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1. Write down your income.
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A budget is just a customized plan for your money where you decide—beforeeach month begins—how much you’re going to give, save and spend. So the first step to making a budget is figuring out how much money you have to start with. Add up the money you’ll have coming in during the upcoming month from all sources—including what you’ll make from your day job,side hustles, any scholarships that are paid to you directly, and any cash you’ll get from your parents. (Make sure you thank your folks if they give your bank account a lift.) If your income changes month to month and you don’t know exact numbers yet, that’s no problem—just make your best guess. Once you’ve got all the numbers, write them down on your budget. Here’s what that could look like:
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2. List your expenses.
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Next, you’ll want to write down everything you spend money on. And I mean everything! To get you started, here are some common monthly expenses that apply to most college students: Now, that list is a great starting point, but you may have some other expenses that aren’t on it. So, look back at your recent bank statements or receipts and think about everything you spend money on. You don’t want anything to sneak up on you down the road—even your weekly stop at the donut shop. Once you’ve organized your budget categories, plan how much you’ll spend for each one. Personally, I put giving and saving at the top of my list to keep my priorities in check. Then I move on to the other categories. Some expenses that cost the same each month, like Netflix and rent, are easy to plan for. Others, like food and transportation, are more unpredictable. To make those easier, look at what you spentlastmonth in each category and use that as a guide.
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3. Subtract your expenses from your income.
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Once you’ve assigned a dollar amount to every category, it’s time to whip out your calculator. If you’re anything like me, you’re ready to dip once math is mentioned. But hang on—I promise this isn’t complicated at all. All you need to do is add up the expenses you just listed, including what you plan to give, save and spend. Then, subtract that total from your income. You want that number to be a big fatzero. Why? Because azero-based budget, where your income minus your expenses equals zero, is theonlytype of budget that works in the long haul. It means giving every single dollar a job. So, if your total expenses arelessthan your income, give that leftover money something to do—maybe you add it to savings or give it to a cause you care about. And if your total expenses aremorethan your income, you have two great options:increasing your income(trust me, there are plenty of ways to make extra money in college) or cutting back on your expenses (we’ll go over some tips on how to do that a little bit later). Here’s what your budget might look like with the example income we used in the first step.
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4. Track your spending.
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Once you get to this point, you’ve officially made your first college student budget. Let’s go! Give yourself a minute to celebrate this win. But you’re not quite done with the entire process. Turns out, you can’t justmakea budget and expect something to happen—you have tostick to it. The biggest key to sticking to your budget istracking your spendingthroughout the month. If you wait until the end of the month to see if you’re on track, you’re too late!
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How to Cut Back on College Expenses
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If you need to free up some room in your budget, cutting back on spending is an easy way to make that happen. Here are some of my favorite tips forsaving money in collegeand how you can lower your monthly expenses.
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How to Save Money on Tuition
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There’s a tried and true way to cut back on tuition costs that every student should take advantage of:scholarships.But I’m already in college. Isn’t it too late for me to get scholarships?No! Plenty of scholarships are available, especially for students already enrolled in college. So start looking for ones you’d qualify for and apply to as many as you can.
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How to Save Money on Food
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A lot of colleges require meal plans if you live on campus. If that’s you, try getting as much bang for your buck as possible. Eating in the cafeteria isn’t as fun as running to Taco Bell or Chick-fil-A, but try to avoid eating at restaurants as much as possible. I know some cafeteria food has the nutritional value of Play-Doh, but youcanfind good options. And you’re already paying for it, so you might as well get your money’s worth. If you don’t have a meal plan, trybuying groceriesand eating at home more often than eating out. That’ll save you atonof money in the long run.
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How to Save Money on Textbooks
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Shopping at your school’s bookstore may be the easiest and most convenient way to buy books, but it’snotthe cheapest. You can get used books for a lot less on sites like Chegg, eBay or Amazon. (Just make sure you purchase the right version.) You can also save some money by renting books instead of buying them.
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How to Save Money on Entertainment
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Your college probably offers a lot of free entertainment—like clubs, intramural sports, concerts and more. Ask older students for some ways to have fun on campus without reaching into your wallet. (Just make sure your “entertainment” doesn’t involve something that would get the police called . . .) You can also cut back on your entertainment budget by cutting down on the music and TVstreaming servicesyou pay for. Do you reallyneed Netflix, Hulu, HBO MaxandDisney+? Nope, and you can also choose from tons offree streaming services.
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How to Save Money on Housing
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Deciding on the best plan for college housing can be tricky. Sometimes, on-campus housing is the most affordable option. Other times,finding a roommateand renting an apartment off campus is your best bet. Do your research and figure out which choice is the most affordable—and make sure your “bargain” apartment isn’t full of bedbugs and broken dreams. No thank you. By the way, if you do live on campus, becoming a resident assistant (aka an RA) is a great way to save money on housing. RAs monitor the dorms and help with student activities, and in exchange, they typically get discounted housinganda cash stipend on top of that.
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Get It Done!
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Here’s the cold, hard truth: If you don’t have a budget, you’re not in control of your money. A budget is a game plan, and youlosethe game when you don’t have one. I don’t want that for you—I want you to win. And don’t wait to get started!Oh, I’ll make a budget right after I finish that sociology paper and eat my grilled cheese.Child, please. You and I both know that’s not going to happen. Do it now!
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We Hear You!
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We’re considering adding the ability to save articles to your Ramsey account.
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1. Identify your spending tendencies.
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If you want to learn how to not spend money, you need to start with yourmoney mindset. It’s important to know your spending tendencies (or as I call them,spendencies). Are you naturally wired to be a spender or a saver? Are you a nerd or a free spirit? Do you value safety or status? All these factors and more can directly influence yourspending habits. And the more aware you are of your spending temptations, the more likely you are to guard yourself against them.
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2. Create a budget.
