Saving Money For Travel

Saving Money For Travel Tips

Many families take a vacation as a reward for working hard and making it through the preceding months. Vacations create unique memories that everyone will share for years to come. Coming up with the money for a trip is not always easy. There are five budgeting tips that any family can use when saving money for travel.

1. Create A Savings Account

Creating a separate savings account for vacation money will help in a number of ways. It allows families to see the actual amount of money saved without having to deduct current expenses. A separate account also makes it harder to access the savings. This reduces the chances that it will be used for an impulse purchase. A dedicated savings account is useful because it is safe and separate from the main accounts used every day. Fees or other charges on a checking account will not affect the vacation savings.

2. Temporarily Eliminate Extras

A vacation is a time to relax and to have fun. One way to save money for a trip is to reduce the extra services in a home temporarily. Sacrificing a little entertainment or fun while saving will make the vacation much more enjoyable. Some extra services that could be cancelled include premium cable channels, housekeeping and expensive cell phone perks that do not affect service. These services can be reactivated after the vacation. The money from the cancelled services can be put directly into the savings account each week or month.

3. Lower Credit Card Payments

One way to help save money is to try to lower credit card payments before the vacation. Lowering interest rates will reduce monthly spending on bills. Credit card companies will sometimes lower rates for good customers who call and negotiate. This is not always possible for people with credit problems. A reputable credit repair service can often fix credit history problems quickly. This can make it possible to negotiate with a credit card company for lower rates.

4. Reduce Vacation Costs

An alternate way to help save money for a vacation is to lower the cost of the trip. This will make each dollar saved more valuable. Reducing the cost of a vacation can take some work. It is helpful to check regularly if there are new deals or discounts available. Finding less expensive hotel rooms or airfare will make it easier to save and will give the family more spending money once the vacation starts.

5. Create And Follow A Budget

The most effective way to save money for a vacation is to create a budget and then follow it as closely as possible. The budget should account for food, gas and other spending. Unnecessary expenses like eating out should be removed from the budget. All members of the family should resist spending money that is not listed in the budget. A good budget will predict exactly how much can be saved each week. It also shows expenses that could be reduced.

Hulu Or Netflix

Hulu Or Netflix: Which One Is More Worth Your Dollars?

Most consumers used to just sign up for cable without thinking about the alternatives, but the era of cable bundles may be coming to an end soon. Many people are finding that they would rather watch television online using their mobile devices as well as their gaming consoles and computers for a flat-rate that is much lower than cable.

So Hulu or Netflix?  Well, netflix currently has about ten times as many subscribers as Hulu, but their service has also been around much longer. Netflix has pledged to spend five billion dollars on acquiring new content throughout the next five years. They will be focusing on acquiring all of the most popular movies and television shows.

Hulu is owned by ABC, NBC and FOX. They currently offer customers the current season of shows from these networks for streaming. In addition to their large selection of television offerings, Hulu is currently experimenting with the addition of movie titles.

Hulu & Netflix – Accessibility and Content

Hulu or Netflix can both be streamed on many different devices, including smartphones, tablets, gaming consoles and Blu-Ray players. They both allow customers to stream content over mobile broadband 4G and 3G networks.

Netflix is currently stocked with about 100,000 streaming options and their movie collection is constantly growing. They offer a variety of television shows, however most of the shows they offer have been cancelled. Their options for current television series usually don’t include the current season.

Hulu offers many current television shows and most current episodes are available the day after they air on television. Most people who watch Glee and other current television shows opt to subscribe to Hulu. The have shows from many networks, including ABC, BBC America, FOX, The CW and USA. The movie selection at Hulu is sparse, but their selection of television shows is excellent.

Hulu and Netflix Users Watching Habits

Hulu and Netflix Users Watching Habits

Graph Credit –www.nielsen.com

Price

Netflix streaming costs just $7.99 per month for unlimited streaming of any of the content on their site on any supported device.

Hulu offers customers many shows for free at Hulu.com, but these shows are interrupted by substantial advertisements. Customers can choose to subscribe to Hulu Plus, which costs $7.99 per month and allows customers the ability to download mobile apps and access Hulu content through gaming consoles. The amount of ads is substantially reduced for Hulu Plus customers, but a few ads still appear during streaming.

