The Definitive Guide to Budgeting Your Money in 2021

How to get it together with your hard-earned cash this year.

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Money: We all want to know we're doing the right things with it. But no matter where you're at with this whole notion of budgeting (and adulthood, for that matter), it's possible to start getting your money situation under control now. Yes, even when the majority of your money is going towards student loans, pizza, and Netflix—no thanks to your ex who just changed his password.

The faster you can get your financial house in order and start thinking strategically, the more you can start planning for what's to come in your life. Make the time to perfect your budget with these helpful tips, so you can know exactly where your money's going and how to make the best use of it.

How do I budget?

There are two main ways: Zero-based budgeting (or reverse budgeting) and the 50/30/20 guide. But before you decide which technique to use, the first step is to understand how much money comes in, and how much must come out, according to Money Under 30 advisor Michael Pruser. "Be honest about your first budget and track as closely as you can (to the dollar) the amount of your everyday expenses. If you don't know what your expenses are, track your spending for a month to get a good picture," he explains.

For zero-based budgeting, you're accounting for every single cent you come in contact with by allocating amounts to categories. So if you have $2,000 in take-home pay monthly, you're allocating a portion of that to rent/mortgage, fixed expenses (cable, phone, heat, etc.), and savings. You're also giving yourself a discretionary budget allotment (fun money). You work to get your "sum" to zero, until the $2,000 has been fully allocated. This is generally the go-to budget tactic for most people who live in urban areas, make a small amount of money, or are just trying to save as much as they can.

With the 50/30/20 technique, 50 percent of your income goes to fixed items: rent/mortgage, utilities, car payments, even streaming services—anything you're paying for consistently. The 30 is for financial goals, including emergency funds, debt, 401K or Roth IRA, and future purchases like a down payment. The 20 is for everything else: groceries, restaurants, shopping, hobbies, and so on. You pay yourself and the necessities first, then figure out how much you have for everything else. For some, this budgeting feels outdated, but it's nice to know how much you should, theoretically, be spending and saving. Don't dismiss it.

There are spinoffs of these budgeting tactics as well as ways to implement them (like the envelope system/cash only system) but it really comes down to allocating for things you have to pay for, then figuring out how much you have left.

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What kind of accounts should I have?

This can vary, and no one configuration is right for everyone. But you don't need to make things complicated until you have extra money. According to Pruser: "After you've completed your budget, open a savings account and begin putting all extra money away immediately. Save until you have six months of expenses, which can protect you should you lose a job, have a medical emergency, etc. After that, congrats! You'll have disposable income."

You need a checking account for everyday expenses, and a basic savings account for emergency funds—a high-yield account (i.e. one with a high interest rate) you can't touch. You can automate the savings until you reach the goal. Another useful tool is a second savings account. Put, say, $1,000 or so in it that will account for "extra" expenses that could screw over your budget: car repairs, random medical bills, and wedding gifts, for example. It should be accessible—connected to your checking account, usually. If you take out money, you have to restore it.

Here's where it gets complex. You also need at least one retirement account. If your company doesn't match 401k contributions, you might want to look into a Roth IRA. For any other savings, another high-yield savings account can host extra, non-emergency funds for big, long-term goals. Think of it as a nest egg, and keep depositing. An HSA and FSA can be good if your medical bills are high. Don't be afraid of investment accounts, even though you may not have thousands of dollars to spare. A trained financial advisor can be an asset, but there are other, cheaper resources.

"​One of the best ways to get started is to use a robo-advisor like Stash, Betterment, or Wealthfront," says Pruser. "For a minuscule fee (typically 0.25 percent of your investment per year) you'll have professionals invest your money in specific funds they've created. They allow you to set your risk preference and have long histories of strong returns. The greatest asset for young investors is that you can follow along and learn all about investing while your money is in good hands. Then, if/when you're comfortable, invest on your own."

Ellevest specializes in investing for women, and gender does in fact matter (women make less than men, they take more time off, and live longer). To learn more about their investment services, click here.

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What's the best budgeting app?

