Have you ever had one of those months where you’re right on track with your budget and feeling really proud of yourself, and then your car breaks down?
You’ve got a $500+ expense that you hadn’t planned for, meaning you have to put it on your credit card. Now, instead of spending the next few months saving up for that weekend getaway you’ve been dreaming up, you’re going to spend it paying off those car repairs.
Luckily, there’s an incredibly simple solution to prevent this problem from happening again: Sinking funds.
In this post, I’m going to share what sinking funds are, why you need them in your budget, and how to get started using them today.
There are affiliate links in this post, meaning I may make a small commission at no additional cost to you. For more information, see my full disclosure policy here.
What is a sinking fund?
A sinking fund is a savings strategy you can use to save monthly for planned expenses that come up throughout the year.
The entire concept of sinking funds is that you save a bit of money each month for big expenses you know you’ll only have to pay once in a while.
Let’s say you spend $600 each year on Christmas. Rather than waiting until the end of the year and having that oh shit moment when you realize how much you’re spending (end ultimately putting it on a credit card), you can save throughout the year. Set aside $50 per month for Christmas, and when December rolls around, you’ll have your entire $600.
Sinking funds are effective for three different types of purchases. The first type of purchase is expected costs you know how much will cost. Sinking fund examples of this include vehicle registration, insurance, and annual subscriptions.
Sinking funds are also ideal for expenses that you know are coming but that you don’t know quite how much they’ll cost. These expenses include car repairs, medical bills, and pet expenses.
The final type of expense you can use sinking funds for is saving for financial goals. If you’re saving up for a vacation or the downpayment on a home, you can use sinking funds by setting aside a specific amount of money each month.
The important thing you have to remember is to treat your sinking funds just like any other bill — Nonnegotiable.
Why are sinking funds important?
There are so many expenses that pop up throughout the course of the year that we know are coming, but that somehow always seem to catch us by surprise. And they always end up screwing your budget.
Sinking funds allow you to spread those expenses out across each month instead of paying them in a lump sum when they pop up. That way, you can ensure you’re never going over budget.
You’ll never have to feel guilty about going on that vacation or spending money on the holidays because you’ve been planning and saving for those expenses.
Everyone’s sinking fund categories are going to look a bit different based on what you’ve got going on in your life, but here are some common sinking fund examples:
Vehicle registration
Car repairs
Car insurance
Home repairs
Christmas
Medical bills
Pet expenses
Vacation
House downpayment
Association dues
Clothing
Car replacement
Weddings
Kid-related expenses
Tuition
Annual subscriptions
New appliances
How much should I put in a sinking fund?
Each sinking fund is going to have a different amount in it based on how much you expect to spend in each category.
For fixed expenses, this will be easy. Let’s say you’re creating a sinking fund for your vehicle registration, which costs $120 per year. Save $10 per month, and you’ll have the full amount after one year to pay for your vehicle registration.
For variable expenses, you’ll have to estimate how much is appropriate for you. One way to do this is to look at how much you’ve spent in the past.
Let’s say you’re setting up your Christmas sinking fund. Look back through your budget to see how much you spent on Christmas last year, and you’ll have a good idea of how much to save.
Where should you keep your sinking funds?
When it comes to storing and keeping track of the money for your sinking funds, you have a few different options.
I’ll start with my favorite: You Need a Budget (YNAB). YNAB is a budgeting app that allows you to not only plan your monthly budget but to plan your finances further into the future and track the money you’ve set aside for specific purposes.
At any given time, I can see exactly how much money I have in my pet expense sinking fund, for example. Then, when I spend money on our dog, it gets categorized as a pet expense in YNAB. The money that I’ve set aside for each category just sits in my savings account until I need it.
YNAB is hands-down my favorite budgeting app and has totally transformed our budget. It has an annual fee, but you can grab a free trial here.
If you’re not using a budgeting app like YNAB to track your money, I recommend using a savings account with budgets (or just multiple savings accounts) to separate your sinking funds.
In addition to the savings account I have at my credit union, I also have a savings account at Ally Bank. Ally Bank allows you to use buckets in your account to separate the money you’re saving for different purposes.
Another solution that plenty of people find useful is using a printable sinking fund tracker. You can find plenty of options on Etsy, or even search for free sinking fund trackers to print.
What is the difference between a sinking fund and an emergency fund?
You might be reading this post and wondering what the difference is between a sinking fund and an emergency fund. After all, aren’t they both just a way to save for emergencies?
Sort of.
An emergency fund is a way to save for unexpected emergencies. The most important job of your emergency fund is to temporarily cover your monthly expenses in case you lose your job. That’s why it’s wise to have 3-6 months of living expenses in your emergency fund.
A sinking fund, on the other hand, is for specific expected costs. In some cases, it will be a cost, such as your vehicle registration or your Amazon Prime membership, where you know exactly how much it costs.
In others, such as car repairs, you don’t know exactly how much they’ll cost, but you know they’ll come up eventually. If the amount you need exceeds the amount you’ve saved, then you can dip into your emergency fund to fill the gap.
Final Thoughts
I can totally relate to that frustration of getting hit with an unexpected expense, or an expense that you knew was coming but totally forgot about.
I can honestly say that sinking funds have completely changed my finances around. Rather than getting hit by expenses that I have to throw on a credit card, I’m able to plan ahead with my budget and instead put my money toward things I’m really excited about (rather than those pesky car repairs).
For years I avoided budgeting because of how restrictive it felt. I didn’t want to feel guilty every time I spent my own money.
Then I discovered the concept of a minimalist budget, and it was a total game-changer. Rather than spending money on things you don’t really care about, you can spend more money on the things you care most about.
You’re probably familiar with the concept of minimalism, but minimalist budgeting might be a mystery to you. It’s the same concept — You’re eliminating the non-essentials to make room for the things you truly value.
In this post, I’m explaining what a minimalist budget is and how you can create one to help you manage your money without the guilt and restriction that often comes with budgeting.
What is a minimalist budget?
Minimalism is the practice of eliminating the non-essentials from your life to make more room for the things you truly value. Most people use the term minimalism in reference to physical belongings, but you can apply the concept of minimalism to any part of your life.
I particularly like to use it as it applies to budgeting. A minimalist budget is one where you eliminate the non-essentials and the clutter from your budget to leave more money for what you value most.
A minimalist budget can help you to reduce your monthly expenses, simplify your financial life, and get out of debt.
It’s important to note that budget minimalism isn’t the same thing as frugality. A minimalist budget isn’t necessarily about spending less money. It’s about spending money on fewer things, so you’re only spending money on what you truly value.
How do you create a minimalist budget?
Like many things, creating a minimalist budget is easier said than done. I’m not going to lie – this doesn’t come naturally, and you’re going to be hesitant to make cuts to your budget. Here are a few ways to help you create a minimalist budget that actually works for you.
IDENTIFY YOUR FINANCIAL VALUES AND PRIORITIES
One of the key benefits of a minimalist budget is that it allows you the freedom to spend money on the things that are truly important to you. To do that, you first have to identify what your values are.
Identifying your values and priorities is an important piece of the puzzle. Consider how often you allow yourself to spend money on something because it’s a “necessity.” Maybe it’s hitting the bar with your friends or that new outfit you’ve been eyeing online.
Sure, those things might seem like necessities. But what about when you compare the importance of a new outfit to being able to afford to fly home for the holidays? The outfit doesn’t seem like such a necessity when you identify your real priorities, one of which is that annual trip home for Christmas.
MAKE A LIST OF ALL YOUR EXPENSES
One of the first things I think everyone needs to do when it comes to setting up a new budget is to take stock of where they’re currently spending their money. To do this, you need to make a list of all of your expenses.
The easiest way to do this is to literally go back through your last three to six months of bank and credit card statements and document every single expense.
Yes, it sounds exhausting. But I promise you’ll get so much clarity from this one exercise!
I remember the first time I set up a budget for myself. I really had no idea how much I was spending on anything each month. I set up a budget and was honestly shocked to see how much I’d spent on take-out every month. It was a LOT.
Not only is this step important to figure out where you’re spending too much, but it also helps you to identify how much you should expect to spend. It’s simply not realistic to start budgeting $200 per month for groceries when you’ve been spending $600.
ELIMINATE UNNECESSARY EXPENSES
Alright, you knew this part was coming! Once you make a list of all of your expenses, it’s time to start cutting. Go through that list and figure out what you didn’t need to spend money on or what you could have spent less on.