The Bottom Line On Hulu or Netflix

Many people who get rid of cable spend $15.98 per month to subscribe to both Netflix and Hulu. This gives you the best of both worlds, with a variety of movies and television shows available for streaming at any time. Netflix is generally the best option for customers who want to keep their cable bundle while giving themselves the option of instant streaming and more movie choices.

Personal Money Management

Why Personal Money Management Is Important

In order to understand why personal money management is so important consider the following questions.

  1. Do you ever worry about money?

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  2. Does it ever seem like your money just disappears and you have no idea where it all went?
  3. Are you now on your own (or soon will be) and you have no idea how money really works?
  4. If you’re married, do you and your spouse ever have tense conversations (or flat-out argue) about money?
  5. Would you like to know how much money you can safely spend before your next paycheck and still be okay financially?
  6. Do you have hopes and dreams that are bigger than your bank account and you wonder if you will ever be able to achieve them?
  7. Do you have a tendency to spend money on things that you can’t afford?
  8. Despite big plans, do you always have trouble coming up extra money to save or invest?  Would you like to know what it will take to make that happen?
  9. Does it seem like you never make any headway paying off your debts (or worse, they continue to grow)?
  10. Have you ever felt overwhelmed by the thought of what it would take to get your finances organized?
  11. Does it seem like you’re never getting ahead despite the passage of time and all of your hard work?
  12. Do you sometimes feel tossed about as external events crash upon you, feeling that they are in control of your financial destiny rather than you?

If the answer to any of these questions is “yes” then I would suggest that personal money management is very important to you.  Then you’ve come to the right website.  Keep reading!  We have a number of different articles to help you become financially independent!

Related Articles and Information on Personal Money Management

If you have not already done so, reading the following articles will enhance your understanding of the concepts presented in this one.

Budget Planner Template

Using A Budget Planner Template

I recently received an email from John about using a budget planner template.  He wrote:

“Hello, I’m feeling a little lost and have some questions in regards to budgeting and saving.  1. Which budget planner template should I use?  2. From the total salary what percentage is ideal to spend for various needs, and how much to be saved for future?  Any insight would be greatly appreciated.”

It’s a question that we all must answer. Even if some of us would prefer to ignore it! Because, with rare exceptions, we all have to deal with having just so much money to cover all our expenses. And, if we spend more than we take in for very long we get into trouble.

Let’s look at a “typical” budget planner template. Then we’ll discuss it.

Category % of Income
Housing 35%
Food 15%
Auto 15%
Insurance 5%
Entertainment 5%
Clothing 5%
Medical 5%
Everything Else 5%
Savings 10%

Understanding The Budget Planner Template

The first thing you’ll notice is that I didn’t include any taxes (either income or Social Security). You can choose to do that if you like (in fact, it’s a real eye opener). But for our purposes it’s easier just to deal with your ‘take home’ pay.  The second thing to notice is that this is a guideline, not a straight jacket. The truth is that very few of us will fit into this exact framework.  So if your spending doesn’t match, don’t despair! Analyze the situation before you panic!  Try our excel budget template!

Customize the Budget Planner Template To Fit Your Wants & Needs

For instance maybe your entertainment spending is closer to 10%. Is that a problem? Maybe not, if you’re young, single and sharing an apartment with three friends. In that case what you save on housing is going for entertainment. So overall you’re not spending more than you’re making.  Or you may be a city-dweller where housing is very expensive (think NYC). But because of public transportation you don’t own a car. So the extra you spend on housing is offset by the reduced spending on transportation.  You get the idea. Tailor your spending plan to your needs. And, adjust it as you go through life and your needs change.  One other thing to notice is that housing, food and auto make up the lion’s share of the expenses. That’s true for almost everyone.  It’s in those three areas that most families get into trouble. Most often by buying a home or vehicle that they cannot afford. But once the commitment is made it’s very hard to undo.

Categorizing Your Expenses

You might wonder where a certain expense goes. For instance, household cleaning supplies. Many people buy them at the grocery store. So are they a housing or food expense? The answer is: it doesn’t much matter. Put them wherever it seems best to you. The key is always putting them in the same place, so you can compare results from month to month.

Another common question is what should I do with charitable contributions. You can either take it off the top (like taxes) or create a separate category for it. If you believe that contributions should come before your expenses you’ll want to take it off the top. If you think that it’s part of your regular spending then include it as another expense category.  For a budget planner template to be effective you must continuously follow your progress.

How Much Should You Save?

