give it a try – I bet you’d be shocked by how much you’re able to save.

-Caroline Vencil, Owner & Founder of Caroline Vencil

How can I build an emergency fund? 

In life, you must expect the unexpected. Things happen all the time. You may get a flat tire, or the air conditioner may go out in your house. Those things cost money and could put a wrench in your plans. It’s important to have an emergency fund for situations like this. Some people may think it’s hard to build an emergency fund. While it’s not hard, it does take some discipline. Below are two tips that I have that can help you build an emergency fund.

The first thing that you should do is pay yourself first. Whether you get paid once or twice a month, you should save some money from your paycheck each time. If you are just starting your emergency fund, you can try saving $10 per pay period. Once you get more comfortable with it, you can increase that amount. You can also have that money automatically deposited into your emergency fund. Doing that may be easier for you because you don’t have to worry about it since it happens automatically.

The next thing that you can do to build an emergency fund is to start a side hustle. There are hundreds of side hustles out there to choose from including freelance writing and selling items online. Choose the side hustle that you like and put that money towards your emergency account.

Doing either of those things will give you peace of mind. You will be prepared whenever the next emergency happens.

-Jason Butler at My Money Chronicles

How can I preserve energy and save money at the same time?

Preserving energy and saving money does not have to be complicated. There are many, easy ways to save! We both use the following two strategies to help us save serious dollars every day.

First, we always unplug appliances, chargers, and other items that are not used. Even though you may not be using the item, leaving it plugged in still uses energy. Using energy = higher energy bills! Therefore, every time we finish using an item, you bet we unplug it!

Second, while you cannot change your utility company easily, did you know that you can change your energy supplier? We constantly shop our electric and gas suppliers to help find the lowest-cost provider. This makes sure we are getting the lowest price possible. Our state, Ohio, offers an easy tool to help compare the price of electricity and gas. This is a great way to help keep the cost of electricity down with minimal effort.

-Lanny and Bert at Dividend Diplomats

How can I spend less money and save more?

Review your entertainment subscriptions: Disney Plus, Hulu, HBO Max, and Netflix all have binge-worthy shows that are fun to watch but not so fun for your bank account if you’re paying for all of them. Consider only paying for one subscription service and enjoying the shows there. The same goes for music and podcasts — no need to have Apple Music and Spotify if you only use one most of the time anyway. Ask yourself this, ‘if I only had to pick one, which would it be?’ Your answer is what you need to keep. Get rid of the rest.

Automate your savings: Having an automated savings plan can help you save by taking away the time it takes to spend your money as soon as it lands in your checking account. What’s great about it is, it automatically takes cash from your checking account and deposits it into your savings account, depending on the frequency you’ve set. It could be on a monthly basis, weekly, or bi-weekly. It all depends on you.

Always use a shopping list and a budget: A shopping list helps you stay on track when shopping by avoiding unnecessary items, and it makes the process quicker. A budget further ensures there’s no room for overspending. You can save a ton of money by always walking into the grocery store with a plan and only taking what you need.

-Brian Meiggs at My Millennial Guide

How can I save money when doing my groceries?

How to save money when buying groceries? Wow brings up a lot of emotions, when my girls were younger we would carefully plan our grocery trips. I learned a few things that are really just simple things to do, but they take a little time. The first is to meal plan. Meal planning not only saves you from hitting the drive-through at the last minute. Plus you will feel a little less anxious when you get the dread “What’s for dinner?” question. Then go to the store with a written list and don’t shop hungry- because you will come home with more than you needed and spend more money than you wanted.

The next piece of advice is shop sales, but buy only the items that you know that you will use, no hoarding allowed. For instance, if your family eats a lot of cereal then of course buy what you think they will use, but if they don’t use mustard a lot do you really need to buy 5 or more jars at one time? When shopping the sales, combine store coupons with manufacturer’s coupons. This is a huge money saver, especially if the cereal is buying one get one free and you have a coupon for $1 off of two boxes. It translates into getting two boxes for less than the price of one. Always have some quick and easy meal options available just in case you really don’t feel like cooking- you know those meals that you can make in under 30 minutes.

And the last tip I would include would be to support locals. If you aren’t able to grow your own fruits and vegetables, consider buying fresh from local farmers or your local farmer’s market. The same thing can be done with meat as well. I also might want to stock up on essentials whenever you find a good deal because it will equate to spending less later on.

