How Does the EveryDollar Budgeting App Work?
Most of us understand the importance of creating a budget and sticking to it. A budget is a conscious roadmap of how our money is being spent as well as how we are saving money. Without it, it's akin to walking around with a hole in our pockets. Dave Ramsey created an app to help people create a budget, track their spending and saving, as well as other proactive measures regarding money. This app can be beneficial to those interested in creating a budget if they can understand how to use it properly.
The Man Behind the App
Dave Ramsey is a personal finance media personality. His company was formerly known as the Lampo Group and is now called Ramsey Solutions. Dave Ramsey has written several books that explore his ideology on money principals to help consumers get out of debt as well as manage their debt. EveryDollar is a freemium app that allows consumers to manually input and track all their spending every month. This app utilizes the zero-based budgeting which assigns every dollar to a particular category of spending. You start by inputting your entire monthly salary then you plan your spending for the entire month. You set up different categories and set a budget for each category. Once all of your categories have been set up, you manually enter your actual spending.
You can purchase EveryDollar Plus if you want your spending to be entered automatically. However, an in-depth explanation of how to use the app will be detailed below.
Signing Up/Registering
Upon registering, you are prompted to enter a money goal. You can choose between:
Paying off a debt
Saving for retirement
Stop living paycheck to paycheck
Pay for your children's college
Saving for a home
Traveling
More About You
Next, you will be prompted to provide more information about yourself. The app will ask if you own or rent a home. It will also ask if you have children. Other questions include whether or not you have a pet and own a car. You will be able to select your answers to all of these questions. Next, you will be prompted for information regarding your income, expenses, charitable donations, and debt. You will be able to enter your paychecks throughout the month or you can enter your paychecks as a monthly total.
Categories for Monthly Expenses
Next, you will need to enter the allocated budget for your monthly expenses. You can edit these amounts later if you need it. However, create preset budgets for each category. List monthly expenses like your utilities, electric bill, gas. and water. Keep in mind that you can add as many categories as you need to. Don't forget to add any expenses associated with your car, like your gas expenses and car repair. Don't forget to include your grocery budget as well as the money allocated to spend eating out.
Personal Expenses
Next, you will need to include your budget for personal expenses. This includes things like fun money or money to spend on your wants, It should also include entertainment subscriptions, clothing, hair, and makeup, so forth and so on. All of these categories are a major part of budget management and help you to keep an active eye on where your money is being spent. This app is one of many budget tools that can be used to clean up your finances and get back on track. If you are someone that donates to charity or your church, be sure to create a budget for that as well. The idea is to track where every single dollar of your money is going. This helps you to spot areas of ver spending and underspending and make any needed changes.
Debt Payments
The next section you need to create is a section that will help you to create a budget for your debt. Input the amounts you plan on paying on each of your debts. Keep in mind that you can make changes if you need to. Make sure that the amounts you enter are changed if you pay a different amount than what was budgeted. Do not include your mortgage payment. The reason for this will be discussed later. The EveryDollar Budgeting App will allow you to detail how you plan on using every dollar you make. Once you get to this part of the setup you will either have a negative balance or a surplus. If you have a negative balance, rework the numbers. If you have a surplus, put it into savings.
Savings/Emergency Fund
The debt category is the last category of the EveryDollar Budgeting App. Once you've set up the debt category and allocated a certain dollar amount to each of your debts, the savings category will pop up. This category will automatically have a target goal of $385. However, you can set a higher goal. However, once you hit the $385 threshold you will get a message that reads “It’s an EveryDollar Budget!”
Inputting Actual Amounts
We have discussed the setup portion of the EveryDollar Budgeting App. The next section will detail the actual use of the EveryDollar Budgeting App. This section will require you to input the actual amounts of money that you are spending and saving across all the different categories you set up. This will help you to determine what changes need to be made and how much you are sticking to your budget. The EveryDollar Budgeting App will ask you to input either an expense or income.
EveryDollar Budget Seven Money Steps
The EveryDollar Budgeting app also includes seven baby steps. These baby steps are designed to help guide your budgeting efforts. Dave Ramsey provides actionable steps that the app user can utilize to master their budget. Ramsey explains each actional step in detail.
- The 1K Emergency Fund
The first baby step is to build an emergency fund. The target goal is $1K. The app suggests a starting amount of $385. The emergency fund is designed to cover life's unexpected incidents. This ideology embraces the idea that unexpected things will happen, it's just a matter of when. Ramsey encourages the EveryDollar Budgeting app users to save up $1K as quickly as possible.