Finally, let’s look at John’s question about saving. There probably isn’t any single right answer, because saving isn’t really an expense. It’s an investment for a better future.  So I prefer to think of savings in terms of priorities. Before I can put money aside for savings I need food and a reasonable shelter. Probably also need dependable transportation to get to my job.  But after those basic needs are met, it’s time to begin saving some money. Not necessarily the 10% in our guidelines, but 2, 3 or 4%. Enough so that there’s some money set aside for the so-called unexpected expenses that happen to us all (dead appliances, home and auto repairs, unexpected sickness, temporary lack of work).

One other comment about savings. Paying off debt (especially credit card debt) is a little like savings. Consider payments used to reduce the amount owed as if they were savings or a Bank CD.  Finally, for those of you who don’t want to bother with any of this. I know what you’re thinking: I’m fine and don’t need any help monitoring my money. Just remember that most people who are in trouble today said the same thing when everything looked good to them.

 

Financial Resources For Improving Your Financial Situation

Managing your funds well throughout these times is of utmost relevance. Individuals are having a hard time making ends consult the raising cost of products as well as the rising interest prices on home mortgage as well as vehicle findings- the honest truth that a number of companies, and economic titans at that, are either folding or minimizing workers.  You can improve your financial situation greatly by using the right financial resources.

Much uncertainty waits for the air in today’s financial scene triggering the need for useful finance assistance not simply for huge financiers yet right to typical individual trying to endure the day-to-day grind. It would certainly seem like employing an individual economist to help you make likelihoods and ends of your present situation would certainly be pricey as well as can perhaps lower your readily available financial sources likewise even more down.

Financial Resources Suitable for Road to Your Economic Success:

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First is investments.  There is no warranty that you’ll generate cash from investments you make. Yet if you obtain the basic realities about saving as well as investing and also adhere to using with an intelligent plan, you should certainly manage to obtain economic security as well as safety and security for several years and also indulge in the benefits of handling your money.

No individual is birthed recognizing exactly how you could conserve or to invest. Every effective investor starts with the essentials. A few individuals might stumble into economic protection – a wealthy loved one might die, or a business may eliminate. For great deals of people nonetheless, the only technique to obtain financial protection is to conserve as well as invest over a lengthy amount of time.

Discover if there is any money that could be spent. If so, then consult with financial resources such as an investment broker to check out if precisely what you need to invest is worth the trip. If it is large as well as it is put appropriately, then perhaps there will certainly suffice to use towards your retirement.

When you obtain your entire ducks right, make sure your tax obligation lawyer or accountant realizes your complete monetary development. They can assist you much better plan for the future by recognizing where you go to the present moment. They can additionally supply you some terrific recommendations relating to the very best ways to proceed in your investments.

Time and again, individuals of also moderate means which begin the quest reach financial security and also all that it assures: buying a home, academic chances for their children, as well as a comfy retired life. If they could do it, so might you.

Savings & Budgeting

Second of all is making to get just your basic needs as well as save as much of your incomes as you can. Include your cost savings in your regular monthly budget strategy. It is likewise a good idea to examine your investing methods and also you will be able to check out where you need to make decreasing or you could possibly source for an additional income. If you use bank card, it is very important to manage your investing. They are hassle-free yet at the same time they can land you into a stack of monetary difficulty.

It is vital that you entirely realized just exactly how it works to make sure that you could utilize it appropriately. If you acknowledge that you could not have the discipline as well as you put on not would such as to carry cash around, you can go with a debit card. It functions merely like cash and has a limit relating to simply just how much you can invest.

Moving Out of Parents House

Moving Out of Parents House & Dealing With Money

Guide to Moving Out of Parents House & Dealing With Money

People do not stay at home in the entire life. The life must go on. And to build up the career and to make success in life you people need to focus on moving out of parents house.  For education, job or business, they must have to face the reality of life. But, most of the people often get stuck or fixed in the times of managing the money.

Staying at home, actually keeps people tension free from the tense of money management and dealings.  Especially, when people stay with parents they don’t have to care for anything. The problem arises when they leave home. Leaving home leads people in huge problem as they will have to manage each and every financial aspect in their own way. And often they fail to manage that.

So, what they need to do is to know and learn to manage the money so that they can get out of financial problems. Here you get to know the ideas about the ways to manage the money and budget so that life can run smoothly.

