Too often, you’ll hear advice from two different financial camps: one side will tell you to save every penny you make, and the other side will tell you to live in the moment and spend it all immediately. Both are wrong. Let’s explore how you can strike a balance between saving and spending with the money you make every month.
Set Goals Early
The best way to ensure you strike a good balance between enjoying the money you make and saving enough of it is to set your financial goals early. Do you want to go to college or save for your child’s college education? Do you have a retirement goal in mind? Do you need to pay off your debt consolidation loan ASAP?
In any case, set your goals early so you know how much you need to save every month. Then you can use the rest of your extra money for fun guilt-free!
Allow Necessary Comforts
Just because you’re saving doesn’t mean you can’t live in relative comfort. Always allow yourself enough money in the budget so that you can be comfortable in your day-to-day routine. If you force yourself to save so much that you can’t afford TV, good food, or other creature comforts, your resolve will gradually weaken and you’ll eventually not want to save another penny.
That said, if you really don’t need something, like a new widescreen TV or a new car, try to avoid the temptation to spend money on it now. Save up for those things instead and you’ll avoid debt, boost your credit score, and practice good financial responsibility all at the same time.
Budget Some “Fun” Money
Similarly, try to allow yourself a little fun money from time to time. If all you do is work and you never play, you’ll get tired of saving and you’ll break your saving habits… maybe with a spending frenzy.
Instead, budget yourself a little bit of fun money every month, whether it’s $50, $100, or more. This money will allow you to pursue hobbies and recreational activities without feeling guilty since you technically budgeted for them and aren’t dipping into your savings account to pay for your fun.
Budget Found Money Equally
“Found money” is any money that you didn’t expect to make, whether it’s $100 found on the street or an unexpected bonus at work. Rather than funneling all found money into your savings account immediately, cut yourself a little slack and budget a little bit of that found money into your fun spending account.
This way, you’ll be excited whenever you find new money or earn more money at work because you’ll be able to spend some of that cash on things you want now, and you’ll be able to meet your savings goals for the future sooner. Again, this all ties into making sure you are both mentally healthy and practicing saving sustainably.
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