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Abudgetis thekeyto fighting overspending. Because if you have a spending plan for the month ahead, you’re more likely to stay on track. Start by listing your monthly income, followed by all yourmonthly expenses. Be sure to include the basics (starting with food, utilities, housing and transportation)beforeyou budget for things like entertainment or clothing. Then subtract your expenses from your income. The goal is for this number to equal zero—this is called azero-based budget. You want to make sure every single dollar you make goes toward giving, saving, spending or paying off debt.A zero-based budget is how you get your spending under control. If you’ve never budgeted before, you might be surprised by how much money you’re spending each week (or even each month) on little things—like coffee, lunches or that snack shop at work that your spouse doesn’t know about. And give yourself some grace. It usually takes a few months to make your budget work for you. Then you can keep fine-tuning your budget to cut costs and trim down your spending even more.
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3. Set money goals.
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Having a specificmoney goalyou’re working toward is a great way to motivate yourself to stop spending money. Because every dollar you spend is one less dollar you can put toward the bigger thing you want. Your goal could be to pay off debt, save for a car, or go on a debt-free vacation. Whatever it is, make itspecific. Even better if you have a visual reminder you can put on your fridge or in your wallet. That way, every time you’re tempted to buy something, you have to decide if it’s worth delaying your goal for.
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4. Track your spending.
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It doesn’t matter how large (or small) your income is—if you’re not tracking your spending, you’ll never be in control of your money. In fact, you’ll always feel like your money is controllingyou. And while making a budget is important, you also have tostickto your budget bytracking your expensesthroughout the month. Every single expense. This will help you know how much you have left to spend. Plus, it makes you more aware of where your money is actually going.
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5. Do a no-spend challenge.
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Want to know the best way to stop spending money? Doing ano-spend challenge! This is where you commit to only buying the bare necessities for a certain period of time. And hey, this is actually more fun than it may sound. Challenging yourself to spend as little as possible for an entire month forces you to be super intentional with your spending. Plus, it helps you see what you can actually live without.
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6. Avoid restaurants (and food delivery apps).
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One of the biggest areas we overspend on is food. We all know thateating outgets expensive—fast. If you’re spending $15 on lunch five times a week, that’s $75 a week (and $300 a month). And don’t even get me started on food delivery app fees! Deciding to cut out (or at least cutback) on eating out is a huge way to keep yourself from spending too much money. I’m not saying you shouldn’t ever treat yourself to Sunday brunch or a nice dinner on a special occasion—just scale it back some and make sure it’s in the budget.
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7. Plan your meals.
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Speaking of not eating out,planning your mealsin advance can help you lower your overall food costs. And it doesn’t have to be complicated! Choose a couple of recipes for the week, head to the store with your list, and set aside some time to prep or cook your meals. Then the next time you’re tempted to hit up the drive-thru after a long day, you can say, “We’ve got food at home!”
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8. Use the envelope system.
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One way to keep yourself from overspending is to use thecash envelope system. Here’s how it works: You choose specific budget lines (like groceries, gas, personal), label individual envelopes with those lines, and then put cash (yes,physicalcash) into each envelope. The envelope system is helpful for a couple reasons: 1) You tend to spend lesswhen you use cashthan when you use a card, and 2) you can only spend what you’ve budgeted in your envelope. When the money is gone, it’s gone! It’s a great way to keep you disciplined with your spending.
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9. Swear off debt.
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If you really want to stop spending money you don’t have, you need to swear offborrowingmoney (aka debt). The truth is, debt steals your income. One purchase you make today can keep you trapped in payments (and interest) for months or years to come. Your debtownsyou until you pay it off. Here’s the deal: If you don’t have the cash to pay for something right now, you can’t really afford it. So, if you’re serious about getting your spending under control, go ahead andcancel your credit cards. Take debt completely off the table. Because without credit, overspending isn’t even an option!
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10. Find alternatives to retail therapy.
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We may sometimes joke about being a shopaholic, but compulsive spending, otherwise known asretail therapy, is a real thing. We buy something because we want itnow. We add it to our cart before we think about what’s in the checking account (or before considering our financial goals, for that matter). But instant gratification isn’t all it’s cracked up to be. Spending money doesn’t actually make you feel better . . . especially when you see your bank account shrinking right before your eyes. So, instead of trying to spend your feelings away, work out what youremotions are really telling you. Or find other things you can do besides spend money: Move your body, talk to a friend, or do a task you’ve been putting off.
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11. Resist sales.
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Who doesn’t love a good deal? I know I do! Retailers know how tolure their customerswith a flashy (and perfectly placed) sales rack. But how much is all this saving reallycostingyou? If you buy a sweater you were never going to buy just because it’s 25% off, you’re actually paying 100%morethan you would have. So, if you see an item on sale that you weren’t already planning to get, it wasn’t meant to be (preaching to myself here too). And if you can’t stop thinking about something, add it to your budget for next month (most likely, there’ll beanothersale).
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12. Limit social media comparison.
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Picture this: It’s Saturday morning, and before you realize it, you’re scrolling through your social media feed to catch up on what your friends are up to. Not even two swipes in, you’re bombarded with a post of an influencer making their morning latte—complete with a high-end coffee machine, aesthetic mug and expensive milk frother. Suddenly you’re thinking,Wait, maybemymornings would be better if I had that espresso machine. Social media makesthe comparison gameeven more intense. Your friend’s post about their brand-new couch with those perfect throw pillows. That popular blogger’s reel about the incredible, all-inclusive resort she went to. It can make us feel like our lives aren’t good enough and we need to spend more money to reach their level. But all that does is drain our bank accounts and steal our joy. A good question to ask yourself:Would I still want this if no one else ever sees it?You can also cut the comparison by unfollowing those accounts (you know the ones) or limiting your social media use altogether. Trust me, you’ll feel a whole lot lighter!
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13. Shop with a list.
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We’ve all been there. You make a quick run to Target to get toothpaste and peanut butter. But as soon as you walk through the door, you feel the gravitational pull toward the dollar spot and the clothes section. Just like that, a quick trip to the store for two essentials just gotprettyexpensive. Consider this: Instead of heading into a store and wandering up and down the aisles, make a list ahead of time and carry it with you into the store to keep you on track. And if you get caught in theimpulse buyscenario a lot, try to avoid the stores that make you spend too much money. (Or maybe send your spouse in for you.)
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14. Pause before you spend.
