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Inside: The decision on where you live is a big life choice. Learn how an HCOL vs LCOL area will impact you financially. Plus find the cost of living city that fits for you.

HCOL. LOCL. MCOL. What do these acronyms mean and why should I care?

Back when I was trying to decide where to live, there wasn’t a big discussion about the high cost of living or low cost of living areas.

You just picked a city close to family or branched out to a new area. Were you drawn to the big city or not? Plain and simple.

Today, there are many tools at our disposal to try and figure out what is the best city to live in based on income, expenses, and the lifestyle that you desire.

In this post, you will see how to analyze what type of city you want to live in and see if it makes financial sense for you.

Why such the price difference between HCOL and LCOL?

In a low cost of living city, you can buy a house for $50,000. In contrast, a median home price in a high cost of living city can cost $1.5 million. This is a correlation between supply and demand in the market.

The more people who want to live in a certain area that has less available space will naturally drive up prices. Whereas most low cost of living areas, the supply is abundant since there is plenty of space to spread out and find your own neck of the woods for much less.

Here’s a quick comparison of HCOL vs LCOL vs MCOL.

New York City has the highest cost of living at 100, followed by Los Angeles and San Francisco. This graph highlights the difference in cost of living in these example cities.

HCOL
Seattle, WA		 MCOL
Las Vegas, NV		 LCOL
Knoxville, TN
Cost of Living Index 85.57 69.33 63.26
2 Bed Apartment Rent $2,724 $1,176 $788
Median Home Price $826,200 $441,771 $256,188
Median Income $92,263  $56,354 $33,229
Data from Nerdwallet, Census.Gov, and Numbeo

What is HCOL area Mean?

Simply put, HCOL means a high cost of living.

This type of acronym is to describe certain areas or cities where expenses that impact your budget the most, such as housing, food, and transportation, are more expensive than other areas.

When defining an HCOL area, it is a comparison of the cost of living based on other areas around other cities, states, and countries.

There is no hard line to define high cost of living since it is compared to the other cities.

Is it possible to live in a high cost of living area? Absolutely, it all depends on how you choose to live, the income you make, your lifestyle choices, and your savings percentage.

VHCOL are VERY high cost of living areas, such as Manhattan, Honolulu, San Francisco, Singapore, or Hong Kong.

This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.

Pros and Cons of HCOL

Just because an area is labeled HCOL does not mean that you shouldn’t call the city home and stay away from these areas.

There are plenty of advantages and disadvantages of living in a high cost city.

There are always drawbacks to living in a high cost of living area and you have to decide whether or not what works for you.

In order to make a solid decision on where the best place is for you to live, you need to know this information.

Advantages of HCOL City

  • Job Market is Solid

First of all, in HCOL cities, the job market is stronger, there are more jobs available, and typically those jobs have a higher paying threshold than other areas.

That is why many companies are attracted to these areas because they know the talent pool of potential employees is much stronger in high cost of living area versus other areas where there are not as many skilled workers.

  • Income is Higher

Since companies know they must pay their employees a fair wage living in a high cost of living area, incomes are higher to support the increased expenses.

This helps those municipalities collect more taxes, which feed back into the system to provide more for their residents.

  • More Opportunities

More opportunities abound in a high cost of living cities.

Not only in the job market but there is access to public amenities and conveniences. Some examples include museums, sporting events, transit, best medical services, endless entertainment options, quality restaurants, high-end shopping, and quick access to international airports.

Even better, you can find free entertainment each and every day that does not cost a penny. Here is a list of 101 things to do with no money.

There are many benefits of living in a high cost of living area just because their opportunities are endless. You will always find something to do and there is always stuff going on.

  • Better Schools

Typically, in your high cost of living cities, that is where you will find the better schools. This is in direct correlation to the job market and skilled workers.

These skilled workers tend to have a higher instance of college graduates and they tend to want the best for their children. As a result, the schools tend to be much better than you would find in other areas.

  • Higher Chance of Home Equity

Another advantage of big cities is the variety of neighborhoods you can find in a bigger city. You can find the type of house you want to live in and the diversity you crave.

While home costs are much higher, there is also a greater chance of income increasing your home equity much faster than other areas.

For example, in Michigan, you could pay $100,000 for the exact same house in 5-10 years since appreciation will not happen at the same rate as other cities. Whereas, if you look at some of the hot markets, like Denver, Phoenix, or Austin, the home prices have been skyrocketing.

Thus, if you live in those quickly appreciating housing areas, there is a higher chance to increase the value of your house.

Disadvantages Of HCOL Cities

  • Higher Basic Cost of Living – Specifically Housing

First, housing costs can break the bank. It is the biggest expense for any
household.

If you were unable to secure a salary to justify the housing cost, it makes it nearly impossible to be able to afford to live in a high cost of living area.

This is where you would have to get creative and look for housing subsidies or
other means to stretch your housing budget.

  • Harder to Find Houses

Another con of a high cost of living areas is it is much harder to find housing! House and rent prices are higher, jobs are tougher to find where there’s opportunities abound, and you may feel like you are searching for a needle in a haystack.

You need to have the right opportunity to find the proper house for you. If you are looking at buying, you need things to line up properly and in your favor.

  • Stretch Yourself Too Far Financially

Since incomes tend to be much higher, many people find the urge to spend more discretionary income.

In many cases, this means that the average household may stretch themselves a little bit further by keeping up with the Joneses. They tend to spend more frivolously and not live as frugal.

This is a trap to be aware of if you are in a high cost of living area. You can be savvy with your money and save, but you have to be cognizant of how you spend your hard-earned salary.

HCOL Cities…

These are the HCOL areas. Do you need to avoid them? No, but going into those areas, you must realize the cost of living will be higher.