-Melissa Vera at Adventures of Frugal Mom

How can I reduce costs when home renovating?

The first thing you should do is to draw up your renovation budget. While your budget will vary based on the age of your houseyour design, and materials used, you need to first establish some thresholds on what you expect to pay so that you can plan towards it. If you’re buying an older house as I did, you may need to factor in additional costs of rewiring the electrical circuits, pipe replacements, etc.

Next, decide if you will be hiring an interior designer (ID) or a contractor to do the renovation work for you. In this day and age where you can download mobile apps such as Planner 5D or DesignMyRoom which enable you to play around and design your own place, you may want to think about whether you prefer to create your own interior design or outsource this to a professional. In our case, we opted for an ID because he not only helped us to design from scratch but was also able to weave in elements that we wanted while advising on areas that we overlooked or were not aware of. Examples included adding more electricity sockets (we did not think about how many we would need, or where the ideal placements would be) around the house to accommodate our growing family, as well as suggesting a more practical substitute to our original idea of having a ceiling-to-floor open bookshelf (as it would entail too much cleaning of accumulated dust).

Reducing built-in carpentry is another great way to save on costs, especially as you can opt for secondhand furniture or even furniture from stores like IKEA which will not bust your budget. The best part about using furniture is that it also offers you greater flexibility, as you can simply shift them around as your family’s needs evolve over time. Fixed carpentry not only costs more but locks you in with the design and placement.

Investing in energy-efficient appliances for your home is also well worth your time and money, as it will help you save more on your electricity and utility bills in the long run.

Finally, if you’ve already done all of the above but still find that you do not have enough for your home renovation, then consider doing up the key parts of your house first, and leaving some other areas to a later time. There’s no rule saying you have to do an entire overhaul all at once!

-Dawn at SG Budget Babe

How can I create a budget for my wedding?

Planning for a wedding can be a tedious task, particularly when it comes to your budget. To help tackle a number that still allows you to pull off your dream day, there are a few important steps to consider, but step one is the most significant — knowing how much you can actually afford.

You need to find a realistic bottom line. The last thing you want to do is plan a wedding before looking at the numbers. Your finances should always be step one in any major life milestone. Chat with your partner and discuss how much you’d like to spend in an ideal world. Once you have a number in mind, start doing your research to see what everything you’re looking to do on your wedding day actually costs.

You might be surprised to find that some things are more or less expensive than you originally thought. From there, it’s a good idea to start a separate savings account to put money away leading up to your event. The beauty of a wedding budget is that you’ll likely have time on your side to get enough money to cover the major expenses, such as a venue or catering. At the end of the day, you need a plan to pull off something as exciting as a wedding, and a financial plan always steps one.

-Alyssa Davies at Mixed Up Money

How can I stay motivated to save money?

Staying motivated to save money is one of the toughest challenges we face while managing our personal finances.

Motivation doesn’t just happen naturally it requires purpose, dedication, and the right attitude. Looking to find more motivation in your financial journey? I recommend developing a plan for the money you will save and setting some goals. Each small financial goal achieved along the way will fuel your determination to continue. Nothing motivates us more than seeing results and dreaming about a brighter future. Saving money can be as simple as eliminating a few simple costs from your budget. For example: staying under budget for weekly grocery trips can be encouraging. Other simple actions taken consistently can help to transform your financial situation. Again, success achieved along your financial journey is usually motivational. Seeing your savings increase and your debt decrease can make it easier to continue.

Some great money-saving motivators could be:

-Begin a year-long money-saving challenge with a goal set for the money saved

-Create a vacation savings account and challenge yourself to save more for a dream trip

-Saving enough to help a good cause

-Anticipating the relief of being debt-free

-Tracking your success and remembering how far you have come

These are just a few examples of things that could help encourage you to save more if you are lacking motivation. Make saving money more fun and encouraging each time and you will find yourself way more successful.

-Andrea Joy at Saving Joyfully

How can I budget for a new home?

Your budgeting plan will portray a spending plan that will help you determine where your expenses should go every month. Good financial planning starts with basic home budgeting.

Indeed. If your household budget is in place, you can effectively track your spending and get a plan to save more and reduce unnecessary expenses. It helps you actively fulfill your financial goals. Here are some steps to check home budgeting and maintain and create financial plans effectively.