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If you’re still having trouble sticking to your budget, ask yourself this question before every purchase:When will I use this? Take the time to literally imagine how you’ll be using thatmust-haveitem a month from now. Will that sweater hold up after a few washes? Will your kids still be playing with that overpriced toy set? Will those shoes go with more than one outfit? Most of the time, the answer is no. Put it back and save yourself thebuyer’s remorse. Otherwise, make it a rule to wait at least 24 hours. By that point, if you still love it and you can fit it into your budget, go ahead and get it.
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15. Use what you already have.
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It’s crazy how much money we waste buying things we really don’t need—especially when we already have things at home that get the job done. We eye the beautiful, mint green Kitchen Aid mixer when our own mixer works perfectly well. We think we need a new skin care set when we have a whole basket of unused products under the sink. Before you add an item to your shopping list, take inventory and see what you already own. Also, what can you repurpose, fix or even borrow from a friend? Instead of buying décor, shop your house and rearrange a room for a fresh look. Rather than spend money on a toy for your kid, pull out board games or unused coloring books. Making use of what you already have will save you money and help you practicecontentment.
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16. Find someone to hold you accountable.
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It’s one thing to say you’ll stop spending money, but many of us need someone to help us stay on track. Whether it’s a spouse, a friend or even a group chat, tell someone your goal and ask them to check in with you every week or every month. Maybe your accountability is afinancial coach—an expert who can help you navigate your situation and help you get to the root of your overspending. Knowing that you’ll have to report your progress to someone else motivates you to make more of an effort. And remember, no matter how the next month goes, it’s never too late to change your spending habits. You can always adjustyour budgetand get back on track at any point. You’ve got this!
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We Hear You!
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We’re considering adding the ability to save articles to your Ramsey account.
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What Is a 401(k) Student Loan Match?
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A 401(k) student loan matchallows companies to offer 401(k) matches based on their employees’ student loan payments.This programalso works with403(b),457(b), andSIMPLE IRAplans.1 Until earlier this year, employers offering a401(k) matchcould only make contributions to your retirement accounts ifyouwere also contributing. Now, companies can offer matches based on the amount you pay toward a student loan, rather than what you contribute to your 401(k). Technically, this whole shebang started when former President Joe Biden signed theSECURE 2.0 Actinto law back in 2022. But the IRS only began providing guidance for companies interested in implementing this program in 2024.2 Sidenote: It’s not a requirementfor employers to offer a student loan match—it’s just a newoption. So don’t feel like you’re getting cheated if your company doesn’t offer this.
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How Does a SECURE 2.0 Student Loan Match Work?
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Let’s look at an example to see how this works. We’ll say you make $60,000 and your employer offers a 4% match on your401(k)contributions, which comes out to $200 a month. Until now, the only way for you to get that $200 was to contribute at least $200 of your own income into your employer-sponsored retirement account. Then your employer would match that contribution by also putting in $200. But with this new rule, employers have the option of matching yourstudent loanpayments—not just your retirement contributions. So, if you had that same 4% match on a $60,000 salary and you made a student loan payment of at least $200, your employer couldstillput $200 in your 401(k)—even though you didn’t contribute a dime. Pretty wild. If your employer chooses to offer a student loan match, getting signed up should be as simple as filling out a few online forms. You may also be asked to provide some documentation, like proof of your student loan payments.
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Student Loan 401(k) Match Pros and Cons
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This program definitely soundslike a great deal if you’ve got student loans, but does it hold up when you look at it under a microscope? For the most part, yes. Let’s go over the pros and cons.
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Should You Take Advantage of a Student Loan Match?
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If your employer offers a student loan 401(k) match, I don’t have a problem with you taking advantage of it. But before you run off to HR and sign up, here are three important warnings.
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1. Pause retirement investing outside of your match.
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Remember: This benefit only works out because it lets you double dip by putting all your extra money toward debt while still getting some drops in the retirement bucket. (It’s also the only time you should double dip—let’s not be feral with the communal guac. Have some class.) So, keep your own contributions paused and focus all your financial energy on getting out of debt. You can contribute for yourself once you’re debt-free.
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2. Don’t let a student loan match slow down your debt payoff.
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Like we already talked about, the only way to get out of debt is to attack it with a vengeance. That means you’re not going on vacation, eating out, upgrading your car, or buying matching workout sets from Lululemon. (Sorry, you’ll have to get the Amazon dupe like the rest of us.) Seriously, you want to get out of debt ASAP so you can start investingandhave way more margin to do so. So, don’t let this little bonus cause you to lose your sense of urgency.
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3. Start investing 15% of your income once you’re debt-free with a fully funded emergency fund.
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Getting an employer match while you’re paying off your student loans is cool, but it’s not enough to make much of a long-term difference in your retirement savings. So, once your debt is gone and you have a fully fundedemergency fundof 3–6 months of expenses, it’s time to focus on the future instead of paying for the past. How much should you invest at that point? I recommend setting your monthlyinvestment contributionfor 15% of your income.
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The Bottom Line
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To sum it all up, the 401(k) student loan match can be a positive development for anyone who uses it correctly and maintains a high level of intensity while paying off debt. Itisfree money, and itisa cool way to make progress on two important financial goals at the same time. Just remember to stay hyperfocused on paying off your student loans as fast as possible. Because once you’re debt-free, that’s when you’ll really be able to start winning with money.
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We Hear You!
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We’re considering adding the ability to save articles to your Ramsey account.
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1. Get on a budget.
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You may not think budgeting can make that big of a difference, but it really is the starting point for paying cash for college. When you don’t make a plan for how you’ll spend your money before the month begins—and don’t track your spending throughout the month—things get chaotic super quickly. After all, if you don’t tell your money where to go, you’ll wind up wondering where it went. On the other hand, making and sticking to a budget every month gives you control. It keeps you from making mindless Amazon orders and impulse Taco Bell runs—which can add up quickly if you aren’t paying much attention to your money. So, if you’ve never made a budget before, change that today! You can’t take full advantage of all these other tips without a budget.
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2. Fill out the FAFSA.