- Pay Off All Debt...Minus Your Mortgage
The EveryDollar Budgeting app encourages users to use the Snowball method. This method suggests that the smallest debts be paid off first. You start by making a list of all your debts from the smallest to the largest. Include every debt from credit cards to your car note. However, do not include your mortgage if you have one. Focus on one debt at a time as you go down the list and pay each one as soon as you can. The idea is to focus on playing one debt at a time and to start with your smallest debt.
- Once Your Debts Gone...Save Like a Mad Person!
Once you've paid off your debt, take all the money you've put toward those debts and make plans to build an emergency fund that will cover three to six months of your expenses. This fund is designed to cover those big unexpected events like the loss of a job, major surgery, the loss of a car. This fund is designed to cover all of your expenses for three to six months should you lose all of your income for unforeseen reasons. Paying off all of your debts allows you to aggressively work on your true emergency fund.
- Retirement
Another major piece of the EveryDollar Budgeting app baby steps is the focus on retirement. Once you've built a solid emergency fund, turn your sights toward investing fifteen percent of your gross income towards your retirement. This can be conveniently done through your jobs 401(k). Invest aggressively enough for your company to match your contributions. This is a good place to start. Ramsey suggests that you invest in a ROTH IRA nest. If you are married you should create an additional ROTH IRA account for your spouse.
- A College Fund for the Children
At this point in your budgeting journey, you're more than halfway through your baby steps. You've paid off your debts, less your home and started saving for your retirement. The next step is to start funding your children's college education. Education Savings Accounts or ESA's or a good move for funding your kid's college education. AT this point you have two irons in the fire, your retirement savings and your child's college fund. The last few steps will target your biggest investment, your home.
- Your Home
By the time you get to the last few baby steps, you would have cleared your budgeting path nicely. YOu've set up an emergency fund, started building your retirement fund, and started saving for your children's college education. These are three powerful moves. However, if you look back, you will realize that you have taken several powerful steps. When you reach this phase of your baby steps you should start putting any extra money you have towards your mortgage. The goal should be to pay your mortgage off early. Imagine the financial freedom that you could create if you didn't have a mortgage to pay. YOu should also consider the value that having a paid-for house as an asset would have. This is a win-win form every angle.
- Continue to Build Wealth and Pay it Forward
The last baby step is perhaps the easiest. At this point, you need not do any more than continue to invest in your future (retirement), your children's education, and your legacy. What do you want to leave behind? Aside from these basic things, think about anything else you'd like to give to. This is when you can start thinking about what you want to leave for your kids and your children's kids. This is all about you and what you want to give to when you get to this stage of the budgeting game. The EveryDollar Budgeting app is a basic straightforward approach to budgeting and maximizing your financial health. However, all the steps are actionable and allow you to see clear results in incremental steps. This fact is a real motivation for app users because you can easily track your progress.
Get Your Finances In Order. Visit the Budgetry Store.
Be Your Own Financial SOS
You don't have to have a master's degree in finance to master your own money. It just takes a little guidance and the willingness to stick to a common sense proven plan. However, it's doable. The EveryDollar Budgeting app gives you the road map you need to map and track your progress with common sense actionable steps. The app is free and gives you access to everything, minus the automated feature. If you want your spending to be automatically input, simply invest in the EveryDollar Budgeting app plus which allows you to link your bank accounts. This is a convenience factor that you can pay $129.99 a year for. However, the freemium app gives you access to everything, you just have to input your pay and your expenses manually. Best yet, the EveryDollar Budgeting app is truly educational. The strides you make serve as encouragement for you to keep moving through the steps, and the education and progress will naturally empower you.
Mental Strength and Focus
Ramsey understands how difficult it is to stick to a budget, especially when you're not used to it. This is one of the many reasons why he has several tips to help you stick to a budget. His tips for making the EveryDollar Budgeting app a success include:
Writing down/planning your spending before it happens
Avoiding places that tempt you to spend
Using the envelope system to avoid overspending
This system:
Allows you to label each envelope and place your budgeted funds in the allocated envelope
Once you've spent all the funds in the allocated envelope dont spend anymore
The EveryDollar Budgeting app breaks your budgeting plan into small bite-sized sections allowing you to build confidence over time and with continued steady progress
Conclusion
These tips fully support the EveryDollar Budgeting app and give you the why behind the steps. Your financial health is a vital part of your future. We all understand that it takes money to live and flourish. This is why it behooves everyone to take the reigns when it comes to their finances. This begins with putting a budget in place. The EveryDollar Budgeting app makes budgeting a doable task with its common sense easy to follow steps.