Here’s a list of all of the cities that are the top 20 cities that are high cost of living areas according to Kiplinger:

1. Manhattan, New York  (145.7% above U.S. average)
2. San Francisco, California (94.7% above U.S. average)
3. Honolulu, Hawaii (97.6% above U.S. average)
4. Brooklyn, New York (80.5% above U.S. average)
5. Washington, D.C. (60.7% above U.S. average)
6. Seattle, Washington (56.7% above U.S. average)
7. Oakland, California (53.9% above U.S. average)
8. Arlington, Virginia (50.5% above U.S. average)
9. Orange County, California (50.2% above U.S. average)
10. Boston, Massachusetts (48.8% above U.S. average)
11. Queens, New York (47.8% above U.S. average)
12. Los Angeles, California (46.6% above U.S. average)
13. Bethesda, Maryland (45.5% above U.S. average)
14. San Diego, California (41.4% above U.S. average)
15. Alexandria, Virginia (40.0% above U.S. average)
16. Stamford, Connecticut (36.4% above U.S. average)
17. Portland, Oregon (34.3% above U.S. average)
18. Fairbanks, Alaska (27.9% above U.S. average)
19. Bergen County & Passaic County, NJ (26.6% above U.S. average)
20. Anchorage, Alaska (24.4% above U.S. average)
Source: Kiplinger

What Is LCOL Area Mean?

LCOL stands for lower cost of living.

These cities have a lower average cost of living versus the average.

Simply put…your ability to stretch your income goes much further in a low cost area compared to a high cost of living area. This is where you can get a bigger bang for your buck.

Pros and Cons of LCOL

The differences in the area where you can live can be vastly different. Thus, providing benefits or drawbacks of choosing to live there.

The cons are typically the reasons that most people want to stay away from these cities.

This is where personal preference tends to play the biggest reason for choosing one location over another.

Just like with a high cost of living area, you need to weigh the pros and cons of
living somewhere where expenses are not quite as high.

Advantages of LCOL –

  • Slower Pace of Life

One of the biggest benefits is a slower pace of living in low cost of living area.

Life doesn’t move as fast.

There is more time to breathe, there is more time to step back and take a bigger picture. It is not go, go, go, go 24/7. Time to enjoy the fresh air and slower pace.

  • Cheaper Housing

This is why people choose to live in a low cost of living area. Period.

You are able to afford much more house for much less.

That right there, over the long term can make or break somebody financially.

  • Lower Taxes

Many of the lower cost of living cities also benefit from lower taxes as well. They have lower income taxes, and even possibly, lower property taxes. So, this is something to take into consideration when looking at a low cost of living area.

Check what the difference would be from where you’re currently at to where you are considering moving.

  • Remote Work

This is the bread and butter spot! When you can take in a higher pay and still live in a LCOL city.

After 2020, remote work is becoming more and more popular. In addition, it is an added benefit companies are including to attract skilled employees.

This is one scenario where you can get the best of both worlds.

Disadvantages Of LCOL Cities

  • Less Opportunities

First of all, there are fewer opportunities. There are fewer things to do, there are less things going on. The airport is a further drive away.

In a big city, you can always find events happening. It may not be the same in other cities. However, some cities have created programs to draw in residents with the big city feel like Bellefontaine, Ohio.

  • Income Potential is Lower

The job market doesn’t have the high-paying jobs that you would find in the bigger cities. The income potential in one of these cities does not compare.

Let’s face it… a good majority of your working years are about built around making an income. With a lower cost of living city, the income limitations can be cumbersome and it takes longer to be able to reach your financial goals.

LCOL States and Countries with LCOL

Geographic arbitrage can give you great value for your money.

Arbitrage is the spread of differing prices for the same thing like rent, food, or transportation.

This means you can save more money by living in LCOL state or spend less of your nest egg by living in a LCOL countries.

These are the areas you can find the lower cost of living. There are many LCOL cities to be found as well.

LCOL States:

1. Mississippi (84.10% of U.S. average)
2. Kansas (86.67% of U.S. average)
3. Oklahoma (88.09% of U.S. average)
4. Alabama (88.80% of U.S. average)
5. Arkansas (89.16% of U.S.average)
6. Georgia (89.30% of U.S. average)
7. Tennessee (89.49% of U.S. average)
8. Missouri (89.75% of U.S. average)
9. Michigan (90.54% of U.S. average)
10. Indiana (90.57% of U.S. average)
Source: US News

LCOL Countries:

Listed in alphabetical order because there are many to chose from based on your personal preferences.

  • Brazil
  • Bulgaria
  • Columbia
  • Ecuador
  • Guatemala
  • India
  • Indonesia
  • Malaysia
  • Mexico
  • Morocco
  • Paraguay
  • Peru
  • Poland
  • Portugal
  • Romania
  • South Africa
  • Thailand
  • Turkey
  • Ukraine
  • Vietnam

Source: https://www.expatistan.com/cost-of-living/country/comparison

What Is MCOL Area Mean?

The definition of MCOL is any area that just has an medium cost of living.

There is not one extreme or another. These cities are just plain average. Maybe slightly above or below the median cost of living.

This can be a sweet spot of reaching your financial goals while enjoying a higher quality of life.

Benefits of MCOL Area

As you can read on Reddit personal finance threads, there are plenty of reasons to live in an MCOL area.

Mostly because these types of cities you can get the best bang for your buck, and still have the pros of living in a high cost of living area, as well as the pros of living in a low cost of living area.

This is where the job market may be very stable with good wages but the cost of living is not going to cost you a fortune.

Also, you can find tons of cities that meet the criteria of a MCOL city.

Cost of Living Varies within Cities

Regardless of whether you choose, HCOL, LCOL, or MCOL areas, the cost of living will be dramatically different between these cities.

Whether you are looking at the downtown area, the outlying suburbs, or maybe even the cities that have popped up around near the main city.

Just because the city is HCOL or LCOL, there will be neighborhoods that will be the outliers to the main part of the city.

So, when you are looking at cost of living, you must know the things that are most important to you and what type of neighborhood that you would want to live in because they can be found.

That is what I call hidden gems.

It is possible to find a cheaper house in a low cost of living or high cost of living area, you just have to do your homework and know what you’re looking for.