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Filling out theFree Application for Federal Student Aid(or FAFSA) is amustif you want to pay for college without student loans. This is the form schools use to figure out how much money they can offer you, plus what kinds of aid you qualify for. No FAFSA means no grants or merit-based scholarships. A few facts to know: Depending on your financial need and the schools you consider, you may be able to cover your education entirely through grants and aid from your state or school. (We’ll talk more about grants and scholarships later.) For now, just remember that all financial aid is awarded only to students whofill out their FAFSA.
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3. Choose an affordable school.
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If you were to ask friends or neighbors the most important factor in choosing a school, you’d get all kinds of answers, like the student culture, the size of the dorms, or even the success of the football team. But here’s the truth: When it comes to choosing a school, you need to focus on affordability above all else. At the end of the day, your top priority should be to find a school you can afford. This might mean adjusting your expectations about going to a certain “dream school.” Because graduating with piles of debt isnota dream—it’s a nightmare. When it comes to four-year schools, in-state public colleges are almost always the most affordable option. You may be able to save even more money by attending a “directional” school, which is a regional public university typically named after its geographic location within the state (think schools like Southern Illinois University or Central Michigan University). And keep in mind that the traditional approach to college, where you move away to live on campus for four years, isn’t the only way to get an education. Trade schools and community colleges are great options for plenty of students. (You can even start out at community college before transferring to a four-year school.)
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4. Apply for scholarships.
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Scholarships are the most powerful tools for covering school without loans because you never have to pay them back. It’s free money! Here are some tips for getting the most out of scholarships:
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5. Take advantage of grants.
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Once again, we’re talking about free money youdon’thave to pay back—which is the only kind of aid you want. Grants are awarded by schools, organizations and federal assistance programs based on your financial need. Once you’ve completed your FAFSA, you’ll learn about thefederal grantsyou’re up for.
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6. Earn college credits in high school.
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Taking Advanced Placement (AP) classes as a high schooler lets you get a head start on earning college credit. And since you likely won’t pay more than $100 to take an AP exam, this can make ahugedifference in the cost of attending college. Dual enrollment classes, whichlet you enroll in college courses while you’re still in high school, can also give you a head start on college coursework. Like AP classes, dual enrollment often comes with a significantly reduced cost—or even no cost. You’ll simultaneously earn both high school and college credit for the same class. If your school offers either of these programs and you qualify, take advantage!
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7. Save money ahead of time.
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If you’re reading this as a current college student, then it’s unfortunately too late to tackle this one. (Don’t worry, you can still avoid student loans by following the other tips.) But if youhaven’tstarted college yet, then it’s time to start piling up some cash. Whether you start investingfor college by opening a529 planorEducation Savings Account(ESA), or you simply start setting money aside in asavings account, every little bit helps.
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8. Cut your food and supply costs.
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Tuition isn’t the only cost you need to think about cutting as a college student. You can also control the amount you spend each semester on food and class supplies. Think about it: If you go through college eating at restaurants every single night, you’ll wind up wasting loads of cash on food—especially if you’re already required to purchase a meal plan. So, instead of going out, milk that meal plan for all it’s worth and eat at home whenever you’re tired of the cafeteria. And while it may be convenient to order all your books brand new from the campus bookstore, you couldsavehundredsof dollars by shopping around online and getting used books from places like eBay, Amazon and Chegg (just make sure you have the right edition).
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9. Work during college.
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There’s a great place for young people to go when they need money—to work! You might think getting a job will steal too much of your studying time, but tons of working students excel in college each year. Plus, you’ll hone some valuable life skills like time management and work ethic. If you’re looking for a place to start, here are some good options for students looking to work while in school:
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10. Limit housing expenses.
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Aside from tuition, housing is the priciest part of going to college. Luckily, you can cut that cost in several ways. Moral of the story? Don’t just look at the amount your school charges to live in a dorm and assume that’s what you have to pay. You may be able to lower that price tag.
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You Can Go to College Debt-Free!
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At the end of the day, just remember that every little effort now sets you up for a debt-free future. And a degree without loans means more freedom to chase your dreams later. So, start planning, stay focused, and crush those college costs—you’ve got this!
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We Hear You!
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We’re considering adding the ability to save articles to your Ramsey account.
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How to Budget as a Single Mom
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Managing your household finances by yourself (on top of everything else) can feel intimidating. But the truth is, you can confidently take control of your money—no matter your income, marital status or financial past. It all starts with a budget. There are a lot of budgeting methods out there, but azero-based budgetis the most helpful. Here’s how it works: Keep in mind, every single-mom budget is going to look different (depending on your income, how many kids you have, and where you live). And if you realize that your expenses aremorethan your income for the month, don’t worry. That’s totally normal when you first budget! But in that case, you’ll need to do some adjusting. Go through your budget and see where you can cut back so you’re not in the red (more on that in a minute).
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11 Effective Budgeting Tips for Single Moms
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Now that we’ve covered the budgeting basics, let’s talk about how to actuallystickto your budget. Here are 11 things you can do to save money as a single mom and feel more in control of your money:
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1. Focus on the Four Walls.
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Don’t be discouraged if your income isn’t where you want it to be right now. You can (andshould) stillbudget with a low income. The most important thing is that you prioritize what we call theFour Walls: food, utilities, shelter and transportation. Plan for those before you budget for anything else. You want to make sure you’ve got enough to feed your kids and yourself, keep the lights on, and put gas in the tank to get to work.If you can at least do those things, you won’t have to stress as much about making it to the end of the month.
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2. Find ways to save on essentials.
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Speaking of your Four Walls, let’s talk about how tosave moneyon food, household items and other necessities. Here are some money-saving tips for single moms:
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3. Cut expenses where you can.
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We know it’s hard to say no—whether it’s to your kids or to yourself. But every expense adds up! So take a look at your budget and see what spending you can cut. Do you really need all thosestreaming serviceswhen your kids just watch Disney+? Even little treats like lattes and pizza deliveries add up. Decide what you’re willing to live without in order to save more each month.
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4. Adjust your budget as needed.
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Don’t feel like you have to get your budget right immediately. In fact, it usually takes about three months to get the hang of it. If you overspend in some categories, just go into your budget and adjust it as needed throughout the month. Your budget should workforyou, not against you. Start with this month, stick with it, and give yourself some grace.