Some of these will be easy, as with my example of eating out. As soon as I saw how much I was spending, I knew I had to cut back. Others will be more difficult because lots of things seem like necessities.
If you’re struggling to make cuts, refer back to step 1, where you identified your values and priorities. If something doesn’t fit within your values, cut it!
For example, suppose you’re spending way too much on food, partially as a result of regularly grabbing lunch and dinner out. If friendship is one of your top priorities, then you probably don’t want to cut that weekly dinner with your best friend.
But you could reduce your food spending by bringing lunch to work instead of ordering out. You’ve managed to cut your food budget without sacrificing one of your most important values.
Here’s the good news: Only you get to decide what spending is necessary and what isn’t. You can decide you want to splurge on eating out or clothing, or anything else. Something that will seem unnecessary to someone else might feel necessary to you, and vice versa.
USE A 50/20/30 BUDGET
One of the toughest parts of setting up a new budget is knowing how much you should be spending on everything. After all, there’s no handbook that you get when you become an adult that tells you how much to spend on groceries. You just have to figure it out as you go.
One of the best ways I’ve found to break up the budget is to do so by percentages. More specifically, I recommend the 50/30/20 budget.
The 50/30/20 budget is a framework that says you should break down your take-home pay like this:
50% for needs, such as housing, transportation, and groceries
30% for wants, such as eating out, entertainment, and hobbies
20% for savings and debt
Remember, this framework is just a guide, and it’s not going to be right for everyone. For example, when Brandon and I had $150,000 of debt that we were paying off, we would spend more than 20% of our budget on savings and debt.
SIMPLIFY YOUR ACCOUNTS
Listen, I know it’s popular advice in the personal finance community to have separate bank accounts for your different savings goals. At some point, though, it all becomes more work than it’s really worth. And if you have a good system in place, you don’t need a bunch of different bank accounts.
First, popular online banks such as Ally (the one I personalize use) allow you to set up “buckets” within a single savings account where you designate different cash for different purposes.
Additionally, budgeting apps such as You Need a Budget (YNAB) allow you to budget money for certain purposes. My banking app might say I have $10,000 in my savings account, but I can look at YNAB and see that I have $X budgeted for my emergency fund and $X budgeted for our new car.
Another popular piece of financial advice is to shop around for the savings account with the highest interest rate. But then what happens is you’re constantly obsessing over whether your current bank still has the highest rate and constantly moving your money as banks change their rates.
Here is some honesty for you — The difference between a 2% interest rate and a 1.75% interest rate on a savings account can literally come down to a few dollars, depending on how much money you have in the account. Just pick a bank with a high-yield savings account and let it go.
Finally, credit card hacking. Far too many people take out loads of credit cards with different types of rewards, and then only use their favorite. Credit card hacking might be effective if you do it right, but for most of us, it just adds extra unnecessary credit cards to our wallets.
AUTOMATE YOUR PAYMENTS
I don’t know about you, but I have a lot of monthly bills. Every month I pay bills such as my mortgage, car insurance, utilities, phone bill, and more. We also pay off our credit card each month so we never carry a balance.
If I had to manually log onto my various accounts throughout the month to pay my bills, that would be a huge pain. In fact, I would probably forget once in a while, and that would cause a whole different set of problems.
One of my biggest pet peeves about life these days is that everything is based on a monthly payment. For some things, it makes sense — I’ll happily pay my Netflix bill every month.
But now, there are buy now, pay later apps that allow you to take out mini loans for large purchases. That way, instead of paying the total amount upfront, you’re paying it off over six months or so.
But here’s the thing. Those services encourage you to buy things you can’t afford. If you can’t swing the cost of the shoes in a single payment, you can’t afford the shoes.
These services also cost you more money. Nothing comes for free. If someone is lending you money, they’re getting something in return. Usually, it’s an astronomical amount of interest. And even if that’s not the case, they’re normalizing debt, which is not okay.
One important component of getting out of the monthly payment mindset is getting out of debt. It’s easy to think about your debt only in terms of what it costs you each month.
Your $5,000 credit card debt might only have a minimum payment of $85 per month. Or your $25,000 student loan might only have a minimum monthly payment of $150. And while those numbers don’t seem all that high, they’re costing you so much more than that.
Let’s do some painful math real quick. Suppose you have $5,000 of credit card debt with a minimum monthly payment of $85. If you only pay the monthly payment, you’ll pay over $7,900 in interest before you pay the card off.
$7,900!!
You’ll pay more in interest than you had in credit card debt in the first place. All because $85 per month seemed like a perfectly reasonable amount to pay to have credit card debt.
Here are some rules to live by when getting out of the monthly payment mindset:
Prioritize paying off existing debt
Don’t take on any additional debt
If you use a credit card, only spend what you have in your bank account and pay it off each month
If given the choice between a monthly subscription fee and an annual one, pay the annual fee. It’s almost always cheaper.
QUESTION EVERY PURCHASE
When you’ve been spending money on the same things for years, it’s easy to see those things as necessities. One of the adjustments you have to make for a minimalist budget is to start questioning every purchase.
Minimalist budgeting is about spending money on fewer things, even if it means spending more on those items. It’s about focusing on quality over quantity.
Maybe you have a go-to pair of shoes that you buy, but the heels wear out in just a few months. This was me for a long time! I would always buy the same $25 pair of high heels for work. When the heels wore out a few months later, I’d replace them. I didn’t think anything of it because they were only $25.
It turned out that once I started spending more money per pair of shoes, I started spending less money overall. Instead of buying a budget pair that only lasted a few months, I could buy a more expensive pair that lasted infinitely longer.
Think about what expenses in your current budget you could replace with a higher-quality item. Instead of buying coffee out every day, what if you invested in a nice coffee or espresso machine? Instead of buying bottled water at the grocery store, what about buying a nice water filter?
The goal is to spend money on quality items that last longer.
I know I said that budget minimalism isn’t necessarily about spending less money, and it’s not. But just like any budget, the most important rule is that you have to spend less than you make.
It’s easy to rely on credit cards and monthly payments that trick us into thinking we can afford more than we really can. But if the amount you’re swiping on your credit card each month is less than the amount on your paychecks, it’s time to change direction.
SCHEDULE REGULAR BUDGET MEETINGS
I think we can all relate to a situation where we set up a brand new budget that we swear is going to change our lives, and then we forget about it in less time than it took us to make it.
I’ve gotten out of this habit by scheduling regular budget meetings for myself and my husband. We do one budget meeting around the first as I’m planning out the budget for the month and a quick check-in each time we get paid.
Even if you’re the only person sticking to your budget, these check-ins are still important. Putting time on your calendar will ensure that you’re actually checking in with your budget and noting whether you’re still on track.
Whether or not you practice minimalism with your physical belongings, a minimalist budget can be a great choice for anyone! Minimalist budgeting is all about eliminating the non-essentials from your budget to make room for the things that you value most.
While budgets often feel restrictive, the minimalist budget is all about freedom — freedom to spend on the things you truly value without letting the less important expenses get in the way.
There were way too many years when I didn’t realize just how important an emergency fund was. I made enough money to pay my bills every month. But when an unexpected expense came up, I’d have to put it on a credit card or pull money from a different spending category.
Having a fully-funded emergency in place is seriously life-changing. It provides so much peace of mind and helps ensure that little bumps in the road don’t rock your financial world.
In this post, you’ll learn what an emergency fund is, how much you should have in your emergency fund, and how you can save enough money for an emergency fund.
What is an emergency fund?
An emergency fund, just like the name suggests, is a chunk of money that you set aside for an unexpected financial emergency.
Your emergency fund has two primary purposes. First, it can help to pay for unexpected one-off expenses that you don’t have room for in your budget. For example, if your car breaks down or you have an unexpected medical bill, your emergency fund can help to pay for it.
The other use for an emergency fund is a job loss. If you lose your job, your emergency fund can serve as a replacement to your income until you have a new job.
How much emergency fund should I have?
There’s a lot of debate as to how much you should have in your emergency fund. If you follow Dave Ramsey’s baby steps, he recommends an emergency fund of $1,000 until you pay off all your debt. Once your debt is gone, then he recommends that you save an emergency fund of 3-6 months worth of expenses.
Depending on how much debt you have, I don’t think $1,000 is nearly enough. When my husband and I got married, we were working to pay off about $150K of debt. We knew it would take us several years to get there, and I wouldn’t have felt comfortable going years with only $1,000 in our emergency fund.