Vice versa, it is very possible to find a neighborhood in a low cost of living area that is much higher than the surrounding areas.

How can I buy a house in a high cost of living?

It is possible to be a homeowner in a in a high cost of living area. You just have to be able to afford the down payment on the house to make being a homeowner justifiable, if possible.

Before you decide to buy a house, here are some factors you need to take into consideration..

1. Does it make sense?

First, you have to make sure that it makes logical sense to buy a house. Especially in a high cost of living area because the house prices may not match up to what the income that you are bringing in.

Will you still be able to reach your money goals by purchasing a house? Or will you be house poor?

2. Compare rent to potential mortgage

Will it be cheaper to rent? Or cheaper to have a mortgage?

To figure this out, take what the average rent is in your neighborhood. Then, use a mortgage calculator to figure out the maximum amount you can afford.

Since those calculators will leave you house poor. Decide what you are able to justify in spending on a mortgage and figure out what the mortgage payment is.

Is the mortgage payment less than average rent in the area?

For example, it may cost in a high cost of living area, like San Diego, it may cost $3,000 a month to rent a house. Whereas you might be able to buy a similar home in the same neighborhood and have your mortgage payment of $2,259.

Thus, making buying makes more financial sense than continuing to rent.

3. Expand your horizons

Another tip to afford your dream house – do not be set on that one specific neighborhood in a high cost of living area.

Many times you can find an up-and-coming neighborhood that is much less than the trendier and hip current neighborhoods that you want to live in.

Thus, you can typically save a good chunk of money. Plus in the long run, you greatly increase the potential for home equity.

4. New Homebuyer Programs

If this is the first time you are buying a house, then look into first-time homebuyer programs and grants. (Hint… this is like free money!)

There are many out there because cities want their residents to buy in their neighborhood and their cities because that means they are going to be there for a longer-term.

Also, there are programs for the military, teachers, nurses, single moms, minorities, graduate students. You just have to look.

5. Save for Down Payment

When you are looking at buying a house, this is the time to become serious about saving for a down payment.

You may have to find ways to save more money each month.

This could include things like downsizing your lifestyle to make it possible. Living with friends or family while you save up more money. Or just spending less for a certain period of time until you reach your downpayment goal.

6. House Hacking

The last step is one of the best ways to reach financial independence in a high cost of living city. Plus the concept works well in any city… house hack.

Find a multi-family housing property that you were able to buy. For example, plan to live on one side of the duplex and rent out the other. This will help you pay for your mortgage, by using the rent collected from your renters.

Thus, lowing your overall housing cost, which is your biggest expense.

Where Does Your Income Go the Furthest?

This is a comparison that you may be surprised by the outcome. Thus, proving why you need to do cost comparisons to see what financially makes the most sense when deciding to move from one to the other area.

comparison of income, expenses, taxes, and potential savings!!!!!!!!!!!

Once again, this is personal to your situation. So, take a moment and use the cost of living calculator yourself.

Paying taxes is one option to increase what you take home in each paycheck.

No Income States

These are the states that don’t pay state income taxes on wages:

  • Alaska
  • Florida
  • Nevada
  • New Hampshire
  • South Dakota
  • Tennessee
  • Texas
  • Washington
  • Wyoming

For most people, that is an instant decrease in overall taxes!

Higher Taxed States

Also, if you live in one of the higher taxed states, then you may want to reconsider moving to a lower cost of living area.

The higher taxes income tax states include:

  • California
  • Hawaii
  • New Jersey
  • Oregon
  • Minnesota
  • The District of Columbia
  • New York
  • Vermont
  • Iowa
  • Wisconsin

These states tax income somewhere between 7.65% – 13.3%.

Property Taxes

Property taxes vary from state to state.

In some states with large property taxes, it may even out with no income taxes. While other states, like Illinois, where property taxes are high and income taxes are above the national average as well.

Moving From HCOL to LCOL

The reason that most people move from HCOL to LCOL area is to save money. They want to decrease their expenses – that is the primary driver. Other times, it may be that they’re looking for a different type of lifestyle.

But as you can read on Reddit, everybody has a different personal experience.

It may have been beneficial and may have been bad timing. It may have been the best choice. It may have been the worst decision.

Make sure to factor in the costs associated with the move. Also, any ongoing expenses like travel if you are moving away from family.

How to Choose HCOL or LCOL?

Deciding where you live is one of the most personal decisions that you can make. Nobody can make it for you. You know what you want in life, how you want to live, and where you would feel more comfortable.

So, let’s look primarily at the financial side of making this decision of what is best.

1. Lifestyle You Desire

There are massive differences between HCOL and LCOL cities!! In big cities, life moves at a faster pace. While most cheaper cities areas move at a slower pace, so you have to make the decision of what type of lifestyle.

Do you want you want the big city? Do you want suburbia? Or do you prefer more of a country lifestyle?

When looking at this first factor, your answer should not include money. This is where your heart is. This is where your home. This is the life that you plan on living. This doesn’t include the financial sense.

This includes what makes your heart happy.

2. Your Money Goals

One of the things that discussed the most on this site is the 10 Money Bliss Steps to Financial Freedom. That is where most of our readers find their current money goal. And for good reason, you must build a strong foundation with money one step at a time.

In order to achieve long term financial success, the decision on housing is critical as it is the biggest expense in any budget. And that is can have the greatest impact on your budget!

On the flip side, the amount of income you are capable of making can also make the biggest impact on what you can afford to spend.

You must decide on your current money goal as well as the longer term money vision. Maybe you are looking at wanting to retire early? Love to live a slower life in the future?

It is possible to live in HCOL area where you are able to live extremely frugally and save more money. This is what my friend did over at Tuppennys FIREplace. For them, it was a smarter decision. On the flip side, maybe you are happier living a slower pace of life. Income is not the primary driver and you just want to enjoy life more.

At the end of the day, you must prioritize what you want, how your budget and your expenses correlate, and how your saving rate is impacted in various cities.