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5. Save for emergencies.
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You get a flat tire on the way to work. Your kid needs a tooth pulled. Emergencies happen—usually at the most inconvenient times. That’s why it’s important to have anemergency fund. If you’re a single parent, the goal is to have about six months of expenses saved up. But if you’ve got debt to pay off, start with $1,000 (this is part of the proven money plan calledthe 7 Baby Steps). Maybe you’ve never even had $1,000 in the bank before. But you cansave $1,000faster than you think! And it’s definitely worth the peace of mind.
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6. Increase your income.
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A huge thing you can do to boost your financial situation is toincrease your income. Now, we know that as a single parent, you only have so much time and energy to add more work onto your plate. But there are things you can do to earn more money. Here are some ways for single moms to make more money:
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7. Avoid and pay off debt.
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Thetruth about debt: It keeps you stuck. Stuck paying for the past. Stuck in a defeated state of mind. We understand you may have had to use debt to make ends meet before. But if you follow the tips we’ve already given, you won’t need to rely on credit cards or loans to get by. Decide right now that you’re done with debt. And start taking the steps to pay off any debt you currently have. (Again, you canget out of debteven on a low income.) The best way to make progress is with thedebt snowball—once you knock out that smallest debt, you’ll have unbelievable momentum to keep going!
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8. Consider downsizing or refinancing.
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If your housing budget line is what’s causing you the most stress, considerdownsizinginto a house or apartment you can better afford. We know this can be particularly emotional if you just recently became a single parent and you’re afraid of too much change at once (for both you and your child). But you want your housing situation to be a blessing, not a burden—so do what makes the most sense for your family and your budget. If you have a mortgage, look intorefinancing. It could help lower your payments and give you some breathing room while you take care of other money priorities.
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9. Communicate with your kids.
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We understand wanting to protect your children from your own financial worries. But children can sense when you’re stressed or when finances are tight. It’s best to be honest andtalk to your kids about money—in an age-appropriate way, of course. Let them know what your spending priorities are and what you may have to say no to as a family, so they know what to expect. And don’t be afraid to share money goals with your kids. They usually enjoy pitching in, helping you track progress, and celebrating with you when you hit a milestone!
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10. Seek out single-mom resources.
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Listen, there’s no shame in taking advantage of programs and discounts for single parents—that’s what they’re there for! But watch out for loansdisguised as financial help(because remember, you’re avoiding debt). Here are some financial assistance programs for single moms to look into: These resources can help you get back on your feet. But keep in mind, you usually have to meet certain low-income standards to qualify.
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11. Build your community.
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You may be a single parent, but that doesn’t mean you have to do it all by yourself. Having a solid support system can help you mentally, emotionally and financially. You need people who will encourage you—especially when times are tough. A local church can be a great source of community, and they may have resources or groups specifically for single moms. It’s also a great idea to find atherapistthat can help you navigate the ups and downs of life. And when it comes to money, afinancial coachcan answer your questions and help set you up for financial success. Whatever you do, know you don’t have to go it alone. Whether you’ve been a single mom for a while or the title is new to you, know this: You have the power to take control of your money and not just survive—butthrive. You got this!
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We Hear You!
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We’re considering adding the ability to save articles to your Ramsey account.
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What Is the Debt Avalanche Method?
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The debt avalanche method (sometimes calleddebt stacking) is a debt-payoff strategy where you pay off your debts in order from highest to lowest interest rate, regardless of the balance. So, let’s say you had a credit card balance of $15,000 at 23% interest and a student loan of $10,000 at 5% interest. According to the avalanche method, you would focus on paying off the credit cardfirstbefore you tackled the student loan. The goal with the debt avalanche method is to save more money in the long run by getting rid of the debts that are charging you the most in interest. But with this strategy, you might have to pay off your largest balances first. And that can feel super intimidating—especially when you’ve still got other debts to pay off!
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How the Debt Avalanche Method Works
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Step 1: List all your debts from highest interest rate to lowest interest rate, regardless of the balance (this includes personal loans, student loans, car notes, credit card balances, medical bills—anything you owe, except your mortgage). Step 2: Attack the debt with the highest interest rate first, while still paying minimum payments on your other debts. Step 3: Once you pay off the debt with the highest interest rate, attack the debt with the next highest interest rate. Step 4: Repeat until you’ve paid off all your debts, ending on the debt with the lowest interest rate.
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Debt Avalanche Method Example
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Okay, so now you know how the debt avalanche works. But let’s look at an example of how the avalanche method would play out in real life. In this case, you would start by focusing all your energy on paying off the $20,000 credit card because it has the highest interest rate at 20%. Once you paid off the credit card, you’d move on to the personal loan at 17%—using what you were paying toward the credit card. Then so on and so on, all the way down to the $2,000 car loan at 4% interest. That all makes sense . . .in theory. But is the avalanche method really the bestway to get out of debt? Let’s dive into an alternative method to the debt avalanche—the debt snowball—to see which one is more effective.
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Debt Snowball vs. Debt Avalanche
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With thedebt snowball method, you pay off your debt in order from smallest to largest balance, regardless of the interest rate. You attack the smallest debt with everything you’ve got, while making minimum payments on your other debts. When the smallest debt is gone, you move to the next smallest and repeat until you’re debt-free. By paying off yoursmallest debt first(instead of focusing on the interest rate), you get a quick win! Plus, you immediately free up money to tackle the rest of your debt. The debt snowball creates unstoppable momentum to knock out the rest of your debts—like a snowball rolling down a hill! With the debt avalanche method, you may not get a feeling of accomplishment fora long time. That can cause you to lose steam and give up way before you even pay off your first debt. And that’s no good! Sure, it might make sensemathematicallyto begin with the debt that has the highest interest rate, but (let’s get real) if math was the problem, we wouldn’t be in debt in the first place. You need a realistic strategy you can actually stick with. The debt avalanche and debt snowball have a similar goal: to help youget rid of your debt. But you’re more likely to make it happen with the debt snowball. The motivation it gives you is the secret sauce you need to become debt-free once and for all!
