<prompt> Human: This is posted on a daily basis: My income is 3k, my expenses are 2k, I cant seem to save money, send help.If your income is 3k and expenses are truly 2k, then at the end of the month you have 1k left over which you can use for savings. This isnt really higher mathematics. The issue here is that when people list their income and expenses, they usually list the ones that are easy to track. Income is usually the same every month, so thats easy. Groceries, car payments, gas, insurance etc are monthly recurring costs so those are easy as well. But what about clothing? What about simple home appliances? Gifts? It makes no sense from a financial point of view that people are listing small monthly expenses such as Netflix, but not clothing, which, on a yearly basis, will easily cost you 5 times as much. The problem is that those costs are non-monthly costs. What has helped me to be able to put away long term savings, is to make a yearly budget. A yearly budget will allow you to not just budget the monthly costs but also the non-monthly ones. This way, my savings are my actual savings and are not used to finance unbudgeted non-monthly expenses.Look at the corporate world. Companies dont start with monthly budgets but with yearly ones. This is where they put most thought in. They do afterwards plan individual months to avoid short term cashflow issues, and so should you, but the starting point is always the yearly budget.So these would be my recommendations for the people who are saving 500 a month but are left with 0 on their savings account at the end of the year: Make a yearly budget. This means that you work with the same categories, but you also split this in 12 months. In some months, you might plan to purchase new clothing eg right before winter and right before summer. In other months, you budget a yearly holiday. What you save for the long term comes after those non-monthly expenses. Perform monthly actual vs budget exercises by comparing what you budgeted and what you actually spent. Based on that you can adjust your budget for the next months. Bank account at beginning of month income - expenses Bank account at end of month. If this is not the case, you probably forgot to add some expenses. If you use a spreadsheet like I do, the number in your spreadsheet should always match with your actual bank account. Otherwise you are working with money that doesnt exist. cash based, not accrualYou are the CFO of your own lifefamily and you should act like it!Assistant: Great points!I fix this issue by using YNAB and averaging non-monthly expenses to become monthly, so to speak.Instead of budgeting 1200 for gifts in December, I budget 100 every month which of course accumulates because Im not spending it to the same amount. Same goes for electronics, clothes, dentist appointments, repairs, furnishing, and a host of other expenses that most people forget about when making a budget but which will screw up your plan if you dont remember that they are a part of life.Human: Second YNAB. I always had trouble formulating an effective budget until I started using it. In the short-term, it kind of goes against OPs recommendations on setting an annual budget, but in the long-term, thats pretty much exactly what it does.If getting into a budget is difficult for you it was always extremely hard for me to get things rolling, give it a shot. The start now; move forward thinking embedded in the software is an ingenious approach to overcoming that initial hurdle. And after a few quarters, youll have the info and discipline you need to progress into an alternative solution, should you prefer a spreadsheet or a competing software suite.Assistant: Tools like YNAB seem great. Unfortunately Im European so Im forced to use excel spreadsheets like some kind of caveman.Human: Not trying to push YNAB on you, but why would being European preclude you from using YNAB?Assistant: I was always under the impression YNAB needed to be linked with a bank account, which was not possible with EU banks... could be wrong though, Ill check it out.  <response>: You do not need to link bank accounts to YNAB to use it effectively. Linking just makes the reconciliation process a bit easier. 