3. Season of Life

For those in their younger years may not understand this as much, but as you go through seasons of life, you will realize that you have different goals, objectives, and desires along the way.

When deciding where to live, your current season of life will probably have a very high impact on what you are looking for.

If you have young kids, you probably want to find a neighborhood where you have other families nearby that your kids can interact with.

If you are close to retirement, you may look decide to move out of the good school district because you do not need to pay the premium of living here. You may choose to move to a lower cost of living area, so you have the freedom to travel and help my kids and grandkids.

4. Potential Income & Career Opportunities

The greatest benefit of a high cost of living area is the income potential and the career opportunities. Both are much greater in the bigger cities than you would find in the smaller cities.

If your primary goal is increasing your income and advancing your career, then looking at high cost of living areas an absolute must. Plus you might be able to find something on the outskirts of expensive neighborhoods, that would make the most financial sense.

Then, living in HCOL is justified and necessary and the income can justify the higher costs associated.

On the flip side, there is plenty of income potential as a small business owner in a low cost of living area. You just have to know the market, what your skills are in, and what the needs are in your area.

4. Fixed Expenses

Fixed expenses can be dramatically different in each area.

Write out a list of your top fixed expenses and make sure to compare those as well.

For example, child care costs and tuition are going to be much more expensive in a big city than in the suburbs. Maybe in certain neighborhoods, a car would not be needed; thus, eliminating another big cost and associated maintenance.

While some fixed expenses seem meniscal, over time, they can add up significantly. Thus, helping or hurting your financial picture.

Unspoken Price Tag to Live Somewhere

As we covered in this post, there is a lot to consider when deciding between HCOL, LCOL, or MCOL areas.

It is a highly personal decision that you must take the time to make the best decision for you!

Not someone else, but for you.

One thing to watch out for when looking at where to live is what I call the “price tag” of a beautiful city.

Many times, employers know that the city that people want to live in their city for whatever reason. Thus, you will experience what I like to call the “income hit” to living there.

For example, Fort Collins, Boulder, and Austin are highly desirable areas for postgraduates to live in because they fall in love with the town and they want to stay here for the long term. Thus, employers know that this!

As a result, income for jobs maybe 10 to 15% less than they could make in any other type of market or city. So, that is something just to be aware of when wanting to stay in the city that they have grown to love.

In conclusion, when you’re looking at a high cost of living area versus a low cost of living area, there are two sides to the coin.

One – what makes financial sense. Two – your home is where your heart is.

Consequently, you have to make the decision on what makes sense for you.

While it makes financial sense to move to a lower cost city, at the same time, it may move you away from your family and your support system, and everything that you enjoy, and you may not be as happy in the long run.

Enjoy weighing the alternatives between all of the options available.

Know someone else that needs this, too? Then, please share!!

Did the post resonate with you?

More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!

Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.

Source: moneybliss.org

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This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.

The cashless envelope method is a fabulous way to jumpstart your budgeting process.

It is proven that the cash method will help you to save money, get out of debt, and make sure you’re spending your money that you actually have to spend.

There is no overspending allowed with the envelope system.

When using envelopes whether with cash or cashless, if you are out of money, you’re out of cash to spend.

In today’s society, more and more transactions are being done online, which makes using the “traditional” cash envelope system very tricky and complicated. So many people are looking into alternatives – specifically using a cashless envelope method.

Personally, a cashless envelope system is something that we have used for many, many years. As much as I would like to say that I’m great with cash. I’m not. I tend to misplace it more often than I prefer. Also, I do enjoy my credit card rewards that I receive the extra couple $1,000 helps to pay for quick travel getaways.

Today, in this post, you are going to learn how to be successful with the cashless envelope method. We’re going to outline how to use the cashless envelope system, provide the trackers and templates that you need.

Then, you can start budgeting with success today.

How do you Use envelope System without cash?

The method of using the cashless envelope system is much like the traditional cash envelope system, except you’re actually not physically stuffing your envelopes with real cash.

You are tracking your spending either with a printable template or a spreadsheet. Whatever method you choose it doesn’t matter. It is the basics of cash system that matter.

The principles are the same. You cannot spend more money than you allocated for a certain category.

Later in the post, we will discuss how to track your “cash” using either a printable template or a spreadsheet.

Reasons to Not Use Cash

There are many reasons you may not want to have cash on hand. Here are some of the most popular reasons not to use cash:

  1. It gets lost.
    Personally, I am guilty of misplaced cash. Thankfully, it has always appeared. But, it is hard when you can’t find the money you need to make purchases.
  2. It gets stolen.
    Getting your wallet stolen sucks. Getting your wallet stolen when you just stuffed your envelopes with cash is even worse. You are left without spending money for a week or two.
  3. You can’t earn rewards.
    A very simple way to earn extra money is with rewards on your credit or debit card. You can earn 2% cash back by paying with these cashless methods.
  4. Counterfeit money is a real problem.
    Unfortunately, there is more counterfeit money in circulation than you would believe. The cash withdrawn from the bank is always checked. But, the change you receive from stores may be counterfeit.
  5. Bacteria on cash.
    Have you thought about how many people have touched your $20 dollar bill? There is a lot of stuff lurking on cash and coins. Nowadays, many companies are not even accepting cash.

There are many more reasons you may not like to use cash. Plus you need to account for online purchases where another payment method is a must.

Now, you are going to learn to manage money by using the cashless envelope system.

How to Use the Cash Envelope System Without Cash?

Just like the traditional cash envelope system, you are allocating money to each of your categories or envelopes.

Instead of actively putting money in envelopes, you are tracking your spending with a spreadsheet, an app, or a paper cashless envelope tracker.

First, you need to decide what cash envelope categories you want to track. Typically, these are the most popular envelopes to use “cash” for:

  • Groceries
  • Eating Out
  • Clothing
  • Gas
  • Gifts 
  • Entertainment
  • Haircuts / Beauty / Personal Care
  • Pocket Money or Slush Money

However, you can use as many of the budget categories as you want.