My comfort level before paying off debt is about three months of expenses in our emergency fund. I feel confident that in our career fields, we’d be able to at least partially replace our income in that time.
Long term, I recommend an even larger emergency fund. I feel most comfortable with six months of expenses set aside for an emergency.
There are other things to take into consideration when it comes to the size of your emergency fund. If you’re single, you might want more of an emergency fund than someone in a two-income household who has another person to rely on in the case of a job loss. Similarly, someone who has children to support might feel most comfortable with a larger emergency fund than someone with no one relying on them financially.
People are tempted to underestimate how much they need in their emergency fun while paying off debt so as to avoid paying more in interest. However, the lack of an emergency fund can actually end up being more expensive.
Imagine you don’t have an emergency fund and end up needing a $1,000 car repair. Now you have to put the repair on your credit card, and in addition to paying the initial $1,000, you also have to pay the high credit card interest rate until you can pay off the balance.
Where should you keep your emergency fund?
It’s best to keep your emergency fund somewhere easily accessible and highly liquid. If an unexpected expense comes up, you want to be able to get to your money as quickly as possible.
A high-yield savings account is a great option. You’ll keep your money safe while earning a little extra money on interest. I personally recommend Ally Bank, but there are plenty of options that pay rates far higher than a traditional bank.
If you’re tempted to invest your emergency fund in the market, I highly recommend against it. The market can be volatile, and the last thing you want is for the stock market to drop at the same time you need to use your emergency fund.
How do I build an emergency fund?
STEP 1: DECIDE HOW MUCH YOU WANT TO SAVE
I talked about how much I recommend having in your emergency fund. But you’re the only one who can ultimately decide how much you’ll need. Once you know how much you want to save, you can figure out how long it will take you to get there.
STEP 2: FIGURE OUT HOW MUCH YOU CAN SAVE MONTHLY
This step is where budgeting comes in. If you don’t know how much you can save every month for your emergency fund, it’s probably because you don’t have a firm grasp on your monthly budget. Let’s change that!
If you already have a budget in place but don’t have extra money left over to put toward your emergency fund, go through and figure out where you can make cuts.
You may currently be making extra debt payments, and that might be a good place to cut until your emergency fund is in place. Otherwise, find some other discretionary spending such as eating out or a vacation fund you can divert budget money from.
STEP 3: MAKE IT AUTOMATIC
I used to tell myself that I would save whatever money I had left at the end of every month after my expenses. And time after time, the end of the month would roll around, and I would have spent everything. There would be nothing left to put into savings.
Finally, I changed my strategy. I set up an automatic payment to go through the day after my paycheck hit my bank account every month. Then I could only spend what I had left after savings.
It’s easy to have the best of intentions when it comes to saving. But I think we can all relate to a situation where we spend more than we plan to. Setting up an automatic transfer to savings is the best way to make sure it happens every month.
I don’t know about you, but I love those cash windfalls that come in throughout the year. Sometimes it’s a tax return (or finding out you owe less in taxes than you had saved). It could also be a little bonus or a raise at work.
Another windfall many people don’t think about is that extra paycheck some people get a couple of months per year. If you get paid every other week, then there are actually two months per year where you get three paychecks instead of two. I always look forward to those months, as my husband gets those extra paychecks.
While it might be tempting to spend those extra windfalls on something fun, there are probably better uses for them. If you’re still saving your emergency fund, then throw those windfalls in there. Once your emergency fund is fully funded, then you can throw those windfalls toward a different financial goal!
STEP 5: FIND WAYS TO EARN EXTRA MONEY
At some point, there’s only so much you can cut from your budget. Even if you’re as frugal as can be, the money can only go so far. That’s where extra money comes in.
I love having a side hustle. I started my blog years ago and worked on it alongside a full-time job. A few years later, I added freelance writing to the mix. But in the years when I was really building up my financial health, that extra income was a life saver.
Your financial needs are going to change a lot during your life. You might decide today that $5,000 is plenty for an emergency fund for you. But fast-forward a few years, and your life might look totally different.
In that case, you’ll need to reevaluate whether your current emergency fund is still sufficient. In general, the higher your monthly expenses get, the bigger your emergency fund will need to be.
The other thing to keep in mind is that something you’ll need to rebuild your emergency fund. Emergencies are bound to pop up sometimes — that’s what the fund is for!
When you find yourself needing to spend some of that money, be sure to build it back up afterward. It might be that it was a relatively small expense, and you can get the fund back up in a month or two.
In the case of a job loss where you end up draining the entire fund, it’s going to take you a lot longer to get it back to where it was.
Don’t get down on yourself if that happens — that’s what the fund is for! Your life will probably be a constant back and forth of building up the fund and then having to use it.
Final Thoughts
I think we can all agree that unexpected financial emergencies suck. But they’re also inevitable and something we should all be prepared for.
If you use the tips in this post to boost your emergency fund, you’ll have a lot more peace of mind next time one of those unexpected costs rolls around.
I know from personal experience that when you’re living on a tight budget, saving money feels damn near impossible. Every dime is going toward paying your bills, and there’s little to nothing left at the end of the month.
I was at the point where I had nothing in savings, and every unexpected expense ended up going on a credit card.
Eventually, I figured out that even making small changes in my monthly spending could make a huge impact, and I was able to start saving more money than I thought possible.
In this post, I’m sharing all of the changes I made to help me actually start saving money and tips that you can start using today to save money on a tight budget.
There are affiliate links in this post, meaning I may make a small commission at no additional cost to you. For more information, see my full disclosure policy here.
Pay yourself first
Regardless of how much extra income you’re able to set aside in savings, you have to take that important step of actually sticking to your savings goals.
First of all, I always keep my savings in a separate savings account. That way, I don’t have the option of impulsively swiping my debit card to use some of that savings.
But the most important thing that I do is to pay myself first — and by myself, I mean my savings account. On the same day every month, I have an automatic transfer to move money from my checking account into my savings account.
I do it at the beginning of the month, so I don’t have the opportunity to spend it on something else first. And because it’s automatic, I never have to remind myself to save.
You see, I found that for years I always told myself I would save whatever I had left at the end of every month. Yet, at the end of every month, there’d be nothing left to put in savings.
Paying your savings account first is the absolute best way to make sure it gets done every month. The rest of the advice on this list doesn’t mean much without this one!
If you haven’t reviewed your budget in a while (or you don’t have a budget), now is the time to fix this. It’s easy to set a budget for yourself and forget about it, but you’ve gotta keep reviewing it to make sure it still fits your life.
Things change, and people go through different seasons of life. I’ve gone through seasons of life where I was driving a lot for work and had to budget more for gas. I’ve also gone through seasons where I spent little on gas but a lot more on eating out.
I do this just about every month. As I’m budgeting out my income for the month, I ask myself whether my current budget really makes the most sense for where I’m at in life right now. If the answer is no, I change it up.
I do all of my budgeting in the app You Need a Budget. This app is hands-down the best I’ve used for setting up a budget and actually being able to stick to it.
For my entire career in politics, I got paid on the first day of every month. I loved getting paid monthly because I could pay all my bills and budget for the entire month at once. Then I knew right away how much I had for the rest of the month.
Then I got married, and my husband gets paid biweekly. At first, it seemed inconvenient — It would have been nice to stick to my once-per-month budget.
Then I realized that people who get paid biweekly have two months every year where they get paid three times instead of two — Then I started to come around to it.
We plan our budget under the assumption that my husband gets two paychecks per month. So during those lucky months when he gets three, we’re able to send them directly to savings.
If you get paid biweekly, take a look at a calendar and figure out what months you’re going to get three paychecks. Then make a plan to save that money or use it to pay off debt!
Set up sinking funds
You know those months where everything is going according to plan and your budget is right on track — and then something unexpected pops up? Maybe it’s a medical bill or a car repair you weren’t planning for.
Those expenses are the worst because there’s no way to know when they’re coming, and you hate to use your emergency fund for them (especially if you’re just getting yours started).
I struggled with this for years, and then I learned about something that seriously changed the game in my budgeting practice.
Sinking funds are when you set aside a certain amount of money every month for expenses you know you’re going to have, but you aren’t sure when. I have sinking funds for irregular spending categories such as medical bills, car maintenance, and pet expenses.
I also use a sinking fund for Christmas. Rather than go into a state of panic when November rolls around, and I realize how much money I’m about to drop on Christmas, I put some aside every month so I know we’ll have plenty when Christmas rolls around.