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Get Your Debt Snowball Rolling With a Budget
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If the debt snowball is the best (and fastest) way to pay off your debt, then it’s time to get yours rolling! And the best way to do that is with a budget. Abudgetis simply a plan for your money. You give every single dollar a job to do—whether it’s giving, saving, spending or (in this case) paying off debt. Because when you have a plan and you stick to it, your debt doesn’t stand a chance! TheEveryDollarbudgeting app will help you plan your expenses for the month, spend wisely, and save money—so you can actually make a dent in your debt payoff. DownloadEveryDollar for freetoday and take your first step toward debt freedom!
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We’re considering adding the ability to save articles to your Ramsey account.
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10 Steps to Buying a House
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Use this step-by-step plan to buy a house the smart way, and download our completehome-buying checklistto follow along with your progress. First things first: Before you jump into the home-buying process, I want you to be debt-free with 3–6 months of expenses saved up in anemergency fund. Think of this money like an insurance policy against life—it’s important to have this safety net when you get ready to make a big purchase like a house. Picture this: When you buy a home,you’rethe landlord! That means paying for repairs is your responsibility. So, if the water heater springs a leak two weeks after moving in, it’ll be no big deal because you have an emergency fund to cover the repairs. But when your budget is eaten up by debt payments and you don’t have any savings to fall back on, you might be eating ramen for the rest of the month just to get that water heater fixed. That’s not fun . . .ortasty. With a full emergency fund and no debt draining your monthly budget, an unexpected repair will just be an inconvenience—not the end of the world. Another thing to think about beforebuying a houseis your stage of life. It doesn’t make sense to buy a house if you plan to move sometime in the next few years. Buying and selling a house is an expensive process, and moving too quickly usually means you’ll lose money when you resell the home. This is also one of the reasons I recommend waiting at least a year after getting married before you buy a house. Here are seven things to check off your list before you’reready to buy a house: Still not sure where you fall?Take our assessment to see if you’re ready to buy. If you’re ready to buy, your next step is figuring out your home-buying budget. You should only buy a house when the monthly payment is no more than 25% of your monthly take-home pay. Anything more than that and you risk being house poor. Sticking to this number leaves plenty of room in your budget to cover home maintenance and repairs while hitting your other money goals, like saving for retirement. To be clear, that 25% limit includes principal, interest, property taxes, home insurance, homeowners association (HOA) fees and private mortgage insurance (PMI). Use ourmortgage calculatorto try out different home prices within your budget. Once you knowhow much you can afford to spendon your new home, stick to that amount. And if you’re buying a home with your spouse, make sure you’rebothon the same page about your budget. You don’t want any surprises when it comes to saving for a down payment. Just like any goal, buying a home the smart way takes planning and preparation. So, even though saving for adown paymentwill take some time and discipline, it’s a crucial part of this whole process. Howmuchshould you save? Aim for putting 20% down so you can avoidPMI, a fee added to your monthly mortgage payment to protect your lender in case you default on your loan. If you’re a first-time home buyer, a 5–10% down payment is fine, but it means you’ll be paying PMI a little bit longer. You should also save up enough cash to cover two other important costs:
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How Do You Get Preapproved?
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Amortgage lendercanprequalifyyou to buy a house with a simple conversation about your income, assets and down payment. But getting prequalified isn’t the same as getting preapproved. Preapprovaltakes a little more work. A lender will need to take a look at your paycheck stubs, tax returns and bank statements to figure out how big of a mortgage you can afford. But it pays off when you start your home search because a preapproval letter shows you’re a serious buyer. Sellers like serious buyers!
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Which Mortgage Option Is Right for You?
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Picking the wrongtype of mortgagecould turn your biggest asset—your home—into a liability. That’s why getting the right mortgage is so important. Setting your boundaries on the front end makes it easier to find a home you love that’salsoin your budget. So, what type of mortgage should you pick? Here are the two most important guidelines: Your home search mightstartwith some online window shopping, but it shouldn’tendthere. You can do a lot of research on your own, but you’ll need thehelp of an expertwhen it comes to finding and securing your perfect home. A buyer’s agent can help you navigate the home-buying process. In some cases, they can even help you find a great house before it hits the market, giving you a competitive edge. How’s that for being a smart shopper? And when it comes to making an offer, your agent will negotiate on your behalf so you don’t pay a penny more than you have to.
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How Much Does a Buyer’s Agent Cost?
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It's common for a buyer’s agent to be paid a commission (for example, 3% of a home's purchase price) for helping you close on a home. In some cases, the seller might offer to cover part or even all of what it costs you to work with a buyer's agent to sweeten the deal, and to thank your agent for helping find someone to purchase their home. But every situation is different. Be sure to discuss what an agent charges for their services so you know what your maximum potential costs could be before you commit to working with one.
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How to Choose the Best Buyer’s Agent
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You may know a lot of real estate agents in your area, but keep in mind that not all agents bring the same knowledge and experience to the table. Don’t work with a friend or family member who’s an amateur just because you want to be nice. A home is the biggest purchase you’ll ever make, and you need a pro on your side. That means you’ll want tointerview a few agentsbefore you hire one. Yep, make them show you why they deserve your business. When you’reinterviewing a real estate agent, don’t settle. A true rock star will have: Not surewhereto start looking for an agent? We’ve done the work for you with our RamseyTrusted®program. These real estate pros will help you reach your goals and focus on getting you the biggest bang for your buck in the home-buying process. Find a RamseyTrusted pro in your area today. After you’ve been preapproved for a mortgage, you’re ready for the fun part: shopping for your perfect home! (This was my favorite part of the process.) To get started, make a list of must-have home features. When you’rebuying a home with your spouse, make separate lists and compare. For example, I valued a bright kitchen with lots of counter space, and my husband wanted a big backyard. A nonnegotiable for both of us was a good school district. Knowing what you and your spouse want will help with the selection process. Once you have a clear picture of the features you both want, share them with your real estate agent and use them as the foundation of your home search. Your agent will help you set realistic expectations and target your search to areas and homes you can afford.