1. Create a Budget

The first step to proper money management is to make a budget. First of all, a budget isn’t meant to be constricting, it is a money plan of how you want to spend your money.

By creating a budget, you are prioritizing where you want to spend your income.

It is a good thing to have a budget even though 69% of society doesn’t know how they spent their money last month (source).

If you have never created a budget, then I would highly recommend our Budgeting Course that goes into detail about how to properly create a budget.

Related reading: How to Make a Budget in 7 Simple Steps

2. Track Purchases Immediately

When you make a purchase, you need to write it down on your cashless envelope tracker – just like you would when using cash. You need to see the money being subtracted from your account.

This is what makes you understand the impact of every single purchase you make over the month.

If you can’t do it right away, save the receipt and write it down when you get home. Just don’t forget to do it!!

By waiting more than a day to track purchases, you may get caught over budget on your envelope budget.

You must stay on top of your envelope budgets!

3. Money is Gone, It is Gone

Don’t get caught with overspending! That is a quick cycle to end up in debt or even worse “borrowing” money from other envelopes.

This is where the rubber meets the road. That popular saying will make sure you don’t continue spending money once you are out of money.

The temptation to spend money will happen over and over. You just need to find ways to stretch what money you have left or be patient until you have more money from your next paycheck.

Make adjustments in the next month for categories where money always seems to be gone early.

4. Money if Leftover, Then Roll it Over

This is why the cash envelope system works so well.

It helps you to create sinking funds. When using the cashless envelope method, it helps you to have one BIG account with all of your sinking funds collected together.

When using a spreadsheet or printable, you can visually see how much money you have rolled over from month to month.

Here is a great example: You set aside $50 a month for gifts. But, only spend money when for birthdays and Christmas and not every month. Typically, you would roll your money over to the next month. So, when Christmas comes you have more money to spend.

For those, who are actively trying to get out of debt, you may take your money left over and put it towards debt. Just make sure those are discretionary accounts that you don’t need money for in future months (spending money would be a good example).

You don’t want to be caught without money set aside for a big bill.

virtual envelope system

The virtual envelope system is the wave of the future. The use of cash is going away.

While cash in the bank is still king, the actual physical transaction of paying with cash is going away. The use of debit and credit cards continue to increase.

You need to have a virtual envelope system in place, so that way you can track your purchase purchases in person, online, and those that are reoccurring.

With the virtual envelope system, you will use a spreadsheet that tracks your spending with a couple of inputs from you. The other option is to use a cashless envelope app with a monthly fee like Empower or Qube Money.

Thankfully, here at Money Bliss, we created a virtual envelope system that works perfectly for cashless budgets and creates sinking funds for you. Learn more about the cashless envelope spreadsheet here.

cashless envelope template

A simple way to start using the cashless system is with free cashless envelope trackers. There is nothing super fancy about the system.

You just have to track your expenses.

This is exactly how do you do the envelope without cash.

Here is a perfect example of how to use the cashless envelope template:

These are great for a mom on the go! Simply stick them in your wallet and write down your purchases.

Ready to Use the Cashless Envelope System?

While Dave Ramsey has created a movement of using cash envelopes. It is becoming harder and harder to use in a cashless society. So, you must find something that works for you.

Personally, we prefer the virtual envelope system. It allows the flexibility of being cashless while still benefiting from the cash envelope system.

To be successful, you must track your spending.

Transitioning to a new system will have some quirks, but over time you will get used to it. The pros are you will live with your means. Then, you move away from living paycheck to paycheck.

By tracking your spending with the cashless envelope method, you are putting your money management forefront and can see your pain points with money.

You can download your cash envelope trackers from our free printables area.

For those who want to use the cashless envelope spreadsheet, then enroll in our in-depth budgeting course.

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More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!

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Source: moneybliss.org

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For many people, budgeting can be really tedious, and feel like it traps their freedom and spirit. While there are plenty of advantages of budgeting, it is nice to have one area of free-spending with money.

That is where a slush fund comes in.

A place to spend money with freedom and not worry about ruining your budget and the inability of not being able to reach your money goals.

When you work hard for your money, it is hard to be disciplined with your money every single step of the way.

You want to reward yourself and treat yourself! Specifically with no questions asked.

That is where the slush fund comes into play.

What is a Slush Fund?

The definition of slush money or pocket money is simple – money set aside to spend as you see fit.

A reserve of money set aside for an unknown and undetermined purpose.

Everyone will have their own meaning for their personal slush fund. That is because we all have ways we want to spend our little reserve of fun money.

And this one thing can save a marriage and many, many arguments!

Slush Fund Examples

Each person will have their own purposes for spending their fun money. Here are some slush fund examples:

  • Spa Treatments
  • Car Accessories
  • Lunch Dates
  • Helping others
  • Music or cable subscription
  • Golf outings
  • Happy hour fun
  • Crafting

Honestly, the best slush fund example is something both people do not want to include in their budget. It could be something they do not agree with, or the cost, or the need.

Did you know all of the names for the slush fund?!?! Call it what you want… the purpose is still the same:

  • Pocket Money
  • Spending Cash
  • Pocket Change
  • Allowance
  • Petty Cash
  • Kitty Fund
  • Chump change

Just pick your favorite name for it and understand it is money set aside to spend how you choose.

Regardless of what you call slush fund money, one meaning holds true.

It is a small amount of money earmarked for one person to spend as they choose.

How to Create a Slush Fund?

These are the four rules of slush fund money. It is not hard or difficult to create a slush fund.

You just need to decide in advance how a few line items we will cover shortly.

Nothing complicated. Pretty simple. You just need to follow them.

1. Agree on amount Given to Slush Fund

Every month or week a predetermined amount is given out for each person’s slush money. Remember, the slush fund meaning is their reserve of cash to spend or save as they deem fit.

In the Money Bliss Cents Plan, there are 3 lines dedicated to Slush Fund Money – His, Hers, and Kids.

Slush fund money is just as important for adults – probably more important than any age group.