Track every dollar you spend
Have you ever made it to the end of the month and wondered where the heck all your money went? Sometimes we don’t realize just how much we’re spending until we make it to the end of the month and there’s no money left.
The single biggest way I was able to get a handle on my spending was to start tracking it. I remember the first time I sat down and figured out how much I was actually spending — I was shocked at how much money was going toward eating out!
I track all of my spending in my You Need a Budget app. The app connects to my bank accounts and automatically pulls all of my transactions. Before YNAB, I used to just track all of my transactions in an excel spreadsheet, which also worked great!
Separate wants vs. needs
One of the biggest problems run into when cutting their spending is that they aren’t able to separate needs from wants. I’ve been there — I could easily convince myself that eating out was a “need” because, hey, you gotta eat.
If you’re really going to cut your spending, you need to get really honest with yourself about what counts as a need and what counts as a want.
Try a 50/30/20 budget
One of the most effective budgeting methods I’ve found, especially for those living on a tight budget, is the 50/30/20 budget.
This budgeting system directs you to spend 50% of your take-home pay on necessities like housing, utilities, transportation, and groceries.
The next 30% of your budget goes towards wants — This is anything you want to spend your money on but don’t have to.
The final 20% of your budget goes toward debt and savings. This would be expenses like student loans, credit cards, retirement accounts, and your emergency fund.
One of the most eye-opening things about using this budget is realizing just how much you’re spending on housing. In parts of the country where housing is expensive, you might have to spend more of your pay on rent or your mortgage. But using this budget might also be a sign it’s time to change your housing situation.
Refinance your student loan
Brandon and I had a lot of student loan debt when we got married — Like, a combined six-figures. Most of that debt was in the form of federal loans with fairly low interest rates. But a bit of it was a private loan with a 14% interest (painful, I know).
One of the best money decisions we made to help save money every month was to refinance that loan.
If you’re shopping for a loan to refinance your student loans, I recommend Credible. You can see rates from more than a dozen different lenders to find the best loan for your situation.
We were able to go from a rate of more than 14% to less than 5%. That changed alone saved us thousands of dollars in interest. If you have private student loans with a high interest rate, refinancing could do the same for you.
Analyze your biggest money leaks
It’s probably safe to say that we’ve all got a money leak or two, which is the splurge item that you tend to spend a bit too much money on. For Brandon and me, those money leaks are food and concert tickets.
Once you can identify your money leaks, you can start to address them. For us, this meant making several changes.
First, we cut back on eating and drinking out. We also started cooking budget meals at home, and making cocktails at home on the nights we felt tempted to go out. Finally, this meant restricting ourselves to one concert per month.
Everyone’s money leaks will look a little different. The key is figuring out what yours are and finding a way to cut down your spending while still allowing yourself the occasional splurge.
Rethink your car payment
Car payments suck. In a perfect world, no one would ever have a payment for their car, and we’d all simply buy cars we can afford. Unfortunately, most of us have been at a point in our lives where that’s not possible.
When I bought my first car with a car payment, I was married to my first husband. I got the car in the divorce, but I also got the car payment. While I powered through it for a few months, it eventually became clear that I couldn’t keep up with the payment.
I refinanced my car loan and ended up with a much lower monthly payment and a lower interest rate, which was a nice perk.
Your car payment is a low-hanging fruit way of saving money every month. Whether it’s refinancing your loan or buying a car you can afford without a monthly payment, figure out what works for your life right now.
Negotiate your bills
For most of us, it would never occur to us to try to negotiate our monthly bills. But it turns out that you totally can.
There’s even an entire market of apps you can use to negotiate your bills on your behalf. Apps like Truebill, Trim, and Billshark all help you figure out where you’re spending too much money and negotiate lower payments.
Cut your utility use
Your utility bill is one that you can’t get rid of — But there are definitely things you can do to lower it every month.
First, consider changing the temperature on your thermostat. If you can stand your house a little warmer in the summer and a little cooler in the winter, you can save yourself a heck of a lot of money. We cut our bill in half in the months we don’t regulate the temperature in our apartment!
You can also reduce your bill by using a programmable thermostat. Turn down the heat or AC while you’re at work, and have it automatically turn back on before you come home.
You can also do little things like using energy-efficient utilities and simply using less electricity.
Use cash-back apps
Cash-backs apps aren’t going to get you rich, but they will help you to save a little money here and there. And that’s exactly what you’re working toward when you’re on a tight budget.
A few of my favorite cash-back apps are Ibotta and Fetch Rewards, which give you cash back for scanning your grocery receipts. Another favorite is Rakuten, which gives you cash back for online purchases.
Unfollow and unsubscribe
Don’t get me wrong – I love Instagram as much as the next person. But I also know that when you see influencers sharing so many gorgeous clothes and products, it can be hard to resist doing a little shopping.
Similarly, it can be hard to resist spending money when you get an email from your favorite clothing store saying they’re having a huge sale (which they seem to be having nearly every day).
If you find yourself having a hard time passing up deals when you see them on Instagram and in your emails, it might be time to unfollow and unsubscribe from anything that convinces you to spend money you don’t have.
Tackle high-interest debt
One of the most frustrating things for me when I started my money journey is that I kept reading finance advice that told me to aggressively pay off debt.
If I don’t even have the wiggle room to put money into savings, how on earth am I going to put extra money toward debt?
Then I started paying attention to how much I was paying being charged in interest every month on my credit cards. And I realized just how right they were.
Paying off high-interest debt is one of the best things you can do to put more money in your pocket every month and, more importantly, save you a lot of freaking money in the long run.
Trust me, I know how hard it is to put extra money toward debt when you’re just scraping by. But if you do everything else on this list, I promise you’ll have some money to spare!
A 2019 survey from Chime Bank found that the average American spends $329 per year on banking fees. I don’t know about you, but that sounds wild to me.
Those fees include overdraft fees, account fees, fees to redeem rewards, fees to receive paper statements, and fees for account inactivity.
Try going through your bank account for the past few months and try to spot any fees your bank has charged you. If you find any, it’s time to either switch banks or change your behavior.
If it’s the case that the fees you’re paying are a result of overdraft fees, try to figure out why that’s happening. Is it that you’re not paying attention to your balance or that emergencies are popping up that you have to pay for? What backup plan can you put into place instead of swiping your card when there’s no money in your account?
If the fees aren’t a result of your behavior and it’s just that you have a fee-happy bank, it’s time to switch banks! There are plenty out there that don’t charge these ridiculous fees.
Start a side hustle
Listen, I can share all the advice in the world about how you can save money every month. But at the end of the day, there’s only so much you can cut.
Rather than relying solely on cutting expenses to help me save more money, my favorite way to do it has been by increasing my income through side hustles.
Today I run my business full-time, but for years I worked a full-time job while I worked on my blog and wrote freelance articles on the side.
When you’re on a tight budget, saving even the smallest amount seems like an impossible task. Trust me, I’ve been there myself.
But since I started going all-in on my personal finance, I’ve learned so many legit ways to save money every month, even when there’s not a lot of wiggle room in the budget.
If you’re on a tight budget, I hope you’ll give a few of these tips a shot to help you start putting money away to help you build an emergency fund or pay off debt.
Confession: I used to be really bad about impulse shopping.
In college, I would go to the mall, only to leave a few hundred dollars poorer and with bags of clothing that I would probably only wear a few times.
After college, I became an emotional shopper and would resort to spending money instead of dealing with the problems in my life.
Thankfully I’ve mostly eliminated my shopping habit, but only after racking up credit card debt.
Let’s be honest – we’ve all been guilty of impulse spending at one time in our lives (although probably a lot more just than one). In fact, a 2018 study by Slickdeals found that the average American spends an average of $450 per month on impulse spending, which adds up to $5,400 per year.
What??
That means that even people who don’t think they do much impulse buying probably do their fair share of it after all. I don’t know about you, but I can think of a lot of things I would rather do with $5,400 per year!
In this post, I’m sharing 11 things I did to help stop my impulse buying habit and that I know will work for you too!
Why Do We Make Impulse Purchases?
YOU’RE IN THE HABIT OF SPENDING
A lot of people are quick to swipe their credit cards simply because they’re in the habit of doing so. Once it becomes a habit, it’s really hard to realize how often you’re doing it.
There’s no doubt that we live in a society of consumerism, so it’s no surprise that so many people fall into the habit of impulse shopping.