Determine your total income. It starts with determining the actual amount of money you have for each month. Since most of your income may come from your job or your spouse’s income, note the number to pan your financial budget. If you have any other source of income, such as rental property or stocks or part-time work payment., you should include them in your monthly total.

Subtract your expenses. You will have necessary fixed expenses for every month. Subtract the total cost from the amount you added for each month. It can include your rent, car payments, utilities, and other insurance premiums.

Decide on a savings goal. After you have subtracted the necessary expenses, decide on a regular savings plan. It should be done from the amount of money that is left with you after deductions. You can also opt for putting aside some amount for long-term financial goals, like saving for retirement, saving for your children’s education, etc.

Effective management of debt is essential. Debt has a mixed role in budget allocation. You may have an account requiring minimum payments; consider all of these as your fixed expense. If you miss any minimum payments, it will affect your credit score adversely. Develop a reliable strategy that works for you for paying out little by little to your debt amount.

Track all kinds of variable spending. These are the expenses you have control over and can be adjusted to a certain extent. It includes entertainment spending, buying new clothes, or opting for home renovations. Making a list of categories for your spending in such cases can help you track your variable expenses effectively. Indeed, any cost incurred which is not essential in priority, including holidays and vacation, comes under irregular spending.

Bottom line. Maintaining and creating efficient ways for household budgeting can take a little more time if doing for the first time. Know where your money goes to control and utilize your budget effectively.

-Tina Roth at ProFinance Blog

What is Saving Rate and how can I calculate it?

What Is Saving Rate?

Saving Rate is the percentage of income a person sets aside every year.

The money does not need to be held in cash and can be used to buy income-producing assets. The important part is that money is not spent.

It is saved or invested for spending in the future.

How To Calculate Saving Rate?

To calculate the saving rate, we need to determine disposable personal income, which is Net Income.

Gross income is income from all sources such as salary, dividends, rental income, business income, etc.

Net Income = Gross Income – Taxes

Savings = Net Income – Expenses

Saving Rate = Savings/Net Income

For example, if you earn $100,000 a year and pay $25,000 in taxes.

Your Net Income = $100,000-$25,000 = $75,000

If your annual expenses are $50,000 then

Your Saving Rate = $25,000/$75,000 = 33.33%

The advantage of a high Personal Saving Rate is twofold.

Having a handle on your expenses will ensure that you do not need a large nest egg to retire. Lower costs will allow you to retire sooner on a smaller nest egg.

A high Personal Saving Rate indicates that you are saving a more significant percentage of what you earn. We know that accumulating assets is the secret to getting insanely rich. The more you save, the more you can invest in assets such as stocks, real estate, etc.

The invested assets will generate cash flow, increasing your income. If the increased cash flow is again reinvested into acquiring more assets, your net worth grows exponentially.

There are only three levers to increasing the saving rate

  1. Reduce Taxes
  2. Reduce Expenses
  3. Increase Income

Learn how to tackle all three and boost your saving rate at Financial Freedom Countdown.

-John Dealbreuin at Financial Freedom Countdown

How can I organize my finances?

I will share with you actionable ways you can organize your finances and get started today. These aren’t the typical things you read about like, write down your debt, track your spending, save money, yadda, yadda, yadda. You’ve all heard those things before, but is that really organizing? And how long is that going to take anyway?

Here are six things you can do today to organize your finances:

Sort through paper statements and existing documents. Shred the unnecessary. It’s easy to let the stack of papers grow without sorting through them and deciding what is important and what is not. Not only does it take up space but it can start to cloud your mind.

Get a small filing cabinet for financial documents. You don’t want anything big because it forces you to only keep the papers that are important. A big filing cabinet sitting in your home filled with papers that you’re not going to need does no one any good. If there’s extra space in your home it tends to always get used up. So keep it simple and space at a minimum.

Create a secure financial folder in the cloud. Set up a secure folder through Drive, Box, DropBox, etc. that contains bank statements, investments statements, insurance policies, taxes, credit reports, and other documents I may need in the future. Moving everything online will help you feel more organized.

Connect ALL of your financial accounts in one place. This will help you feel organized more than anything else. Instead of logging into 10 different accounts to check the different information, you connect all of your accounts in one place. When you log into Personal Capital, for example, you have everything you need to see in one central place.

Create a financial bookmark in your browser. Create a bookmark on your browser for everything related to your finances and when you do need to login to something you won’t have to search for it and everything important that you need will be easily accessible.