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Think Long Term
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You might think you’re shopping for your forever home—but remember to shop with resale value in mind because no one knows what the future will bring. A job opportunity in another state or a growing family could change your idea of a forever home. Here are somehouse-hunting tipsto help you make a smart investment: And one more thing: When you start house hunting, you need to be prepared for it to take a while—it could take months before you find a house that’s right for you andyour budget. Now, there’s a chance (since you’re so prepared from doing your homework on the front end) that a great agent could find you a house the next day. But you shouldn’tcounton that happening. Just make sure you’re ready to go either way. Hang in there, and don’t compromise on your must-haves. Once you’ve found the right home, it’s time to get serious. That means submitting your offer and signing a purchase agreement with the sellers.
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What’s Included in Your Offer?
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Your real estate agent will work with you to submit a solid offer. If you end up in a bidding war with other buyers, keep a cool head and put your best foot forward. Being preapproved with your lender and having a flexible closing date can make your offer stand out. Your purchase agreement will include other details of the real estate transaction, like: Sometimes agreeing on terms is quick and painless, but it can also be one of the hardest parts of the home-buying process. If your negotiations get intense, remind yourself that both parties want the same thing. The sellers want to sell their house, and you want to buy it! And remember: Sometimes it pays to compromise on little details if that’ll move the process forward. A good real estate agent will give you advice about when to give in and when to hold firm.
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Home Inspection
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As a buyer, you have the right to aprofessional home inspectionbefore purchasing the house, and it would be crazy not to take advantage of that. This is one of the most important precautions you can take before purchasing a home because it keeps you from being blindsided by structural issues or expensive repairs. If the inspection reveals major problems with the home, you can ask the seller to fix the problem, reduce the price, or cancel the contract. You can also consider getting other pros involved so they can run even more tests, like a termite inspection or a radon test, depending on your real estate agent’s advice and the age and condition of the home you’re purchasing. Your new home could look perfect from the outside, but you never know what’s going on under the foundation or in the walls.
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Appraisal
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If you’re getting a home loan, your lender will require anappraisalto assess the value of the property. An appraisal protects you from paying more than the home’s true value. If the appraisal comes in lower than your offer price, your real estate agent can provide the best guidance for what to do next. If you did get a mortgage, you’ll have another step before you can close on your home: getting final loan approval. Prepare to be patient for this part. Your lender will be digging through a ton of your financial details to finalize your mortgage, which couldtake more than a monthto hammer out before your closing date. Whatever you do, don’t open a credit card, go out and buy a bunch of new furniture on credit, or change jobs once you’re under contract. Doing stuff like this affects your debt-to-income ratio and could jeopardize the loan process. You did it! All the planning, saving, house hunting and waiting are over. The final step in the home-buying process is closing on your new place. Before you get the keys for your new home and officially call it your own, you have one more sprint ahead of you: paperwork. Bring on the hand cramps . . . You should receive a copy of your closing documents to review ahead of time so there are no surprises on closing day. Most likely, you’ll pay for: If you’re confused by any of the terms or conditions as you work through the paperwork, don’t be shy about asking questions. This is one of the biggest purchases you’ll ever make, and you should know exactly what you’re signing up for. Once you sign all the paperwork, it’s time to breathe a sigh of relief. Ahh. You’re officially a homeowner. Congratulations! The home-buying process may not be easy, but having a beautiful new home to call your own is worth it in the end.
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You’ve Got This!
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Buying a house has definitely gotten more difficult over the last several years thanks to higher prices and interest rates, but it’snotimpossible. If you set a savings goal,get on a budget, and stick to it, youwillbe able to afford a home before long. It may take longer than you’d like, but youcando this!
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We Hear You!
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We’re considering adding the ability to save articles to your Ramsey account.
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We Hear You!
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We’re considering adding the ability to save articles to your Ramsey account.
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What Is the Best Month to Buy a House?
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If possible, it’s good to buy a house at the time of year when prices are lowest and inventory is highest. Traditionally, that’s August or September. Prices usually go down in late summer and early fall, since fewer buyers are looking at homes and inventory is still pretty high after the busy spring selling season. On the flip side, theworsttime to buy a house is typically the late spring and early summer (May through July). That’s because tons of people are in the market to buy a home—which means you’ll face more competition. Many home buyers, especially those with kiddos, want to buy a home in time to get moved and settled before the school year starts. But keep in mind: No one can predictreal estate trendswith 100% accuracy. So never let what month it is make or break your home-buying decision—only your financial situation can truly determine the right time for you. With that said, in 2024 the best time to buy a house was probably around September—when existing home prices had fallen nearly $15,000 since July and inventory was the highest it had been all year. To see these trends for yourself, check out the chart below:
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What Is the Cheapest Month to Buy a House?
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Home prices are usually at their lowest in winter. In fact, based on the 12-month period in the table above, home prices were at their lowest in January 2024—at a median of $378,600. So if the best time to buy for you means getting the lowest price, be sure to slip on your warm woolen mittens before you go to showings. But remember: You want to find the sweet spot of low pricesandhigh inventory. While prices go down during the winter, fewer houses hit the market during the busy holiday season (not to mention some regions have the cold and snow to deal with). In the chart above, the number of homes for sale saw its greatest drop from November to December—losing 140,000 homes from the market. Still, less demand for homes could give you some bargaining power when it comes time to make an offer on a house.
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What Month Do Most Houses Go on the Market?
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Most houses go on the market in the spring. In 2024, the national number of homes for sale shot up an additional 90,000 from March to April—the fastest rate of growth all year. That number kept growing into the summer and reached 1.34 million home listings by July. On the downside, spring and summer are also the busiest house-hunting seasons, so competition and prices will likely be at their highest. This year, home prices shot up $9,700 from May to June and reached their highest point of the year at $426,900. But if you can budget for it, it’s often worth shopping when there’s an abundance of homes on the market to choose from.
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The Best Time to Buy Depends on You
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Remember: Even though you can try timing your home purchase just right to find the widest selection or pay the lowest price, the best time to buy is when your finances are in order. Here are the biggestsigns you’re ready to buy a house: If each of those statements sounds like you—congrats! Now could be the best time for you to buy a house.
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We Hear You!
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We’re considering adding the ability to save articles to your Ramsey account.