Planning a budget:

This is actually the most important part of money management. People need to make a budget about the expenses in every month. They must know how much they earn and how much they can expense. With this assessment, they need to set up a budget.

One thing must be performed and that is you should not spend more than you earn. You should spend less than your earnings. This habit can save you from all odds in the management of the life after leaving home. In fact, people must maintain this and exceed the budget.

It may happen for some month that you need to spend exceeding the budget. If you will have to do that, make sure you can recover that in the next month. If you can manage to make some savings in every month, you may not have to face problems even if you have to exceed the budget in a month. You can manage to make that possible with using the saving account.

Avoiding taking loans:

After leaving home, most of the people make this mistake. They depend on payday loan no credit check. This habit can lead them to huge problems. The problems are associated with the default as they can not manage to repay the debts. This can harm the future financing as well. So, people should avoid taking loans.

Instead of taking bad credit loan, they can do an added job. Utilizing the vacation or weekends can make you generate some money so that you do not need to go for a loan. Whatever you do, you should not go for applying for a loan.

Avoiding using credit cards a lot:

If you have the habit to purchase everything with credit card, avoid that if you have left home for making career. This habit can lead you face credit card debts which can harm you a lot. So, use the credit card as less as you can. It would save you from many dangers.  Now you’re ready to start the process of moving out of parents house.

Debit Card Budgeting Methods

Budgeting Methods Using Debit Cards

Introduction Of Budgeting Methods Using Debit Cards

Check and debit card budgeting methods are refinements of the Budgeting Cash Envelope System.  When I say “refinements” in this case, I don’t mean that a cash based budgeting system cannot work or be an effective budgeting method for some people, because it absolutely can.  However, cash based budgeting systems do have some notable shortcomings which I discuss in more detail below, and the use of checks and/or a debit card is intended to shore up those weaknesses while still maintaining the integrity of the budget process.  As a means to illustrate how checking and debit card budgeting methods work, assume that your financial situation for the month is as follows.

What this illustration shows is that after you pay all of your bills, you have $1,000 left to cover your day-to-day living expenses for the month.  It’s important to clarify before going any further that there are distinct advantages and disadvantages of making payments with checks, debit cards, and cash, and to learn about that in more detail you can see the article, “Comparing Paying with Cash, Checks and Debit Cards.”  However, for purposes of this budget-related article, I am going to treat the use of checks and debit cards as essentially the same, because both payment methods draw funds directly from your checking account each time you make a purchase.

The Advantages Of A Debit Card Vs. Cash Based Budgeting Methods

Budgeting Methods Card SecurityThere are distinct advantages to managing your budget with checks and/or a debit card as opposed to cash.

  1. Convenience and flexibility – If all you have is cash and you’re out and about then you’re your spending is limited to the money you have in your purse or wallet.  However, if you’ve got a debit card or a checkbook then you have immediate access to all of the money in your budget (which is $1,000 in our example).
  2. Security – If your checkbook or debit card is lost or stolen there are steps you can take to limit your risk of loss, but if cash is lost or stolen then it’s likely gone forever.
  3. Better record keeping – When you make purchases with cash you only have your receipt from the transaction, and in some cases you may have no receipt at all (paying a babysitter, for example).  On the other hand, when you pay with a check or debit card you not only have the receipt from the transaction, but you have other records as well (entries on your bank statement or, in the case of checks, check carbons).

The Disadvantages Of A Debit Card Vs. Cash Based Budgeting Methods

While there are certainly advantages to managing your budget with checks and/or a debit card, there are drawbacks as well.

1. Discipline – While I don’t pretend to know all of the psychological reasons why, people tend to take spending cash more seriously than writing checks or handing over a debit card.  SomehowBudgeting Methods Debit Card Vs Cash spending cash “hurts” more, or makes the cost of a transaction more “real.”  As a result, some people have an easier time respecting and staying within their budget using a cash based budgeting method as opposed to a check/debit card based budgeting methods.

2. Math Errors – If you make a math error in tracking your budget while using a checking or debit card money budgeting method there is a real possibility you could overspend, thinking you have more money in your account than you actually do.  With a cash based system it’s unlikely you’ll go long thinking you have more money than you do.  For example, you might think you have $100 of cash left, but if you open your purse or wallet and you only have $60 then that’s it – you’ve only got $60.  Granted you may not be able to remember where the missing $40 went (which can be frustrating), but after counting the money in your hands there will be no doubt how much you have to work (which can provide a sense of certainty).