YOU’RE BORED
Have you ever been bored, so you pull up the website for your favorite store? You swear you’re just going to look, but of course, you end up grabbing a few things.
Or maybe you have some time to kill, so you decide to stop at Target. And if you’re anything like me, you can always find something at Target you’re convinced that you need!
YOU’RE EMOTIONAL
Yeah, I’ve definitely been guilty of emotional spending. I used to have days where I had a really bad day, and after work drove straight to my favorite store to distract myself from whatever had gone wrong.
Emotional spending is a real thing. And it’s not just used to counteract negative emotions either. I think we’ve all been in a situation where we celebrate exciting news by spending money. Often it’s the first thing we think to do!
YOU HAVE FOMO
I think we can all relate to this reason for impulse buying. You’ve seen something that everyone else has or that everyone else is doing, and you don’t want to be the only one to miss out.
YOU WANT TO SAVE MONEY
This one seems counterproductive, and it totally is, but it’s also a justification that a lot of us use for impulse spending!
If you see something you like and it’s on major sale, it’s easy to convince yourself that it would be irresponsible to pass up such an amazing deal.
How to Stop Impulse Buying
MAKE A BUDGET AND STICK TO IT
I talk a lot about budgeting on this site and, without a doubt, think that everyone should have a budget. But you have to do more than that.
There’s a big difference between people who have a budget and people who have a budget and stick to it.
To be clear, I have definitely been the person who has a budget but does not stick to it!
Unfortunately, there’s no secret hack to help you stick to your budget other than discipline. You just have to force yourself to do it.
However, the other tips on this list should help as well!
Here are some articles to help you get started with your budget:
You might think this tip is counterproductive since the goal of this article is to help us to spend less money. But I promise this works.
You know how super-restrictive diets are almost impossible to stick to because when you restrict yourself too much, you end up overcorrecting the other way. And by that, I mean totally blowing the diet.
Well, budgets are pretty much the same.
If you restrict yourself too much, you’re going to eventually end up breaking the budget. And you’ll probably go way overboard.
But by treating yourself in small ways and building that into your budget, you’re scratching the shopping itch without blowing your budget.
FOCUS ON YOUR FINANCIAL GOALS
My partner and I love to eat out. If we’re going to blow the budget anywhere, it’s going to be on eating out.
The one thing that has been most effective for us to stop impulsively going out to eat several times per week is putting our financial goals front and center.
We bought a big whiteboard and hung it in our living area. On it, we wrote our financial goal.
We also included a budget tracker to show how close we are to our financial goal and a budget tracker showing how much we have spent eating out that month.
Every day, we are looking at our financial goal. And every time we impulsively go out to eat, we have to mark it on the board so that we’re hyperaware that we’re choosing to put that money toward eating out instead of our financial goal.
And it’s actually worked!
Figure out a way to put your financial goal front and center, so you’re constantly reminded of the opportunity cost of impulse buying.
Create a rule for yourself where every time you want to buy something, you have to wait at least one week before pulling the trigger.
Chances are, that feeling that you absolutely have to have it will have dissipated during that week. You may not want it at all anymore.
If the week passes and you do still feel like you must have it, then it’s time to revisit the budget.
Can you fit it into your budget for this month, or do you need to set aside money for it for a few months before you can pull the trigger?
UNSUBSCRIBE FROM EMAIL LISTS
For the longest time, I felt like it was super practical to be on the email list for all of my favorite stores. Then I would know when they were having a sale, and that’s the only time I would let myself shop.
But here’s the problem. Stores know that people do this, and so they are always having a sale.
Meaning I was constantly being given opportunities to impulse shop and feel like I was saving money.
It’s better to unsubscribe from those emails and remove the temptation altogether. If you have a specific item that you want to buy, then you can just set an alert on that one item to be notified when it goes on sale.
If you follow many influencers on social media, then you’re probably constantly being marketed to. Seriously, every day some blogger is popping into my Instagram stories or feed to talk about some new beauty product or clothing item that they’re obsessed with and that we all absolutely need to have.
It can be a lot. And if I was still an impulse spender, I would probably be spending all of my money on things I don’t need.
If you struggle with impulse spending when you hear about new products from bloggers and influencers, then it’s probably time to start unfollowing.
At the very least, mute those influencers during specific times of the year (i.e. during the Nordstrom sale – better yet just stay off social media during that week).
DON’T SHOP WHEN YOU’RE EMOTIONAL
I mentioned earlier that emotional shopping is one of the reasons that many of us impulse shop. So the obvious answer, of course, is just to stop emotional spending.
Easier said than done, I know.
The best thing to do is to make a plan for what you’ll do instead of shopping when you’re emotional.
For example, I have found that journaling is one of the best ways to get out of a negative mindset. If I’m having a rough day, I feel so much better after writing it out.
So instead of shopping when I’m emotional, I write.
Other things you can do instead might include meditating, working out, cleaning, or talking to a friend or partner.
If you’re an impulse shopper, you need to avoid credit cards at all costs!
Credit cards are a super-effective way of being able to impulsively spend money without feeling the hit right away.
It’s so easy to pretend it doesn’t really “count” because the money isn’t actually leaving your bank account.
If you have ever made this argument to yourself, it’s time to hide your credit cards. Seriously.
I used to make this argument to myself a lot, and now I’m paying off the credit card debt from that time in my life.
Switching to only using a debit card made a huge difference because I was limited as to how much money I could spend, and was forced to prioritize my spending between impulse spending or more important things.
As a side note, I actually love credit cards and recommend using them if you can do so responsibly. But it’s best to avoid them until you overcome your impulse spending problem.
SHOP WITH A FRIEND
Let me preface this one by saying that this is a situation where you really need to know your friends and what influence they have on you.
I can confidently say that I’m going to spend less money if I’m shopping with my best friend or my partner.
Part of the reason for this is that they don’t spend a lot of money shopping, so I’m more likely to spend less money.
Also, they both know me well enough to tell me if I’m going overboard or buying things I don’t really need.
One thing I have found to be really effective for limiting my impulse spending is just to stop going into the stores that tempt me and order things online instead.
For example, let’s say I’m out of dry shampoo and need to run into Target to get more. Now I’m in the Target beauty department and can be tempted by everything else in the Target beauty department.
But instead, I can buy the same dry shampoo for the same price and get free shipping via the Target or Amazon app, and I’m not putting myself in a situation to be tempted by anything else.
Not only am I saving myself the time it takes to drive to Target and back, but I’m also probably saving myself some money.
DO A NO-SPEND MONTH
So you know how I said most of us are just in the habit of spending, and that’s why we find ourselves making so many impulse purchases?
I think the best way to get out of that habit is to have a no-spend month.
During a no-spend month, you don’t spend money. It’s pretty self-explanatory. This obviously doesn’t apply to necessities such as food or any toiletries that you might run out of.
Most people only think about the benefit of a no-spend month in terms of just that one month. And yes, you’ll definitely save some money that month.
But the benefits will last a heck of a lot longer because you’ll have eliminated the habit of shopping when you’re bored or emotional or having FOMO, and you’ll be less likely to do that kind of spending in the future.
Over the course of that month, you’ll have learned to be okay with not buying that thing that everyone else is buying.
You’ll have found other things to focus on when you’re bored instead of shopping.
You’ll have found other ways to deal with negative emotions rather than emotional spending.
It’s worth noting that I’m generally not a big fan of no-spend months because they can feel restrictive. And as we talked about above, restriction doesn’t usually work. However, a no-spend month can be helpful in this case, since it helps kick the impulse buying habit.
Final Thoughts
Impulse shopping is obviously a huge problem in our society today. Consumerism is constantly being marketed and advertised to us.
But it is possible to get rid of your impulse spending habit.
It’s not easy, and it’s not always going to feel great. But I promise it will feel amazing when you are reaching your financial goals because you didn’t spend money on things you didn’t really need!
I’ve had my fair share of struggles with impulse and emotional spending, and the tips I shared in this post have helped me immensely.
When you’re new to budgeting, it can be really difficult to figure out how much money you should be spending on each area of your life.
How much should we be spending on rent? Groceries? And how much can we spend on fun things like nights out and vacations?
I remember moving to a new city after college and being so stressed looking for an apartment because I had no idea what my budget should be!
My favorite budgeting method for beginner budgeters is the 50/30/20 rule, which lays out what portion of your monthly income you should be spending in each area of your life.
In this post, I’m sharing what the 50/30/20 budget rule is and how you can make it work for you.