Everyone in the household can have a little chump change to spend as they see fit. So many times, we hear of using pocket money for kids. However, very few people use it as adults.

2. Fun Spending Your Way – No Questions Asked

The biggest ground rule is no questions can be asked about how or why you spent your slush fund money in this or that way. Period.

Don’t test the boundaries. Respect the rule of no questions asked.

It is hard for a couple not to argue on every single line when they make a budget. So, agree on a slush fund amount and stop pestering the other party on how they spend their money.

3. Cash Only (Or Seperate Cashless Account)

Spending must be in cash. And cash only. At the very minimum, that chump change account is only used for your fun spending.

The temptation to overspend is way too great especially when it is spent on ourselves. Staying away from credit cards is necessary. Especially because it helps with #2 rule of no questions asked.

Here are great options to help you succeed:

4. No Judging

Human nature is quick to judge. Someone spent their money in a way you don’t agree with and you want to speak up to say something.

Not up to you to judge.

Slush money is meant for whatever you want to spend money on. This is not the time or place to be judging how to spend under $20-100 per month.

Plus – Don’t Be an Idiot

This isn’t the time or place to be sneaking behind your significant other’s back. If you are unable to honestly say how you spent the money, then you are on a slippery slope.

Honest and open communication is the key to success.

This isn’t an opportunity to start hiding your actions.

Bonus Tip for Kids –

***A side note on the Kid’s Slush Fund Money…this is how we introduce paying commissions to our kids for jobs done around the house.

That in itself is another post for another day. But, the same rule holds true, we can’t judge how they use their “spend” money.

Advantages of Slush Fund Money

There are many benefits of using a slush account when you are budgeting money. This is especially true at the beginning of your proper money management and budget journey.

You need freedom in your life if not you will be so constricted that you will not meet the smart financial goals you planned for yourself.

1. Agreed Upon Amount

First of all, the amount of money designated to each person’s slush fund money is set at the beginning of the month (or week). Everyone agreed to the budget, so no changing money in the funds.

Sit down and discuss what amount is doable based on your situation. This is based on your budget.

The key is to stick to the agreed amount of money. Use cash to stick to the agreed-upon amount.

2. No Arguments

Remember, no questions can be asked!

No judgments can be made!

A very simple way to steer clear of arguing. One person spends their money before the first week of the month is up – more power to them! Another person saves their slush fund money for a bigger purchase – high five!

There are bigger things to discuss in the journey to financial freedom than how someone spends their slush money.

Pick your battles.

Money is one of the leading causes of divorce. Save your marriage and use a slush fund account. That right there is one of the huge advantages of pocket money.

Related Post: How to Talk about Money with your Spouse

3. Breath of Fresh Air / Freedom

Many people find living in a budget or Cents Plan very constricting and overbearing.

This is why slush fund money is SO very important. It provides a breath of fresh air. A moment to spend money and not worry about the money spent.

Freedom to savor life’s little moments. Enjoy!

Especially if you are struggling to make ends meet, this is a big advantage of pocket money.

4. No Guilt

The last advantage of slush money is not carrying guilt. Regardless of how an adult decides to spend their pocket money, there is no guilty feeling about buying x, y, or z.

Remember rule #3 – no judging, you are free to purchase whatever your heart desires and not be overwhelmed by guilt.

Disadvantage of Slush Fund Money

After listing out all of the advantages of pocket money, you may be thinking there have to be disadvantages, right?

Honestly, the only disadvantage is it is one more category to track and separate out money.

However, that is menial given the advantages of slush money.

Related Post: Complete Guide to Sinking Funds; Why They are So Important?

Ready for Your Slush Account?

This is a key point to remember…

Regardless of where you are on your journey to Financial Freedom, slush fund money is utterly important.

The key to money is to build a strong foundation. That includes how you spend money, how you save money, and how you discuss money.

Even if you start at $5 or $10, you will begin to reap the benefits and advantages of pocket money. The small amount of money will change your perspective and how you relate to money.

As you get further in your journey, you can increase your slush amount to $100+ of fun money!

Just remember the rules of slush fund money in order to see the advantages in your household!

Further reading:

From all of the free and paid budgeting apps, here are our top budgeting apps to check out!

This section may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. Please read the full disclosure below.

Empower Personal Wealth, LLC (“EPW”) compensates Money Bliss  for new leads. Money Bliss  is not an investment client of Personal Capital Advisors Corporation or Empower Advisory Group, LLC.

Personal finance and money management software allows you to manage spending, create monthly budgets, track investments, retirement and more.

Save 40% off on new memberships.

Enjoy guilt-free spending and effortless saving with a friendly, flexible method for managing your finances.

Change your relationship with money!

Personal Capital is wealth management for the Internet Age. The online platform combines digital technology with highly personalized service to provide a holistic view of a unique financial picture (AKA your net worth). 

Make sure to connect all of your accounts within 7 days to set up your Personal Financial dashboard.

Tiller is the only tool that automatically updates Google Sheets and Microsoft Excel with your spending, transactions, and balances each day. 

Start your free trial.

Automate your financial plan with set-and-forget money tools that fit right into your daily life.

That’s why Qapital puts your goals front and center, then helps you plan your spending, saving, and investing around them.

Manage your money less in 5 minutes each week. Reach your money goals with confidence! The personal finance app gives you something to look forward to. 

“The easiest, most comprehensive way to both see where your money is going and plan for future expenses.”

Your automated financial assistant and budget tracker are designed to put you back in control of your money.

Stay on top of your spending, easily track bills, cancel unwanted subscriptions, and find ways to improve! 

Photo Credit:
moneybliss.org

HoneyMoney increases your awareness about your money habits. Being fully aware of your money naturally changes how you spend it.

Great way to use cash flow budgeting. Plus uses “envelopes” to budget.

Start your free trial.

Moneyspire is user-friendly personal finance and small business accounting software that brings your entire finances together in one place.

Have total control over your financial life in one click.

Know someone else that needs this, too? Then, please share!!