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What Is the 50/30/20 Rule?
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The 50/30/20 rule is a budgeting method where you divide your monthly after-tax income into three categories: needs (50%), wants (30%) and savings (20%).
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50%: Needs
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According to the 50/30/20 rule, you put half of yourafter-taxincome toward your needs. Now, needs are all the bills and othermonthly expensesyouhaveto pay—the things that would majorly affect your life if you dropped them. Here are some examples of needs:
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30%: Wants
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The 50/30/20 rule says to spend 30% of your take-home pay on your wants—or the stuff that improves your standard of living. But hear me when I say this: Wants arenotneeds. Yes, we all know this . . . in theory. But when you start dividing all your expenses into categories, the lines betweenneeds vs. wantscan get real blurred. Some examples of wants include: These are all expenses you can technically do without (even if it’s uncomfortable). Because you don’t have to go out to eat when you’ve got groceries in the fridge. And unless your kid outgrew their jacket and school shoes, you don’t need to buy new clothes every month.
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20%: Savings
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With the 50/30/20 rule, the goal is to put 20% of your monthly income toward savings. Here are some examples of what’s included in the savings category: That’s just 20% of your income to get you feeling safe and secure with money for today, tomorrow and down the line in retirement. And with this rule, you’re somehow supposed to save forallof that at once.
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50/30/20 Budget Example
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What does it look like to create a budget with the 50/30/20 rule? Well, let’s say your gross monthly income is $6,360. But after taxes and benefit deductions, you take home about $5,000 each month. If you use the 50/30/20 method to budget, you’d have $2,500 for your needs (50%), $1,500 for your wants (30%), and $1,000 for your savings (20%). Makes sense on paper. But is that actually enough to cover all your necessary expenses for the month? Should you really be spending that much on your wants, instead of building your savings? And what if you’ve got a massive pile of student loans you’re trying to pay off? You can probably tell by now that I have some problems with this rule. So, let’s get into the pros and cons.
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Cons
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A benefit of the 50/30/20 rule is that it gets you to budget and save—both of which are super important! But whilerecommended budget percentagescan be a good starting point, the 50/30/20 rule ultimately falls short. Here are a few reasons why.
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It’s not realistic for most budgeters.
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The truth is:The 50/30/20 rule doesn’t work for the average American.In fact, most people’s needs aremorethan 50% of their income. Seriously, look at this math: That’sover 80%of the average income that goes just to monthly needs. Now, you could find ways to lower those expenses (and you should). But my point is that it usually takesmorethan 50% of the average income for most American households to operate. And that’s not even includingdebt payments! If you’ve got a car loan, credit cards or student loans to pay off, then you probably don’t have 30% left for fun and 20% for savings. When you put the 50/30/20 rule to the test, well . . . that math doesn’t add up! Literally.
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It doesn’t prioritize saving over wants.
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With the 50/30/20 rule, you budget 30% for your wants and put 20% toward savings. Yes, saving 20% is better than saving nothing at all. But that’s not the best (or fastest) way to build your savings. Savings should be a priority—not an afterthought. Especially if you’re saving up for your emergency fund or for a big goal, like a down payment on a house. The 50/30/20 rule makes it easy to put savings on the back burner, when it should be one of thevery firstthings you budget for each month.
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It doesn’t help you pay off debt faster.
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With the 50/30/20 rule, you’re paying off your debt . . . butslowly. It combines both saving and extra debt payments to make up only 20% of your overall budget. That’s not enough if you really want to make a dent in your debt! And if you’ve got debt, you shouldn’t be spending 30% of your money on things you don’t need anyway. You should be focusing on knocking out your debtas fast as you can. That meanscutting back on extra costs(aka thewants) so you can throw more at your debt and take back control of your income. Plus, trying to hit too many major money goals at once can actually keep you from making progress. You’re much better off if you line up your big money goals in order of priority (using the7 Baby Stepsto guide you) and knock them down one by one. You’ll be able to really focus as you save for emergencies, pay off debt, and build your retirement savings—in that order. And when your budget is set up to help you take those steps one at a time, you know what happens? You. Make. Progress. Faster. And that’s what I want for you—to make progress with your money! Your budget should live and breathe with you. It should adapt toyourstage of life and toyourmoney goals. The 50/30/20 rule just doesn’t do that.
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The 50/30/20 Rule vs. the Zero-Based Budget
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The 50/30/20 rule boxes you in. But budgets aren’t one-size-fits-all. Your budget should reflectyourreality. It should reflect where you are right nowandwhere you want to be with your money—not force your expenses into some blanket percentage category. What you really need is a zero-based budget. What’s that? Azero-based budgetis when your income minus your expenses equals zero. You give every dollar a job and make every part of your paycheck work for you and your goals! When you budget, start with giving, next saving, and then needs (what I call theFour Walls—food, utilities, shelter and transportation—and then other essentials). After that, you prioritize everything else in the budget based onyourincome,yoursituation andyourBaby Step. The zero-based budget method is better than the 50/30/20 rule because it lets you customize your budget to your specific expenses and money goals.It also helps you make progress faster and intentionally get your spending under control. Plus, a zero-based budget is way more flexible! As things change in your life, so does your budget.
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Create a Budget That Works forYou
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Now that you know a zero-based budget is the way to go, let me tell you about my favorite zero-based budgeting app—EveryDollar. EveryDollar is what I use to budget every single month. It makes it super easy to tell your money where to go, customize your budget categories, and track your monthly expenses (needs, wants, savings and all). Plus, it’s free! Stop trying to cram your life and your goals into percentages that don’t make sense. Go all in with the zero-based method and create a budget that’s gets you closer to your money goals. Download EveryDollar for free today!
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We Hear You!
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We’re considering adding the ability to save articles to your Ramsey account.
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1. Get on a budget.
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It all begins with a budget—a plan for your money. Budgeting can get a bad rap because people think it takes away your freedom. But budgeting is seriously so empowering. And that’s because when you budget,youare telling your money where to go so you can stop wondering where it went. If you haven’t been doing this in the past,make a budget. Pronto. It’s the first step to taking control and being intentional with your money.
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