“Remember Time Is Money.  Simplifying Your Budget Will Give You A Better Chance Of Sticking With It!”

Debit Card Budgeting Methods Receipts3. Losing Receipts – When using debit cards in particular, it’s not difficult at all to lose track of a receipt, and thus forget to account for it in your budget.  For example, if you get gas with a debit card and fail to take the receipt then it’s very likely you’ll forget to deduct the purchase from your budget.  As with math errors, if you miss recording a transaction such as this then you’ll think you have more money to spend than you actually do, which will put you in danger of blowing your budget.

4. More Complex Record-Keeping – While it’s true that using checks and debit cards technically provides you with better record-keeping, it also makes your record-keeping more complex.  Think about it, if you convert the remaining $1,000 in your account for day-to-day living expenses into cash then you will have very few transactions to account for on your bank statement when you balance your checkbook.  On the other hand, each check and debit card transaction will hit your bank statement, and all of those transactions can be difficult to reconcile unless you’re diligent and organized.

Combining The Debit Card and Cash Based Budgeting Methods

It’s important to note that the check/debit card method of budgeting and the use of cash basis budgeting are not mutually exclusive.  In fact, you can combine the two methods in a myriad of ways, and doing so can provide you with a lot of flexibility and can be tremendously effective.  To illustrate, in our example you have $1,000 to manage your day-to-day expenses for the month.  That being the case, you might elect to take $100 in cash to spend on miscellaneous things over the course of the month, leaving $900 in your account to cover checking and debit card transactions.  Thus, as you go through the month, you have the flexibility to pay for things with a check, debit card, or cash as you see fit.  Again, that’s just an example.

There are almost limitless ways you can combine checking and debit card based budgeting with cash based budgeting to manage your finances.  The important thing is to develop a system that meets your needs, that you’re comfortable with, and that best enables you to live within your means.

Related article “Cash Budgeting Method Explained

Budgeting Cash Envelope System Done Right

The Budgeting Cash Envelope System

How The Budgeting Cash Envelope System Works

The budgeting cash envelope budgeting system is a refinement of the All Cash Budgeting Method.  In other words, instead of paying for everything with cash, the basic philosophy of the budgeting cash envelope system is pay bills using a checking account, but to use cash to pay for everything else.  Here is an illustration of how it works.

What this illustration shows is that you used checks to pay all of your bills, and then you converted the remaining $1,000 of your paycheck in cash.  So what are you going to do with all of that cash?  How do you properly manage it?  That’s where the envelope system comes in.  What it means is splitting up your cash and putting it in separate envelopes, with each envelope representing the amount of money you can spend within a certain time period or on a certain category of expense.

Budgeting Cash Envelope System Split CashAnd how do you decide how to split up your cash?  Of course it should be according to your needs, preferences, goals and personality.  It’s also vitally important that you split up your cash in a way that works best for you, with “working best” being defined as the system you’re most likely to follow to live within your means (which in this example means not spending more than your $1,000 of cash until your next paycheck).  With that flexibility in mind, there are 4 main schools of thought on how to split up your cash when applying the budgeting cash envelope system.

Method #1 – Divide You Cash Into Time Periods “Weekly Method”

Assuming there were 4 weeks in a month, if you wanted to divide your cash into time periods then you would put $250 in 4 separate envelopes labeled “Week 1” through “Week 4”. This budgeting cash envelope system would then use the $250 for week 1 to make all of your day-to-day purchase: groceries, gas, entertainment, etc.  If you elect to use this “Weekly Method” then you need to understand that spending needs for different weeks could be quite different.  For example, one week might be heavy on groceries, and another might be heavy on gas or other expenses.  Either way, if you maintain your discipline then the idea is that the week-to-week highs and the lows should average out.

But what if you happen to have a week that requires heavy spending for one reason or another?  While not ideal, you would either drastically cut your spending or, if necessary, you would borrow cash from the next week’s envelope to make it through.  On the flip side, what if you had a week with exceptionally light spending?  Rather than go out and blow the money, I would suggest putting in an additional envelope marked “Extra.”  That way you’ll have an additional source of cash to draw from if another week’s spending runs high.  Finally, if you end the month with any cash remaining then you’re in the enviable position of having extra money that you can either save or spend.