Automate everything. If you can get to the point where your statements are filed automatically, you decrease the amount of clutter, your digital financial life is organized, and all of your accounts are synced automatically in one central place, I promise you’re going to feel more organized.

Bonus: Sign up for Qube Money Qube Money is the #1 tool for organizing your money. You can create unlimited “qubes” or mini-accounts for different purposes in your life. It comes with your own Visa-branded debit card and all you have to do is select which qube you’d like to spend from and the money instantly becomes available on the card. How’s that for organization?

-Scott Henderson at Qube Money

How can I stop spending money on unnecessary things?

One way to cut down on unnecessary spending is to cut down on decision fatigue. Decision fatigue is the deteriorating quality of our decisions after making a lot of decisions already.

We recognize our bodies are only physically capable of so much, but we don’t recognize our brains as having the same limits. Every day our brains have a finite store of energy, once it’s gone we’re caput, or rather, we develop decision fatigue. Once our brains are fatigued we’re prone to making bad decisions because we lose our ability to think critically, especially about our purchases.

That’s why it’s always easy to stick to a budget or no-spend challenge during the workday and increasingly difficult after work. Once our brains get fatigued our decisions get worse and worse. The solution is to integrate as many systems, preparations, and plans into our day as possible so we make fewer decisions and have more brainpower in our most vulnerable times.

-Jen Smith at Modern Frugality

How can journaling help me organize my finances? 

Journaling is a powerful habit to get into and can make it easier to manage all areas of your life, including money. It’s something I’ve integrated gradually over time, and while some methods don’t work so well for me, there are others that I’ve adapted and used for myself. Personally, I try to use some form of journaling every day, and I find it so helpful to manage my money!

I like to use my money journal for several things. On a daily basis, I track any unplanned spending I’m doing, so that at the end of the month, I can see what I need to consider budgeting for in the next month, or if my emotions have got the better of me and explore why that is.

I also like to track what flows into my life in the form of money and gifts/freebies. It’s amazing how little bits of money really add up, even pennies found on the street! By tracking the freebies (like maybe a friend buys me a coffee or something), I can appreciate and feel gratitude for what I have. This helps my mindset and makes me feel good about my money.

A final way I like to use my money journal is to keep track of my credit score and my net worth. I do this monthly, and love seeing the changes as I improve my financial situation. It’s such a motivator!

There is so much power in using a planner for your money. It’s empowering and money loves to be organized, so if you don’t enjoy using apps or spreadsheets, this is a great method to try.

-Nikki Ramskill at The Female Money Doctor

How can I reduce water usage and save money at the same time?

As I’m sure you’re all aware, the less water you use, the more money you save. And reducing water consumption is a simple process that nearly any of us can do. A few small steps include:

–When brushing your teeth, do not leave the tap running

-Take showers instead of baths. The average shower takes 8 minutes and should be more than enough to get you clean

-When filling a kettle, only use the amount of water you need. Not only will this reduce water wastage, but it will also cut the amount of electricity you use

-Only use the washing machine with a full load of clothes. Again, this will save you money when it comes to electricity consumption and should mean your machine lasts for longer as it is used fewer times.

The above ways are free, but if you’re willing to spend some money, there are a couple of items you can buy to help reduce the amount of water you use. And it shouldn’t take long before you see a return for your investment.

For example, you can purchase a ‘Save-a-Flush’ device into your toilet. Easy to install, it should save 1-2 liters of water each time you flush. Or, you could buy a new showerhead, which can often be bought for as little as $15. Again, these are easy to install and claim to cut your water usage by up to 50%.

For families, these devices should quickly pay for themselves.

-Peter Chatfield at Household Money Saving

What percentage of my budget should I spend on each household expense?

Having even an approximate guideline for how much you should spend on each household expense can really help when setting up your budget. In particular, it can help you see where you may have been spending too much before so that you can adjust your expenses in that area.

As a starting point, the three biggest costs in most household budgets are housing, food, and transportation and, on these, you should aim to allocate up to 25%, 15%, and 10% of your budget respectively. Any more than that and you’ll start to find it more difficult to also contribute money to your financial goals each month, like boosting your savings or paying off that credit card debt.

Other expenses should also be factored in, like allocating between 5% to 10% of your budget to health costs and utilities. If needed, insurance costs should also be included in your budget, which should be around 10% of your overall spending.