Did the post resonate with you?

More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!

Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.

Source: moneybliss.org

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Inside: Dream about what life could be if you didn’t have a job? If you are in the boat of I don’t want to work anymore, then you must read this post.

The reality is most people have days where they absolutely have no desire to work. Yet, you know deep down that you have to make money in order to pay your bills.

You are thinking… I don’t want a job I just want a life.

So, what happens when you don’t want to work anymore?

Well, if you don’t want to go to work today, you could take a sick day and get away with it. You can do that here and there for a while, but unfortunately, your employer is going to catch up to the quality of work that you are able to do or not do.

At this point you might be saying, you know I don’t want a job, I just want a life.

And that is very understandable if you don’t want to work in a field anymore job that you don’t love.

You want time freedom in your life!!

We will dive into the reasons for not wanting to work and how to overcome them when you need the money.

What to do if I don’t want to work?

The best thing to do is to find a job that you love and want to do on a daily basis!

Something that you can’t wait to go to work to be able to do. A way to make money that doesn’t feel like a job!

Unfortunately, too many of us feel we cannot do what we want to do when we want to do it. Thus, we want more out of life.

In this post, we are going to detail. If you don’t want to work anymore, what steps can you take to quit the job and live the life that you want?

Is it normal to not want to work?

I think each and every one of us has a desire not to work. Maybe you are thinking “I hate my job.”

This desire to work may ebb and flow based on what is going on, how you are feeling, and your current situation.

Especially if you are in a situation where you do not enjoy your boss, your co-workers, the company culture, or the current assignment, it will make going to work harder.

Whatever your job entails, if you are not enjoying what you’re doing, it is harder and harder to go to work on work every day.

As you can read on Reddit personal finance threads, there are plenty of people who have shared their stories about how they don’t want to work, seeking solace from others, and looking for ways to get out of the current situation that they’re in.

Also, if you are thinking that I can never make it until I am 55 then think about retirement. You are just sick of working and you may be in your 20s, 30s, or 40s.

It is okay to dream about not working daily!

Why We Don’t Want to Work

There are several reasons for not wanting to work.

Primarily many people do not feel engaged at their jobs, which makes them less likely to want to continue working. Gallup found that only 15% of employees feel engaged at work.1

In addition, there is an increasing amount of competition in the workforce as well as a lack of clear career paths and advancement opportunities for those who desire more freedom or flexibility with their careers. This can lead someone to think about becoming self-employed or going into a different field.

There are many reasons for not wanting to work.

People on Reddit share their stories about how they don’t want to work anymore. Some are still in school, some are retired, and others have other reasons for not wanting to work.

We all have heard about the Great Resignation with people saying “enough is enough; I don’t want to go back to work.”

1. Burnout

Burnout is when an employee begins to feel exhausted and overwhelmed by their job. They do not want to be there anymore and it negatively impacts the happiness of both the individual and their work environment.

If you want to stop working, it is okay!

Just make sure you can still be financially independent.

2. Not enjoying your job

Many people wake up and say, “I don’t really want to do the work today.” If you are not enjoying your job, it is harder and harder to go in every day.

People don’t want to work because they feel like they’re working more than is necessary, or there’s no meaning behind their job anymore.

If you find yourself not enjoying your job, it might be time to leave. Many people experience dissatisfaction with their jobs and want to retire early.

Many times this is when people leave their jobs and find success is the best revenge.

3. Mental Health

Mental health issues can be caused by outside factors, such as stress and anxiety, and can lead to feelings of wanting to avoid work.

For many, the idea of going to work can feel overwhelming and lead to feelings of anxiety and dread. It is also essential to take a step back and assess the quality of your mental health.

If this is something you have been struggling with, it is important to think about why you are feeling this way and take steps to address it.

If this persists, it is important to seek professional help. Visiting a therapist or counselor can help you identify the root causes of your negative feelings and develop a plan to overcome them. In many cases, your workplace may even cover the cost of therapy, so you don’t have to worry about paying out-of-pocket.

This is one of the good excuses to miss work.

4. Lack of Interest

When you find yourself feeling like you don’t want to work anymore, it’s important to take some time to examine the reasons why and identify potential solutions.

  • It could be that you’ve been in the same job for a long time and need a change of scenery.
  • Maybe you’re feeling overwhelmed and undervalued by your current role.
  • Possibly you have other things that are taking president and you don’t have the same level of interest.

Whatever the source of your feelings, they need to be addressed.

5. Support System

Friends and family can be a great source of support, offering advice and understanding. However, if they do not believe in you, it can make it even harder to find motivation.

On top of that, if you have family obligations such as childcare, it can be difficult to make the time to work or even to access the necessary resources.

Talking to your loved ones about your feelings and concerns is a great first step in getting through this tough time.

One of these family emergency excuses could help you in a pinch.

6. Lack of Appreciation

It can be incredibly disheartening to work hard and not be appreciated.

It’s easy to become discouraged and feel like you don’t want to work anymore if you’re putting in the effort and not being recognized.

When this happens it’s important to remember that you are valuable and your work does matter. It’s also important to talk to someone about how you’re feeling, whether that be a friend, family member, or therapist.

You just want someone to say to you, “I appreciate you!”

7. Thinking of Career Change

If you find yourself in a position where you don’t want to work for weeks on end, it’s important to figure out why. Are you having a hard time at your current job or do you no longer wish to pursue a career? If it’s the latter, it can be freeing to consider all the possible career changes you can make.

Many people don’t want to work anymore because:

  • they don’t want to pursue a career in corporate America
  • tired of the same job they’ve been doing for years
  • don’t want to continue vying for raises, bonuses, or promotions

It’s okay to dream about something else, something fresh and different.

You may find yourself researching other opportunities to put your skillset to use.

9. More Interest in Hobby to Turn into Side Hustle

For many people, having a side hustle is a great way to make extra money, explore a passion, and turn a hobby into something productive and profitable.

If you find yourself no longer wanting to go to work and feeling more fulfilled in your hobbies, it may be time to pursue a side hustle.