Method #2 – Divide Your Cash Into Categories of Spending “Category Method”

Budgeting Cash Envelope SystemAnother budgeting cash envelope system is an alternative to the Weekly Method of organizing your cash envelopes, you could use the “Category Method.”  You do this by creating separate envelopes for groceries, gas, fun/entertainment, savings and any other categories that make sense to you.  As you go through the month you draw cash from the appropriate envelope depending on what you’re spending money on.  If run out of money in a particular envelope then ideally you shouldn’t spend any more money on that category.  However, if it’s urgent (you need gas so that you can get to work) then you can take some cash from another envelope where you might have some extra (such as groceries, but now you might have to forego the chips and ice cream you wanted).

The upside of the Category Method is that it’s easier to predict how much money you’ll spend on various categories of expenses than it is to figure out how much you’ll spend in a given week.  For example, it’s much easier to estimate how much cash you’ll need for gas in total than it is to determine how much cash you might need for week 3 as opposed to week 4.  On the other hand, the Category Method can be difficult to apply in practice.

“Using Cash Into Categories Of Spending Takes Time To Get Use To, But It Is A Great Budgeting Cash Envelope System!”

To illustrate, say you’re going to the movies, but you’ve got to get some gas on the way, and you’re going to pick up some milk on the way home.  How are you going to handle that in the context of the Category Method?  Are you going to take your “Gas,” “Groceries,” and “Fun” envelops with you, and then pay for each with separate money?  Or are you going to take what you estimate what you need from each envelope and carry a combined amount of cash.  Do you know what category the cash that might already in your purse or wallet belongs to?  In which envelope(s) will you put any change you might have left over, or will it just stay in your purse or wallet?

In summary, while the Category Method is conceptually sound, it can be difficult to develop and perfect a system that will keep your cash in various categories segregated.  If this budgeting cash envelope system doesn’t sound right for you we have the lump sum method.

Method #3 – The “Lump Sum” Method

Cash Envelope System Lump Sum MethodYou might not want all of cash to be henpecked into specific categories of spending or artificially short time-frames.  In other words, forget all this envelope stuff.  The philosophy behind the Lump Sum Method is that you just want to know flat out how much money you have $800, how long it needs to last 1 month, and then be left alone to manage it as needed.

The appeal of the Lump Sum Method is that it conveys a sense of freedom “Wow, I have $1,000 of cash to spend however I want.”.  On the other hand, the Lump Sum can convey a false sense of freedom that can get you into financial trouble.  For example, let’s say that even if you’re very, very careful with your cash, essentially $700 will be needed over the course of the month for the very basics, such as food and gas.

If you lose sight of that and go out and the beginning of the month and blow $400 on “fun” just because you started out the month with big wad of cash, you’ll end up running out of money before the end of the month…even if you do nothing else fun or that you want to do (because you’ll only have $600 left, or $1,000 less $400, when you really need $700 at a bare minimum to cover real necessities such as groceries and transportation)!

My Observations Of The Budgeting Cash Envelope System Called The “Lump Sum” Method

In summary, my observation is that the Lump Sum Method can work very well with people that are highly disciplined with their money.  By “highly disciplined” I mean “stand at attention for 3 hours in the rain without moving a muscle” type of disciplined.  This budgeting cash envelop system is by far the most discipline of all methods that have been covered. On the other hand, if you have a single impulsive bone in your body when it comes to purchases “Hey, I wasn’t really looking to buy anything, but that seems like a good deal!”, then I would proceed very carefully before adopting the Lump Sum Method.

Method #4 – Combining The Budgeting Cash Envelope System Methods

In using the budgeting cash envelope system there’s no reason why you have to exclusively use any one of the above methods.  Instead, you can combine them any way you see fit according preferences, personality and goals.  For example, in thinking about how to split up your $1,000 you might decide to put $600 in an envelope marked “Groceries & Gas” and then divide the remaining $400 in 4 separate envelopes of $100 for weeks 1-4.  That way you have money set aside that’s dedicated to necessities, and you have an extra $100 each week to take care of everything else.  Again, that’s just an example; there’s no end to the combinations you can come up with in using the budgeting cash envelope system to meet your own customized needs and circumstances.

Cash Budgeting Method

Cash Budgeting Method Explained

How Does The All Cash Budgeting Method Work?

The all cash budgeting method is simple and straightforward.  Here’s essentially how it works.