What is the 50/30/20 budget?
The 50/30/20 rule is a budgeting method where you break down your after-tax income into three categories: Needs, wants, and savings/debt.
50% of your take-home pay goes toward needs. 30% goes toward wants. And the remaining 20% goes toward paying off debt and putting money into savings.
Let’s dive a little deeper into each of those spending categories.
50% – NEEDS
Needs are the monthly living expenses that you have to pay in order to keep going. Your needs include:
Housing
Utilities
Insurance
Transportation
Groceries
These expenses will vary a little bit from person to person, but we all have the same basic expenses when it comes to this category.
30% – WANTS
Wants are those totally optional expenses that you choose to spend your money on. Consider this your “quality of life” category, because it’s the items you spend money on to reach the quality of life you want.
Your wants include:
Eating and drinking out
Entertainment
Clothes shopping
Starbucks
Vacations
Gym memberships
Manicures
Holidays
You get the idea. It’s all of the things you choose to spend money on, not that you have to spend money on.
20 % – SAVINGS AND DEBT
The last 20% is reserved for just two things: debt repayment and savings.
First, this category will help you to pay off any debt you have, including credit cards, student loans, auto loans, personal loans, and more.
This is also the money that will go toward helping you build your emergency fund, pay for any financial goals you have, and funding your retirement account.
Alright, let’s say you’ve read about this budgeting method and decided you want to give it a shot. How do you get started? Here are some simple steps to follow:
STEP 1: FIGURE OUT YOUR AFTER-TAX INCOME
Before we can budget our income, we have to figure out how much money we have to budget with. This part should be easy – simply take a look at your paycheck or bank account and see what you’re after-tax income is each month.
This is a little more difficult if you don’t make exactly the same amount of money each month, such as if you’re self-employed. In that case, just work with your average take-home pay.
STEP 2: MAKE A LIST OF YOUR MONTHLY EXPENSES
The one thing you need to do before creating any kind of budget, not just a 50/30/20 budget, is to make a list of all of your expenses.
I like to go back 3-6 months and make a list of everything I spent money on. Seriously, everything. Account for every single coffee, cocktail, and concert ticket you’ve bought.
STEP 3: BREAK YOUR EXPENSES INTO NEEDS, WANTS, AND SAVINGS/DEBT
Once you’ve made a list of all of your expenses, it’s time to categorize that list. Using the three spending categories (needs, wants, and savings/debt), divide up your expenses.
It might be most helpful to use a spreadsheet with three columns so you can add each expense to the appropriate column.
STEP 4: ADJUST YOUR SPENDING
Here’s where you may need to make some changes to your spending habits.
Once you’ve broken your expenses up into categories, add them up. How much have you been spending on needs every month? On wants? On savings and debt?
If you do the math and it’s not fitting into the 50/30/20 budget, it’s time to adjust.
It might be that you have a luxurious apartment that causes you to spend a higher percentage of your money on rent. Ask yourself – could you be living in a more affordable apartment?
For myself, I find that I spend too much on wants – specifically eating and drinking out and concert tickets. So those are the areas I try to cut back on.
Remember, you don’t have to follow the 50/30/20 rule exactly.
Here’s the rule of thumb I like to stick to: It’s okay to spend less than 50% on needs. It’s okay to spend less than 30% on wants. It’s not okay to spend less than 20% on debt and savings.
Using the 50/30/20 budget rule, you have $1,500 to spend on needs. The biggest expense to come out of that will almost certainly be your rent or mortgage. If you live in an area where housing is more expensive, try to run some numbers and see if there’s a way you can reduce your other bills.
Next, you’ll have $900 to spend on wants. These are expenses that are totally optional. If $900 seems like more than you need to spend on your wants, I encourage you to shift some of this money toward your needs or, even better, toward your debt repayment.
Finally, you’ll have $600 to spend on savings and debt repayment. This money is to be used for two things: money and paying down debt.
I think the 50/30/20 rule is a great budgeting method, but it doesn’t work for everyone.
First, this method might not work if you live in an area with a high cost of living or if you have a low income. In both of those cases, you’ll almost certainly be spending more than 50% of your monthly income on needs.
The 50/30/20 budget also might be problematic for those with a lot of debt. Millennials and Gen Z-ers with student loans, I’m talking to you!
Many people have a minimum payment on their loans that makes up 10-20% of their take-home pay. So to have just 20% of your budget going toward debt repayment and putting money into savings probably isn’t going to cut it.
Finally, the 50/30/20 budget doesn’t work forever. It’s a great reference point for new budgeters and people earlier in their lives, but you’ll have to adjust over time.
As you get older, your financial goals will become more customized. Your income might increase without your needs increasing. You might have loftier financial goals. And finally, this budgeting method is not conducive to those trying to aggressively save for retirement.
I was probably in my early to mid-twenties before I created my first monthly budget. It was definitely eye-opening – I honestly had no idea how much money I was spending every month!
When I first started budgeting, I just used a simple spreadsheet. However, there are so many awesome budget apps out there that can make it so much easier for you to manage your money.
Using a budgeting app has been such an amazing way for me to keep my spending in check and save for some big financial goals – like paying for a wedding, vacations, and, someday, a home.
In this post, I’m sharing six of the best budget apps on the market. Whether you’re looking for a basic free budgeting tool or a more robust budget system, there’s something in here for everyone!
There are affiliate links in this post, meaning I may make a small commission at no additional cost to you. For more information, see my full disclosure policy here.
Best budget app for hands-on budgeters: You Need a Budget (YNAB)
As someone who loves hands-on budgeting, You Need a Budget (YNAB) has quickly become my favorite budgeting app that I’ve tried!
With YNAB, you sync the app with your bank and credit accounts to track your income and spending.
You break up your spending categories. This includes financial goals, which is a feature I love. For example, we have spending goals set up for our wedding and for a trip to Spain we have planned for later this year.
The thing that really sets YNAB apart from other budgeting apps is that rather than creating a set-it-and-forget-it budget, this app works on the premise that you only budget the money you have now.
For example, each time we get a paycheck, we hop into YNAB and divvy up how we’re planning to spend that money. So we wouldn’t budget for all bills with the money, only those that are due before we get paid again. And rather than budgeting for our food spending for the entire month, we’re only budgeting for our food spending for the next two weeks.
It’s definitely a hands-on approach to budgeting. But that’s how I prefer to do my budgeting! Prior to using YNAB, I was using a spreadsheet where I typed in every transaction manually, so this is still less work for me!
You Need a Budget is a paid subscription, but they do offer a generous free trial.
Mint is definitely one of the most – if not the most – well-known budgeting apps out there. It’s is owned by Intuit, which is the same company that owns QuickBooks and TurboTax.
Mint works by connecting to your bank and credit accounts, importing and categorizing transactions, and allowing you to set budgets for each spending category.
The app is super easy to use. You can add your own categories, recategorize expenses, split expenses into multiple categories, and split ATM transactions into the cash purchases made later on.
The budgeting features in Mint are really robust, and they send alerts when you’re approaching or over your budget.
I also love that Mint allows you to set financial goals and budget money monthly for those goals.
Mint also tracks your net worth by connecting to all of your investment and debt accounts and updates your credit score regularly.
And as robust of a budget tool as Mint is, it’s relatively hands-off for those who don’t want to be updating their budget on a daily basis.
Best budget app for spreadsheet lovers: Tiller
If you love spreadsheets, then there’s a good chance you’ll love the budgeting app Tiller. After all, this app literally markets itself as your financial life in a spreadsheet.
Like other budgeting apps, Tiller allows you to connect your financial accounts so your transactions and balances are automatically imported. But unlike other apps, you’ll see your daily stats in spreadsheet form so you can easily see where you stand.
Tiller allows you to easily see your money trends. It’s also incredibly customizable, so you can see what charts and reports you see.
As an added bonus for spreadsheet lovers, you can use your own favorite spreadsheet formulas and functions with the software.
Tiller is a paid budgeting app with an annual price tag of $79 per year (which breaks down to $6.58 per month). There’s also a free 30-day free trial.
Best budget app for investors: Personal Capital
Personal Capital is a personal finance app with a primary focus on investing.
This app does allow you to connect to your bank account and monitor spending, but it does not have the robust budgeting features that Mint and YNAB do.
Personal Capital is really for those looking for a tool for investment management. You get access to project portfolio values, as well as retirement forecasting to make sure you’re on track for retirement.