You can monetize your hobby and create a side gig to give yourself a new source of income.

This will provide you with the freedom to pursue what you’re interested in and make a living from it. It can also give you the option to quit your job and explore other areas of your life.

10. Wanting to make money passively

Making money passively is a goal that many people desire, but it can be hard to turn into reality.

While it is possible to make money passively in the stock market, real estate, or a small business, one can also earn passive income by doing any type of side hustle.

It is better to find ways to make passive income from something you enjoy.

You need to figure out what should I do for a living that will make passive income.

How do you make a living if you don’t want to work?

If you don’t want to work, you still need to find a way to make a living.

Passive income is the most effective way of making money without working.

It allows you to work on your business or hobby full-time and then withdraw a certain amount every month that helps pay for all of your expenses, including food, rent/mortgage, etc.

So, your first step is to create a passive income source.

If you don’t, then don’t say, “I don’t want to do the work today.”

In fact, there are many good excuses to miss work.

Can I survive without working?

Well, that completely depends on your financial situation. (Since most people are not aware of where they stand financially, here are the Money Bliss Steps to help you.)

If you are lucky enough to be a trust fund baby with somebody else managing your money, you are likely fine and can survive without working.

However, if you are like most normal folk, then you may be able to survive for a little bit without working. But over time, it will catch up to you. Not working is not a long-term solution.

While you may be on unemployment and collecting unemployment benefits, or maybe even disability payments that are not enough to make ends meet. In most cities, you can survive in the short term without working. But in the long term, it is not going to work out for you.

If you are serious about not wanting to work, you need to find the FIRE movement, which means financial independence retire early.

That is a better term for not wanting to work anymore. When you want to quit the job and do something else in life, you have to do what is called FIRE.

5 Simple Steps To Quit the Job

To quit the job or the career path that you were in, you have to take steps ahead of time to make sure that your transition (financially) is as smooth as possible.

The biggest question is how can I make money if I don’t want to work ever.

You set aside money to take care of your obligations and bills while being able to live the life that you want to live. That means you have more types of income than just a paycheck.

These are the exact steps you need to take to quit the job. Obviously, it won’t happen overnight. But, you can see the light at the end of the tunnel.

1. Make an Exit Plan

First, you have to make a plan of how finances will work without a typical paycheck. You need to learn how to FI quickly.

In order to retire early or quit the job, you must be able to financially support yourself without a consistent income coming in from a regular paycheck.

Specifically, it means you need to find ways to make passive income. That could be in the stock market, real estate, small business, side hustle hobby, or driving for Uber. There are a variety of different ways to make money; it is just better to find ways to make money doing something you enjoy.

One of the things you will quickly realize is that to make money passively, you must have money on hand to invest. That is the “Catch 22” of why people get caught in the cycle of it being too difficult to change their financial position and just give up.

If you don’t like your job and you don’t want to work anymore, then you need the mindset that something is gonna change, you are gonna make it a reality.

It will be hard for a short period of time to save up the money necessary to build the steps to be able to quit working or FIRE, but you might be surprised how you can double $10k quickly when you put your mind to it.

Motivation is a great thing, especially given the right circumstances.

Related Answers:

2. Save Money

If you don’t want to work anymore, then you have to save money to cover your bills. Period.

There is no way to get around that situation.

Your friends and family are not going to pick up the slack just because you want to quit your job.

So, you have to find all of the possible ways to save money. A great place to start is with one of our money saving challenges.

Another great way to save more money is by changing your habits.

In order to “retire early,” you must save a majority of your income at an early age
to gain the benefit of compounding early. If you are thinking, “Well shoot, I missed that bucket,” then don’t worry … now is better to start than waiting too long.

Things only look up from here!

3. Cut Expenses

You have to be able to live below your means.

If you’re not interested in your job or the career that you are currently in and you don’t want to work anymore, then you need to cut your expenses in order to save more money.

One of the wisest tricks of the FIRE community is becoming a thrifty person. You know when to spend money on quality items as well as you know when to save
money on frivolous expenses.

4. Pick a date.

As with any smart financial goal, you need to put a deadline on when you want things to happen.

If you are not happy with your job and your depression isn’t worth it anymore, then you have to find a date to move on and do something else.

Obviously, you’ll need some of these FIRE calculators to learn how much you need to make your dream a reality.

that happen. Here are some of the best fire calculators that you can find, to learn, how much you need to quit your job.

5. Start Hustling

Let’s face it, 2020 changed the workplace as well as our priorities. Honestly, I think it was for the better. We all realize there is more to life than just the constant line of being busy.

In addition, many of us found the extra time that we can now put to work and start to make money.

It is easier to work when you have a target goal in mind of not working anymore. You must start saving money to put to work passively.

Below you will find ideas to help you search out the best serious ways to make more money. The last thing you want to do is learn what happens when you don’t save enough for retirement.

When You Don’t Want to Work Anymore

In this post, we answered the question of how can I make money if I don’t want to work.

The secret sauce is called passive income.

You must earn money on your investments. So, yes, now is a good time to invest in stocks.

There are many ways to make passive income; it could be in the swing trading the stock market, real estate, a business venture, a side hustle, or simply long-term investing.

Unless you are massively independently wealthy and part of the 1%, with millions of dollars that you do not know what to do with, then you will want to make some money on your nest egg that you create over time.

If you are saying, “I just want a life,” then stop waiting for the magic time for your retirement. You don’t have to wait until the retirement age of 65 years old.

You are in charge of your life and can make it happen… if you put your mind to it.

Source

  1. Gallup. “What Is Employee Engagement and How Do You Improve It?” https://www.gallup.com/workplace/285674/improve-employee-engagement-workplace.aspx#:~:text=Based%20on%20over%2050%20years,in%20the%20%22engaged%22%20category. Accessed March 11, 2024.

Know someone else that needs this, too? Then, please share!!

Did the post resonate with you?

More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!

Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.

Source: moneybliss.org