My alternative title option for this post was, “How I learned I was budgeting the wrong way for over 6 years!” Yikes. There are just so many ways you can go wrong with personal finance. So, what is the good news? I support only a tried and true method that works. Really. The Hallmark of personal finance success? The BUDGET. Learn all the ways I tried to budget and why this one is the best budget app (EVER!). And no, I am not being endorsed to write this review. I just love this app and hope you will too.
EveryDollar has changed the way I think about a budget and I finally stopped going over my spending goals.
Which is crazy. I mean, every month I would go over. Shopping, personal spending, clothes. Oh the clothes. If you need help ending your shopping addition, you may want to keep reading this.
So, how did I become a convert to a life of budgets?
Two years ago, I was an avid Mint user. Obsessed with Mint. It was free and my transactions imported automatically. What’s not to love? They also periodically provide free credit scores. Another bonus was that you could easily see all your account balances at a glance. I even converted my friends to the ways of Mint budgeting. I could have been a spokesperson for Mint. I used Mint for over 5 years! Then, like many of you, I started to notice a sad trend in my budget. By the end of the month, my “budget” was all red. It became depressing. For a while, I stopped budgeting all together because it made me sad about my own overspending.
“I sat there, at the end of each month, looking at a red screen and wondering where the hell all the money went.”
Turns out, the first step is admitting you have a problem. I had a problem, and it was multiplying by the month in the form of credit card debt. It multiples like bunnies, am I right? It was hard to see where to go next.
Then, I read some very inspiring posts, stories, and testimonials on YNAB. I thought my budget issues had been solved. My favorite concept?
Give every dollar a job. It is all about the Zero Based Budget.
The principals seemed to make so much sense. I could once again link my bank accounts. I also really liked the idea of saving up so that the money you spend today is money earned one month ago. Sort of like a buffer. But then I signed up for the free 34 day trial. I died a bit inside when I first had to reference the owners manual. Pages upon pages of how to set things up. Ugh. The sinking funds part seemed daunting. Determined to get a hold of my spending, I pushed on and finished my first budget. Goodness it was a pain in the behind. I know the program has worked for many people, but I truly hated the whole budget process and complicated program. Talk about non-compliance. Another month bites the dust and falls into the red. I quickly canceled my trial, because YNAB is also not free to use.
Well, now that I have sufficiently depressed you with budgeting, here comes the silver lining. For me, budgeting finally felt natural when I came across Every Dollar. It was so quick to step up. No owner’s manual required. And, I realized I had been budgeting all wrong this whole time!
budgeting finally felt natural when I came across Every Dollar.
Income minus expenses needs to equal zero at the end of the month, every month. BEFORE the month starts. Each budget should also be unique, which I think is part of the reason I kept failing with Mint. Month to month, things should be different.
Every dollar (no pun intended, or was there?) needs to be accounted for. Whether the dollars are assigned to paying off debt, saving for a new car, or into your vacation savings account. So, did Every Dollar really make a difference? I have used Every Dollar since July of 2016. Since July of 2016, we have not gone over budget. Not once. Has it been tight at times? Of course. But we finally are able to get a handle on our spending.
For the first time, we were living on less than we made.
So what was my biggest surprise I learned about budgeting? Budgeting with EveryDollar was a tad scary at first. It does not clearly display all of your account balances. For the first time ever, I had to trust the budget. I could not quickly look down and see an account full of money and subconsciously know how much “extra” money I had to spend. I didn’t even realize that I did this. With Mint, having all balances was enabling me to sabotage my own budgets and making me feel like I could overspend.
I also didn’t realize just how much our account fluctuates over the course of a month. At once point, we may have $3,000 in checking, and then a week and a half later, it could be down to $300. Depending on the payment schedule. I started keeping a buffer of $1,000 in our checking account. Dave Ramsey recommends $1,000 baby emergency fund. For all you newbie budgeters, this is baby step #1 on the Dave Ramsey plan. I moved any extra money into savings (which eventually we put towards out debt, which I talk about in our story.) Then, I stopped checking our accounts so often. I just knew if we stayed on budget, we would not run out of money. Holy compliance batman. This seemed to be the game changer. Sometimes, a bit of fear can be healthy.
I was also able to let the money from our “sinking funds” build up without having the sudden urge to spend it. I did not directly see this build up of money each day. I have a big love hate relationship with sinking funds, but this method helped prevent me from spending the bits I did save. Read a bit more about the sinking funds I use here.
Turns out, Every Dollar was saving me from myself.
Goodbye many temptations to overspend. Well, for the most part.
EveryDollar vs. EveryDollar Plus
For one month, I used the free version of Every Dollar. It was still quicker to set up than Mint and overall easier than YNAB. I fell in love with the simplicity. Personal finance does not have to be hard, you just have to drag and drop. After one month, still determined to save money, I traded my Amazon Prime subscription for EveryDollar Plus (My last subscription. A moment of silence was held for my Prime membership. Good news, I bet you Amazon Prime will still be around by the time we are debt free.) I have never regretted the upgrade. Makes things so easy and quick.
Nerd alert ahead: I get excited every day to drag and drop each little transaction into it’s home. I get very excited when a bill that used to cause me stress, like our end-of-the-month phone bill, is just another line item already accounted for. With the other systems, by the time it got to the 30th of the month, things would all be in the red. Now, it already has a home. And I know every month we will “spend” (or save) everything until each dollar has a new home. Hello zero based budgeting. Goodbye end of the month budget depression.
This all sounds awesome, but How do I stick to my new budget plan?
Friends, it is time to reorganize your wallet with the clip system and some cold hard cash. (watch Rachael Cruze explain it more!) Choose 1-3 budget categories where you typically overspend. For me, this is personal fun money, eating out, and groceries. (Yes, I love food. Gotta limit all my food overspending). Eight months into budgeting, I still get excited to set up my budget, and it just keeps getting easier with use.
- Set a realistic goal for yourself for each category. For example, look back one month and see how much you spent on groceries. Say it was $300. Then, knock off about $50 and see how you do. Thus, if you usually spend $300, try to stick to $250. Choose a set amount, month by month, for each of the areas you struggle with most. Your bank account will thank you.
- Go to the bank and pull out the money in cold hard cash. Usually, I take money out in two batches. Half for the first few weeks and the second half for the remainder of the month.
- It is time to get organized. I use the clip system. Get some mini binder clips to help organize your money in the wallet you already own. This way, you know which money is for fun and which will make sure your family (or cat) do not go hungry. If you already love the cash envelope system, try these fun and more durable envelopes. They will add some color into your life. Or, if you want to spend a bit more and invest in a wallet with “envelope” dividers built right in, try this beauty. Rachael Cruze also now has her own version of this wallet. Budget has never been more happy.
- When the cash is gone, stop spending. It may take some getting used to, but I dare you to try it for three months and see how it goes! If you are looking for some budget samples, I share my unique May budget too.
Action plan: Try EveryDollar Today. AKA the Best Budget App Ever. It was the game-changer for me, Maybe it will be for you too.
And no, I am still not being endorsed to share this app with you, I just love it.
Here is to a life of budgeting and not hating it.