Personal Capital has many free features. Personal Capital also offers premium features for those looking for true investment management.
Best budget app for couples: Honeydue
If you want to budget with your significant other but don’t share a bank account, then Honeydue is the app for you.
Each of you connects the app to your bank account. You can choose what you want your partner to be able to see (all transactions, account balance, etc.).
Honeydue then has basic budgeting and spending tracking features where you can budget using the spending from all bank accounts.
My favorite feature of Honeydue is that you can divvy up expenses and the app will keep track so you can square up bills. This app makes it so easy for us to split expenses like rent, utilities, groceries, etc. In fact, this feature is the entire reason my partner and I signed up for Honeydue.
More recently, Honeydue has introduced a joint bank account that users can sign up for. While Honeydue isn’t technically a bank, your deposits are insured through an actual bank.
Honeydue is entirely free to use, so you can get started right away.
Best budget app for the envelope budgeting method: Goodbudget
The “envelope system” for budgeting has become super popular. The app Goodbudget allows you to digitize that system, so you aren’t actually carrying around envelopes of cash.
First, you connect Goodbudget to your bank account to track your income and expenses. Then, you split your money into different categories, or “envelopes.”
Goodbudget has both a free and a paid plan, so you can choose which is best for you.
Final Thoughts
I’ve talked many times before about the importance of maintaining a monthly budget. It has honestly helped turn my financial situation around!
These best budget apps for iPhone and Android are some of the best on the market. And there’s an app for every budget style, whether you prefer a set-it-and-forget-it system or a super hands-on system like I do!
I don’t know about you, but I’m pretty much always looking for ways to save a bit of money every month. In fact, finding a few key areas in our budget to cut back and a few ways to get a little extra cash have helped us tremendously in reaching our financial goals.
Unfortunately, sometimes it feels like you’ve cut costs as much as you can, and you’re stuck on ways to save more money. But the good news is there are almost certainly a few strategies you haven’t even thought of yet.
In this post, I’m sharing 25 of the best ways to save money that you might not have already tried. These creative savings tips can go a long way to helping you build up your savings account or create a little extra wiggle room in your budget.
You don’t have to incorporate all of these money-saving tips, but just adding a few of them to your budgeting strategy can go a long way.
There are affiliate links in this post, meaning I may make a small commission at no additional cost to you. For more information, see my full disclosure policy here.
Start a Budget
The most effective way I’ve found to actually start saving money is by creating a budget. I know it seems simple, but a lot of people aren’t doing it!
There was a long time when I didn’t feel like I needed a budget. I didn’t think my spending was a problem, and I had money left at the end of every month.
Then I sat down and started tracking where my money was going, and I was slightly horrified. Seriously, the amount of money I was dropping on take-out and trips to Target was eye-opening.
Once I sat down and created a monthly budget for myself, I was quickly able to cut back my spending and start saving more money.
Ready to start your own budget? Head over to this post on creating a monthly budget and some extra budgeting tips.
If you find that you don’t have money left at the end of the month to put into savings, then it’s time to reevaluate how you’re doing things.
Instead of saving whatever you have left at the end of the month, put money into your savings first, and then only spend what’s left.
The best way I’ve found to do this is by automating my savings. On the first of each month, when I get paid, I have an automatic transfer set up from my checking account to my savings account.
I don’t have to think about it, but I’m still managing to put away money every single month. It’s not money I miss because it gets transferred literally the same day I get my paycheck before I even have a chance to notice it’s gone.
Download Money-Saving Apps
These days there are plenty of apps that can help you save money or get cash back on purchases you’re already making. Here are a few of my favorite money-saving apps (btw, they’re ALL free):
Ibotta: I use Ibotta pretty religiously to get cash back on groceries, and I get at least a little back every week! All you do is upload a picture of your grocery receipt and you’ll earn cash back on certain purchases. One of the reasons I love Ibotta so much is that they offer cash back on things like produce and generic brand products that you can’t normally find coupons for.
Rakuten: Ebates is a service that gives you cash back on just about any online purchase. And they now allow you to get cash back on in-store purchases too!
Dosh: Dosh is an app that connects to your debit and credit cards and gives you cash back on purchases. One thing that sets Dosh apart from other cashback apps I’ve used is that you can get cash back at some local restaurants.
Acorns: Acorns connects to your bank account and will round up the spare change on your purchases and invest them. It’s 100% hands-off, and you aren’t investing a significant amount of money, so it’s a great way to start investing.
Start Meal Planning
Meal planning is essential when it comes to saving money on groceries. Meal planning can help you avoid wasting food, as well as cut down on impulse purchases. Meal planning can also help you avoid those nights when you aren’t sure what to make for dinner, so you resort to eating out.
We used to plan our meals a lot more strictly. Now we’ll usually just plan one or two proteins for the week and buy ingredients we know work well with it. However, when we were on a tighter budget, we would plan every meal down to the ingredient and wouldn’t buy anything that wasn’t a part of our meal plan.
Check in on Subscriptions
Have you ever checked your bank statement and realized you were still paying for a subscription you had completely forgotten about and weren’t using?
*slowly raises hand*
Yeah, I’m guessing I’m not the only one.
These days there are so many random subscriptions out there for as little as $5 per month that it’s pretty easy to forget about them.
It’s not hard to figure out what subscriptions you’re paying for. You can either take a few minutes and scan your bank statements or sign up for a service like Trim to automatically scan your accounts and find recurring subscriptions.
This would also be a good time to check in on subscriptions you are aware of and decide if you really use them. If you’re paying for every TV streaming service, do you really watch them all? Be honest with yourself!
Finally, figure out where else you can save. My husband and I had been paying for separate Spotify accounts for years before we realized we could save money by signing up for a family plan!
Save Money on Books
I love to read, and I can power through a book pretty quickly.
There was a time when I was picking up a new book just about every time I stepped foot in Target. However, that was getting pretty darn expensive.
Turns out, it’s super easy to get your reading fix for a lot less money.
I invested in a Kindle a few years ago, and since then have rented free eBooks instead of buying books. You can do this through your local library or, if you’re an Amazon Prime member, through the Prime Lending Library.
If physical books are more your style, you can also rent actual books through the library.
I still buy books occasionally, but only if it’s a book I know I’m going to read more than once. And since I’ve cut my spending on books so much, I don’t feel bad about occasionally spending money on one I know I’ll get a lot of use out of.
Compare Grocery Prices
Even if you’re planning your meals and your grocery list ahead of time, you can still save even more money by comparing prices at different grocery stores.
Stores like Aldi can save you a ton of money on non-name brand foods. Meanwhile, discount stores like Costco can also help you to save money by purchasing items in bulk.
We typically start our grocery shopping by hitting up Costco for items we need to stock up on. Then we head over to Aldi or the other discount grocery store nearby to get everything else we need. We shop around the items that are on sale. So if the local grocery store has a great price on the meat we like, we’ll buy that. In other cases, we might buy a bunch of sale items to use later on.
To get the best grocery prices, you might have to commit to shopping at more than one store. If you’d prefer to save time and just hit one store, figure out which stores in your area have the best prices on the things you buy the most.
Ditch Your Gym Membership
Working out is great for your health and all, but the cost of a gym membership can really add up!
Luckily, there are great alternatives to paying for a gym. When the weather is nice, your options for exercise outdoors are pretty much endless! Running, walking, hiking, and biking outside are all awesome alternatives to hitting the gym.
But I live in Wisconsin, and it’s definitely not warm enough year-round to exercise outside. When it starts to get colder outside, I find options for working out indoors.
There are about a million free workout plans online. There are also tons of workout videos on YouTube (yoga and Pilates are my favorites). Finally, there are free apps that will create a customized circuit training workout for you.
If a gym membership is a must-have for you, consider a cheaper option like Planet Fitness. It will have everything most people need to get their workout in.
Find Free Events
My husband and I love finding new events and activities to check out in town. Unfortunately, this could also get expensive.
We’re lucky to live in a city where there are always a ton of free activities going on. Just a quick scan through local Facebook events will probably show you quite a few options in your area.
Even if you live in a smaller town that doesn’t have quite as many events going on, you can probably still find some free activities to check out.
Start a Garden
If you’re lucky enough to have a yard, you have a great opportunity to save money on groceries! By growing your own garden, you can save money on produce year-round.
You can save money on seasonal veggies during the summer. And if you’re growing veggies that can be easily frozen, you can save money year-round!