It’s also important to give yourself some room for “fun stuff” and any other miscellaneous spending that pops up, so aiming to spend about 5% to 10% of your budget on this can often be a good target. Otherwise, if you don’t factor that in, it makes it less likely that you’ll stick to your budget over the long term.

All this means that even if you spend up to the cap of each expense, you’ll still have 10% left for your financial goals, which is a critical part of any budget. And of course, if you can spend less than these percentages on any expense, meaning more funds are able to be targeted at your financial goals, then that’s even better!

-Anna Barker at LogicalDollar

How can I save money in the Laundry Room?

When you have a lot of laundry to do each week, it can get expensive. Especially when you consider that the washing machine uses 590 kilowatt-hours of energy and the dryer uses 769 kilowatt-hours. Here’s a list of ways to save money in the laundry room, plus give your clothes a longer lifespan.

-Use cold water: Using cold water will save you about 40 cents per load of laundry.

-Fill up the washer: No matter what size load you are washing, the machine uses the same amount of energy.

-Use the washer’s high-speed spin cycle: This helps remove as much moisture as possible, reducing drying time.

-Don’t fill up the dryer: A too full dryer takes longer to dry the clothes, costing more money in the long run.

-Air-dry when possible: Air-drying your clothes saves money on your electric bill, plus helps clothes last longer, saving more money on your shopping bill.

-Use dryer balls: Wool dryer balls cut drying time because they separate your clothes allowing more air to get to them, plus they absorb some of the moisture.

-Use lower heat settings.

-Make your own laundry products.

-Separate your loads: Towels and heavier items should be dried separately from lighter-weight clothing to save energy.

-Sign up for a rewards program: Check to see if your utility company has a time-of-day program, which offers lower energy costs during certain times of the day.

-Invest in ENERGY-STAR machines: ENERGY-STAR washing machines use around 25% less energy each year, plus they use less water, too. Dryers use 20% less energy. Investing in ENERGY-STAR machines can save you up to $585 each year.

-Michelle Miller at Blessings by Me

How can I stop emotional spending?

It’s natural for spending to fluctuate based on our emotional state. What we don’t want though, is for our emotions to lead to spending that impacts negatively on our finances. So what can we do about it?

The key to stopping emotional spending is to first recognize the times you’re doing it and what the triggers are for you personally. Maybe (like me!) you turn to takeaway food for comfort when feeling low? Perhaps you feel flush on payday and love a spending splurge that leaves you short the rest of the month? Maybe you overspend on gifts for others because it makes you feel good about yourself? Whatever it is, recognizing your patterns can make it easier to control.

The next thing to do is try and create barriers that make it harder to spend. For example, if your emotional spending tends to manifest in buying clothes online, one barrier would be not saving your credit card details, just so there’s that extra step to take that might help you pause.  If you’re more likely to spend while out and about, you could try leaving your cards at home so you can’t shop.

Another way to combat emotional spending is to find an alternative that makes you feel good without spending money. Exercise is a great way to relieve stress and release endorphins. Listening to your favorite music, reading, cooking – any activity that you really enjoy can become a go-to replacement for when you’re tempted to spend.

Finally, simply talking to someone you trust, such as friends or family, can really help keep you accountable as well as knowing you’re not alone in it.

-Hayley Muncey at Miss Manypennies

How can I save my way out of debt?

The fastest way out of debt is through savings.

Step One – If you are in a hole, stop digging. Stop all credit card use, or minimally, consolidate all new spending to only one active credit card.

Step Two – Create a strategic debt repayment plan and receive immediate psychological and emotional benefits from taking control of the situation.

Step Three – Eliminate all consumer (credit card) debt and take measures to prevent future debt.

It is critical to consistently put money aside while you’re paying down debt so that you can build a cushion of savings. I recommend three levels of savings for emotional and financial security:

-A Periodic Savings account for bigger ticket items non-monthly expenses. This is a high-touch account, money that’s meant to be spent.

-A Safety Net for at least six months of living expenses. Ideally, you would not touch this account unless you face fluctuating income or an interruption of income.

-Be diligent about investing for the long term (retirement).

-If applicable, all small business owners should have a separate tax savings account, in addition, to set aside money throughout the year for quarterly estimated or annual tax payments.

-Carrie Friedberg at SF Money Coach

Why it’s important to pay in cash when you are in debt?