  1. You get paid.
  2. You convert the entire amount of the check to cash.
  3. Pay all of your bills in cash.
  4. You set aside any cash that you want to save in a semi-safe place (the proverbial jar in the closet).
  5. With your remaining cash you cover your day-to-day living expenses.  If you run out of cash, you quit spending.

Who Is The All Cash Budgeting Method Best Suited For?

As appealing as the all cash budgeting method is in terms of its simplicity, it’s only a practical money management solution for a limited number of regular people.  Why? Cash Budgeting Method Best Suited For You For one thing, it’s a significant (not to mention stressful) issue to keep cash – especially large amounts of cash – safe and secure.  Also, while you might be able to walk down to the property manager’s office to pay your rent in cash, it’s much more of a pain to do so for things such as your utilities and phone bill.  Despite its drawbacks, the all cash budgeting method can be useful for the following categories of people.

  1. Young kids living at home.
  2. Students away from home whose primary expenses are largely covered for them (room, board, insurance, etc.).
  3. Those who are living with relatives or friends due to age or personal hardships.
  4. Those with a lack of understanding and/or a great fear of banks and the financial system in general.
  5. Those who have lost checking account privileges by doing things such as bouncing checks or continuously over-drafting.  It can also be from not settling up with the bank, either due to excess, abuse, mismanagement, or a lack of understanding.

The all cash budget method of budgeting is also used by the following categories of people, who I would not broadly characterize as “regular people!”

  • Illegal immigrants or others who do not want to provide the necessary identification to open a bank account.
  • Criminals who do not want their identity or whereabouts to be traced.
  • Anyone else who wants to remain anonymous for whatever reason.

Is the all cash budget right for you?   Check out our article on The Budgeting Cash Envelope System.

7 Effective Budgeting Strategies

7 Effective Budgeting Strategies

For effective budgeting strategies, it’s important to understand the difference between budgeting principles and budgeting methods.  When talking about budgeting principles I am referring to the underlying reasoning and rationale behind effective budgeting.  The principles aspect has to do with the “why” behind approaches to budgeting.  Effective principles of budgeting do not change over time, just as principles of mathematics do not change over time.  After all, no matter how much the technology around budgeting advances, $3 less $2 will always equal $1.

When talking about budgeting methods I am referred to the “how” in terms of the tools, systems, and resources one employs to apply budgeting principles.  But budgeting methods also has to do with various systems of budgeting one chooses to use to manage their money.  The budgeting methods are as follows: the all-cash budgeting method, the envelope system, as well as check, debit card, and credit card budgeting methods.  What this means is one person may track their budget using a pencil, paper, and their checkbook.  Another may do so using credit cards and the latest integrated cloud-based personal finance software.

You can also take advantage of our budget calculator, which will assist you in creating a monthly budget.  Yet despite the use of vastly different budgeting methods, each of these individuals could be equally proficient in applying principles of effective budgeting strategies.  And what are these budgeting principles I’m referring to?

7 Effective Budgeting Strategies

  1. A budget needs to tie to how much money you actually have in the bank.  It does no good if you’re budget says you have $100 to get through the month, but in reality your checking account is Effective Budgeting Strategies Monthly Budgetoverdrawn $200.
  2. A budget needs to be realistic.  Your estimated income and expenses need to be as close an approximation as possible to your actual income and planned spending.
  3. A budget should cover a specific period of time.  Monthly budgets are best in most cases, but other budget periods (such as annual budgets) can also work if they more logically track your income and expenses.
  4. You should be able to update your budget quickly and easily.  While this may sound like mere convenience, it’s important because if you find your budgeting method to be excessively cumbersome there is a danger you could stop doing it altogether.
  5. A budget is a vital communication tool, so it should be intuitive and easy to understand.  Specifically, you should be able to clearly tell where your money is coming from, and where it’s going.
  6. A budget’s format should be flexible.  This will allow you to easily modify it as your preferences and circumstances change over time.
  7. You have to be committed to and respect your budget.  If you’ve budgeted $40 for entertainment and you spend $400 then you’re wasting your time.

This is okay, because as long as you follow effective principles of budgeting there are many different budgeting methods to choose from. Having effective budgeting strategies will allow you to better manage your finance to meet you financial goals.  As long as you incorporate the principles outlined above, you can employ the budgeting method that best reflects your own personality, preferences, priorities, and circumstances.