Analyze Your Credit Card Habits
There are plenty of people out there who will tell you to never have a credit card. And while I agree with the sentiment of not spending money you don’t have, I don’t think credit cards are the problem.
If you’re diligent about paying them off every month, credit cards can be a great opportunity for rewards, whether those be in the form of cashback or travel points.
That being said, it’s important to know your spending habits. If you’re someone who carries over a credit card balance and is spending money on interest, then stop using your credit card. Because in that case, it is costing you money.
Avoid Impulse Purchases
You guys, I used to be SO bad about impulse purchases. I literally could not walk into a Target without impulsively buying a book, clothes, or some piece of home decor I really didn’t need.
And what made it worse was that I was a stress shopper, so I would hit one of my favorite stores when I was upset and spend money.
If you’re also an impulse shopper, create a rule for yourself that anytime you want to buy something, you have to wait 30 days. If you still really want it after 30 days and it’s within your budget, then you can buy it.
That will help ensure you’re only buying things you really want and need and not just impulsively purchasing something you may never use.
One of the best ways to avoid impulse shopping is to unsubscribe from any marketing emails you get.
I don’t know about you, but getting a daily email with the best sales at my favorite clothing stores really makes me want to buy clothes.
Sales are great. But a better way to shop sales is to find an item you really want or need and then wait for it to go on sale. You’re getting the same deal without getting that daily reminder of your favorite stores.
Pro Tip: There are plenty of free services that allow you to track the price of items and get a notification when they go on sale. Google Shopping and Capital One Shopping are just two examples.
Take Care of Your Health
This may not seem like something that is going to make a big difference in the short term, but taking care of your health can have a huge financial impact in the long run!
Healthcare is freaking expensive, and staying as healthy as possible will help you cut down on healthcare costs.
Consider the cost of even your run-of-the-mill flu. First of all, if you’re an hourly employee, you’re losing out on that money when you call in sick. And even the cost of over-the-counter cold or flu medicine is steep. And that’s just a minor illness. It’s nothing compared to the long-term healthcare costs of an unhealthy lifestyle. When it comes to major health issues, the price tag can be thousands, tens of thousands, or even hundreds of thousands of dollars.
Pack a Lunch
I realize the idea of packing a lunch to save money is not exactly a revolutionary idea, but I had to list it anyways. It’s such a basic tip that SO many people ignore.
The cost of eating out really adds up. And sure, I would love the ease of just grabbing lunch out every day. But I also have a limited eating-out budget every month.
I would much rather devote that part of my budget to date nights with my husband or grabbing brunch with my best friend versus spending it all on lunch.
When I worked in an office, the easiest way I found to consistently pack a lunch every day was just to make sure I made enough of every dinner so that I could bring some for leftovers the next day.
Now that I work from home, we just always have the ingredients on-hand to make a simple lunch, whether it be sandwiches, salads, or even mini charcuterie boards.
Make Your Own Cleaning Supplies
I don’t know if it’s having a dog and a baby, or perhaps a husband who is a very messy cook, but we go through a lot of cleaning supplies in our home. And personally, I can’t think of a less exciting thing to spend money on.
On top of that, I get really freaked out by the number of chemicals in most cleaning products, especially with a pet and a little one in the home.
The good news is that there are plenty of options that are way cheaper and way less harmful. It’s amazing what can be done with some water, vinegar, and a few drops of essential oils!
I currently make my own all-purpose cleaner and disinfectant, but for someone with the desire, you can make just about any cleaning product at home.
Trade Your Night Out for a Night In
We love going out for dinner or drinks, but the cost definitely adds up.
Lately, we’ve started inviting friends over for homemade dinners and game nights. It’s way cheaper, and everyone has a great time!
You could do potluck style and have each of your friends bring a dish to pass. You could also suggest that everyone bring a game or activity.
It’s a great way to have fun with your friends while sticking to a budget. Plus, it’s more personal than heading to a noisy bar or restaurant where you may not get to talk to each other much anyway.
Avoid ATM Fees
ATM fees have gotten a little ridiculous, and I always kick myself later when I end up in a situation where I need cash and haven’t planned ahead.
If you’re someone who carries a bit of cash on you all the time, then it’s probably easy to avoid ATM fees.
But for people like me who don’t typically carry cash, just make sure you plan ahead and know when you’ll be somewhere that you have to pay cash. That way, you can take cash out ahead of time at an ATM where you won’t have to pay a fee.
Make Your Own Coffee
I love grabbing a latte from the local coffee shop as much as the next person, but those daily coffee runs can really add up!
By making your coffee at home instead of grabbing a latte every day, you could easily save yourself over $1,000 per year.
You can find a way to compromise your daily Starbucks habit without giving up good coffee, too. As a way to get myself to spend less money on coffee, I treated myself to a Nespresso. I get a daily latte for a fraction of the price of a latte from a coffee shop. Yes, there was an upfront cost with the Nespresso. But it’s already paid off several times over.
Sell Your Stuff
There’s a quote I’ve seen a lot lately that says, “Look around. All that clutter used to be money.” I’m not sure who said it first, but it definitely speaks to me every time I see it.
The good news is that even though you already spent the money on all that stuff, it’s not too late to make some of it back.
Just last weekend, I sold a small appliance from my kitchen and a bag full of clothes and made over $100!
The Facebook Marketplace or other sale apps can be a great place to sell items to other individuals. Whenever I list something for sale, I usually get a dozen or more responses. Local clothing resale shops will give you money for your gently used clothing. You can also go with an online service like ThredUp that will send you a bag to ship your clothes back and will give you money for the ones in good condition.
Drink More Water
Most of us are probably spending money on beverages. That might be coffee, soda, juice, alcohol, etc. One of the easiest ways to save money every single day is to trade some of those beverages for water.
And I’m not talking about bottled water. Get yourself a water filter to keep in your fridge, and you’ll always have cold, filtered water ready to drink anytime.
Plus, most of us aren’t drinking nearly as much water as we should be, so this swap will be good for your health as well as your wallet.
Keep an Emergency Fund
For people who are struggling to save money, the idea of building an emergency fund can seem daunting. But it will also save you even more money in the long run.
An emergency fund can help you pay for unexpected expenses that pop up, such as car repairs and medical bills.
With an emergency fund, you’re stuck either putting these expenses on a credit card or just letting them go unpaid – both of which will cost you more in the long run.
An emergency fund will help you in the short term when the emergency happens, but will also help you save money in the long run. Look at it this way – if you have a financial emergency but don’t have an emergency fund, you end up putting that expense on a credit card. Then, not only are you paying for the cost of the financial emergency itself, but you also end up paying interest – possibly for years afterward.
Quit Bad Habits
There are some bad habits that can cost you a heck of a lot of money. If you’ve got one, you probably already know this is killing your budget!
I’m not proud to admit it, but I was a smoker for almost a decade. Not only is smoking obviously incredibly harmful to your health, but it’s also really freaking expensive! I’m definitely saving hundreds of dollars per year by not buying cigarettes.
Other expensive habits could include excessive drinking, wasting food, and carrying excessive debt.
Refinance a Loan
There was a time a couple of years ago when my monthly car payment was taking up more of my monthly budget than I was comfortable with. I looked into refinancing and was able to get a lower monthly payment and a lower interest rate, saving me money in both the short term and the long run.
If you’re dealing debt in the form of car payments, student loans, credit debt, etc., it may be worth looking into refinancing for a better deal.
My favorite way to refinance loans is through Credible, which is a an online loan marketplace. No matter what type of loan you’re trying to refinance, Credible will show you loan offers that you may qualify for at the best rates.
Create Budget Accountability
Creating a budget for yourself is one thing, but sticking to that budget is a different story altogether.
In order to make sure you’re sticking to your budget, create some accountability for yourself. There are plenty of personal finance bloggers who started their blogs initially as a way to stay accountable to their budget and document their debt-payoff journey.
When my husband and I were dating and were working on paying off debt and budgeting, we hung a whiteboard in our living room where we tracked our monthly budget, as well as our debt payoff progress.
It seems like a small step, but the whiteboard hung in a place where we saw it all the time and it helped to create accountability and remind us of our goals.
Final Thoughts
These 25 ideas are just a handful of simple tips to save money. There are definitely a LOT more ideas out there!
But just by incorporating a few of these tips, you can start to really see a difference in your budget every single month.
I know how overwhelming it can be to live on a tight budget. I also know what a breath of fresh air it was to incorporate some of these money-saving ideas and really start to feel more confident with my money!