Being in debt is a common money mistake that can have several consequences for consumers. For example, those with a heavy debt burden often face financial stress and difficulty making ends meet since debt payments can consume a significant portion of an individual’s income. Debt can also negatively impact an individual’s credit score, making it more difficult to obtain loans or other credit in the future. Additionally, high debt levels can lead to long-term financial instability and difficulty in achieving financial goals, such as buying a home or saving for retirement. And finally, in the most extreme cases, unmanageable debt can lead to bankruptcy. Though bankruptcy often causes relief, go figure!

Consumers who pay with cash help them stick within their budget and avoid overspending. Paying with cash also means avoiding credit cards, which can lead to additional debt and high-interest charges if the balance isn’t paid off in full at the end of the month. Last, paying with cash provides a sense of accountability as consumers see exactly how much money they are spending, which can be beneficial for managing debt.

-Rick Orford, Personal Finance Expert at rickorford.com

What is the 50/30/20 Budget Rule, and does it work?

The 50/30/20 Budget Rule is a rule of thumb to manage your money in a simple manner. The Rule was popularized by Senator Elizabeth Warren and her daughter Amelia Warren Tyagi in their 2005 book All Your Worth: The Ultimate Lifetime Money Plan. The 50/30/20 Budget Rule breaks down your after-tax income into three categories: needs, wants, and savings. According to the Rule, your after-tax income should be applied at 50% to needs, 30% to wants, and 20% to savings. Needs are the bills that you must pay including your mortgage or rent, food, insurance, healthcare, utilities, and debt. Wants are all the things that are not essentials, but you desire. This can be items such as gym membership, movies, vacations, eating out, etc. Lastly, savings is your retirement plan savings, emergency fund, and extra debt payments.

The 50/30/20 Budget Rule is not a hard and fast rule, but it is more of a guideline that you should adapt to your personal situation. But does it work? The main advantage is that it is simple and thus probably easier to follow at least in theory. It also accounts for your main expenses and doesn’t push an extremely frugal or austere lifestyle just to pay down debt and save. For these two reasons alone, it is more likely to work than other more complicated budgeting methodologies. That being said, the one category that people may cut back on is the 20% for savings. You always need to eat and a place to live and cutting back on something far into the future like retirement may seem logical but at the expense of meeting your retirement goals.

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How can I make a budget when I have a variable income?

The key to making a budget when you have a variable income is a bit different than making a budget when you have a stable or steady income. My recommendation if you have a variable income is to work backward. Instead of looking at how much money you are bringing in each month and then allocating certain amounts to different categories of spending, you should first determine what your absolute minimum expenses are each month. This means figuring out exactly what you spend on a mortgage or rent, car payments, gas and maintenance, necessary clothing, and necessary food (not including any extra deserts or morning coffees). Now that you have your absolute minimum expenses to cover all of your necessities, you can determine a reasonable amount of money for discretionary spending. Add this to your original figure and you now have your monthly budget, which really becomes your minimum monthly income target. Of course, if you make more than you budgeted for, you should consider storing it away and building up a comfortable emergency fund. This will allow you to have a little more flexibility in both your spending and your income in future months to take some stress off of you.

-Austin Weyenberg at The Logic of Money

How can I save money when I’m a big spender?

I always believe that the people you are constantly with have a cognitive impact on you. If you always hang out with people who overspend, it’s likely you’ll overspend too.  But if you surround yourself with people who love to save, chances are you will end up becoming a saver yourself. You will learn from their experiences and wisdom and acquire their frugal habits. So, if you are a big spender when you are with your extravagant friends, you might want to limit your time with them. Replace it with other fun activities that don’t cost anything, and spend more time with people, whether it’s your mom or sis, who will inspire you to realize your goals.

Another great money-saving strategy is learning the value of your money by converting money to time. This has also always been my favorite advice to people who want to learn how to stop wasting money and start saving. Before buying something, think how much time you are going to work to afford the item. If you get paid $25 an hour, it means you’d need to work almost half a day to buy a $100 purse. Ask yourself if the purse is worth all that work or would you rather save or invest your money so you can afford an extra half a day not working in the future.

-Jane Sardoma-Susaeta at This Mama Blogs

Home budgeting doesn’t have to be hard! Start by setting your goals; if you don’t know where you’re going, any road will get you there, you can always use a budget template to make sure you have full control of your finances. Don’t forget the amazing benefits financial freedom brings. Follow the previous advice and remember: it’s not your salary that makes you rich, it’s your spending habits!

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Updated January 25, 2023

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