So, when we first got married, one of the things we recieved was tuition to a Total Money Makeover class. This was the best thing ever, and I wish we were also financially able to pay it forward. We’re getting there. One month at a time. But we’re still learning the best way to budget. Mostly because we have a fluctuating income, my husband changed jobs just over a year ago, we had another baby, and because there’s always something new to learn about how to save money and where to spend money. I’d been doing our budget on paper since we took the class, but recently, I goofed. Pretty big. And so I knew I needed a better system. I had the EveryDollar app installed on my phone, but I hadn’t really used it much. Now I’ve tried it, and I think this is the system for us.
Here’s how it works (for us):
You enter all your income streams in for the month. If you’re not sure about how much to enter because your income fluctuates, add the bare minimum you usually make. If we make extra money one month, I add an extra income line that says “EXTRA” or describes how we earned the extra income, so that it can be included in our “Every Dollar” budget.
Then you add all your bills in. Insurance, rent/mortgage, electricity, internet, debt. All the things you definitely have to pay for. Then you see how much is left, and allocate those dollars into categories like groceries, restaurants, clothing, savings, and gas/oil for your car. You can even add categories if you need to, but I found it had categories for things I hadn’t even thought of. After that, you just keep moving the numbers around until you’ve allocated every single dollar into a category. This is your Every Dollar budget, but it’s still pretty flexible. I found that I had severely underestimated how many times we had to fill the car up, so we’re trying to drive less, because when you run out of money in that category, you’re supposed to stop. Next month, I’ll have a better idea of how much we spend on gas. But if I really needed to, I could pull money out of one category and put it into gas. Just as long as I don’t “invent money,” doing it this way helps.
Every time we spend money, cash or card, I pull my phone out and a) take a picture of the reciept for Reciept Hog (they pay you a small amount for shopping), and then b) log that purchase into the appropriate category on my app. There’s is an Every Dollar PLUS option, where you can sync up your bank account to the app so it knows where you spent money, but I prefer this way… it makes me make sure I’m staying on target with our budget. When we run out of money in our grocery budget, that’s the end of the grocery budget. We will have to survive on the food we already have (which is probably plenty of food) until the next month.
The app tells you how much you have left to spend, the percentage of income you spend in each category, and how much you have left to spend.
Playing with the app for about ten minutes shows you everything you need to know (it’s pretty user friendly), and it’s free to download for both Apple and Android. There is a paid version, and maybe one day I will bite the bullet and try that, but until then the free version is wonderful, and is helping us track every dollar we bring in or send out.
The only thing I have a problem with is how easy it is to fuss with my budget all month long. On one hand, that can be helpful. If I budget $100 for a bill that ends up only being $80, I should tell that extra $20 to go somewhere else, so we don’t waste it on something silly. On the other hand, that means if I decide to go crazy and buy a ton of extra groceries, I can *technically* pull money out of other budgeted categories to make sure I’m not over in any one category. I’m trying my best not to do this, but it sometimes happens. And I also learned that I had been rounding a few of our bills down (by a dollar) to make the numbers easier to work with. This means that on a few occasions I went “over” in a category by a few cents, but it was just as angry as when I accidentally typed “$72.70” instead of “$7.27.” This just means next month I’ll use less round numbers, which will make our budget more accurate anyway. Because I do *not* want to go over budget.
Other than those few things? I love it.
I should add that I’m not getting paid or sponsored to talk about this app. I just really like it, and think it’s helpful. As a household who follows the Dave Ramsey method about 80% of the way, this app is exactly what I was looking for. Simple, easy to use, shows me exactly where my money is going, and reminds me that we don’t only spend money on groceries and bills (I am forever forgetting that I go get coffee every other week, and we occasionally leave the house in cars that need gasoline to help them go). I will be using this app along with my pen and paper budget (I like to see when bills are due so we don’t pay late fees, and I like to track our emergency fund and how much we’ve paid onto our debt), and I think this combination is a winner.
What’s your favorite budgeting tool? Tell me about it in the comments! I love learning more about budgeting and financing, and I’m always excited to find new tools that make it a more integrated part of my life.