By this point in the age of smartphones, there are a ton of money apps—Acorns for investments, Venmo for money transfer, Ibotta to pay you for shopping (although be careful with this one, because it can incentivize greater spending). But the be-all-end-all is one you've likely heard of—Mint.

Says Pruser, "​Mint is still the best for most consumers. It links to just about every financial institution you can imagine. Plus, it's free. If you're in need of something with a little more functionality and are willing to pay a couple of bucks a month, go with PocketGuard: More features, better savings recommendations."

How can I spend less, more regularly?

I won't lie, some of these suggestions might come off as unpleasant. But hey—you want to save money, right? And these are some big-ticket items that people, on average, tend to overspend on.

  1. Spend less on food. That's groceries, delivery, and snacks (sorry). "It can be time saving to eat out or grab caffeine at Starbucks, but by cutting out just one meal a week, you can save $100+ a month," says Pruser. Plan grocery trips, and go after you eat.
  2. Maximize the value of credit cards. Don't carry a balance or pay a fee, but sign up for one with a rewards program like the Chase Freedom or Citi Double Cash Card, says Pruser. Just be aware that sometimes these programs incentivize you to spend more—make sure you're getting something tangible back, like travel points.
  3. Plan travel carefully, and look for deals. Yes, it can be done, and yes, budgeting how much you'll spend on food, lodging, etc., ahead of time will save you from falling into the "let's just spend and worry about it later!" trap.
  4. Prioritize your student loans. They suck, and they suck up your income. The same goes for education you may need to complete—find ways to keep the cost low.
  5. Shop secondhand. I know, I know, this one isn't terribly sexy, but it's more sustainable—plus, secondhand stores and consignment shops sometimes do offer new clothes at very discounted prices. Scour your local shops for deals.
  6. Dry clean at home. Scandalous, right? But at-home dry cleaning solutions like Dryel can work in between big trips to the cleaners. Also, unless the tag explicitly says dry clean only, you don't need to dry clean (and even then it's up for debate). Wash your bras and lingerie the right way and jeans zippered and buttoned up and turned inside out. Try fabric conditioner (like Downy) to keep delicate, thin knits from piling or fading. The better you take care of your clothes, the less you have to buy.
  7. Try a no-spend month. It's not always easy, but it can be done—and you can use that extra cash to pay off some bills, student loans, or increase that emergency fund.
  8. Learn from your mistakes. Just because you made errors in the past doesn't mean you can't learn. Don't take an "oh well, might as well make a few more purchases while I'm at it" attitude.

    How can I make more?

    There are (figuratively speaking) a million ways to make extra money. Smart career and work choices can get you to financial wellness faster. Here are just a few ideas:

    1. Turn your hobby into a side hustle. Love walking dogs and have extra time? Start a part-time dog-walking service! Love writing? Start looking around for freelance gigs. From fashion stylist to career coach, the sky's the limit, even if it amounts to just $100 a month.
    2. Stack your skills."Take something you're good at and learn to apply it to a new vertical or in a new way that can make it even more valuable," offers Pruser. This can include learning programs like Excel and PowerPoint, or developing soft skills like video editing and coding. "Skill stacking can set you apart from your peers who do the same work or are good at the same things you are."
    3. Work with your partner. There are tons of ways to handle money as a couple to maximize wealth—we've written a whole series about it.
    4. Get creative. Did you know that if you work as a landlord you may not need to pay rent? This couple also rented their spare bedroom out to Airbnb and made thousands over a couple months. The more you know!
    5. Sell your clothes or possessions. Let Go will let you sell all kinds of home goods, and ThredUP lets you sell clothes (in good condition, and from certain brands). Poshmark and Tradesy are similar but for higher end items.
    6. Advocate for more pay. Honestly, if you haven't had a recent raise and haven't asked, learn what your position should be making (via sites like, brush up on tips for talking to your boss, and then schedule the meeting. You'll be happy you did.

      You've totally got this—now get out there, budget well, save a bunch, and spend occasionally.

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