Let’s talk about Saving!
Is your random spending prohibiting you from doing anything extra?
I went to Spain, on multiple cruises, to Alaska, on a long East Coast road trip, to New York City, to Georgia once a month, and the list goes on. I’m asked all the time, “How can you afford to travel so often?” Well, the answer isn’t that I’m rolling in the dough if that’s what you think!
I make a normal salary for a newer business owner who is 24 years old. I pay my bills like everyone else. I even have a hefty car payment of $500/month. So what’s my secret?
I’m not stupid with money. That’s the secret! I live within my means. I only buy what I need.
I’ve tried to budget SO many ways and I’ve just kind of found what works best for me.
Budgeting Ideas and Tips
In the past I’ve tried putting cash in envelopes. I liked this because you had a tangible way of seeing how much is left. I had a food envelope, a rent envelope, an entertainment envelope and so on and so forth. If you had $200 in your food envelope, got groceries, and had $50 left. Then you went to McDonalds a few times, and your co-workers asked you out for drinks… you HAVE to say no. The envelopes set boundaries for you. It sets guidelines that you have to follow in order to remain on budget. This works if you’re newer to budgeting, don’t have a lot of self-control, or just honestly prefer cash for whatever reason.
I’ve tried the “spend first, save later” method. This is where you get your paycheck, you spend on food, and whatever you need until your next paycheck. On the day before your paycheck you transfer everything left to your savings account and start fresh when the next deposit hits your account. This worked okay for me, but not my favorite because of its inconsistency. It was easy to overspend and some weeks I wouldn’t have anything left over.
What I do now is my ultimate favorite! I’ve read Dave Ramsey and multiple other savings/money/budgeting advice books, but to tell you the truth there is no “perfect budget”. You have to do what works best for you.
My Simple System
This is what I do:
First, I have 3 accounts. Well, I have multiple, but I have 3 that I really use often. One account is my Long-Term Savings Account. I put money in here and then I forget about it. I don’t travel with it, I don’t look at my balance. I’m not sure what this money will be used for. It could be used for emergency, taxes, down payments, housing needs etc. I hardly EVER touch it. I put a minimum of $100 a month in here and totally forget about it. It comes right out of my account and I think of it as “money I never had”.
My second account is a fun savings. This is my favorite account because I get to spend money out of it! I typically have 3-4 things I’m saving for at a time. This is where I put this money. I keep a close track of what I’m saving for and how much is in each “fund”. For instance, if I’m saving for a vacation, a new computer, and a new treadmill, I keep tabs on how much I have going towards each thing. When it comes time to buy this item, I transfer it to my main account, and spend it out. This isn’t for everyone, but I love to keep things separate.
My last account is just my “normal” account. This is the account I pay off credit cards with, my bills come out of etc.
Before we move on, you should know. I put EVERYTHING on my credit card and pay it off in full each month. Sometimes multiple times a month. I use a Discover It credit card and I rack up TONS of cashback. I used to put this money towards my balances, but now I save it for, you guessed it, traveling!
Disclaimer: There was a time when I owed a lot on my credit card. When that was my life, I did not actively use my cards as much. I worked to avidly pay them off and get myself out of debt. This post is not about paying off debt. We’ll save that for another day! This post is about budgeting for what you WANT. So I’m predominately writing to people who have little to no credit card debt and more of a financial freedom.
First, I look at what I’m working with. Write down what’s in your account CURRENTLY. I look at what’s in my “normal account.” This is the account that my direct deposit hits. This is my everyday spending money.
Then, I subtract everything that HAS to come out by the time my NEXT deposit hits. These are bills, food, etc.
Next, I see what I have left over. If your answer is NOTHING, then you need to reevaluate. If you can’t afford to save ANYTHING each month, you need to make a change. Take a hard look at your job choices, your car choices, your spending habits, and make a change. There are a billion and one jobs out there. Always be willing to work to have freedom, over struggling due to laziness. Interest payments are no joke.
When I see what’s left is when the fun begins! I typically take some off the top first for travel and move it to my savings account. I keep an ongoing list of what I need/want. Each paycheck, I distribute my “extra” to these things. I may put $50 to summer vacation, $50 to some new shoes, and $50 towards my oil change.
These things are not random. I don’t just decide on a whim where I want the money to go. I plan in advanced how much I need for each thing, and what my due date is.
I plan what I want and budget way in advanced. I’ve learned that this is the ONLY way I get to travel and explore.
I’ve created a new freebie for you all that you are going to LOVE! This freebie allows you to think and plan ahead! It lays out everything what you want, and WHEN you want to begin saving for it!
Here’s the real trick. If you don’t give your self ALLOWANCES, and stick with them, you won’t have much left over. (Unless you just make a ton of money!) When I get my paycheck, I assign every penny a job. Unless I intentionally make a “random spending” fund this paycheck, there will be NO random spending.
I don’t live outside of my means. For me, travel is my #1. That’s my passion. I’d rather spend $50/week on food and eat the same thing all week, than to eat out and have less money left over to put in my savings account. I’d rather wear “average” clothes 99% of the time to SAVE specifically for my awesome trip!
There are tons of things that you can do to set yourself hard limits. Plan your meals in advance. Plan where your driving in advance. This will cut down on both food and gas budgets. Cancel unnecessary subscriptions. Switch to a cheaper gym membership. There are so many things that we can do every day that will allow us to do more in the future!
So tell me, what are your money saving tips? What do you LIVE to do? Are you currently saving up to live your passions?? Leave me a comment below!
P.S. Don’t forget about the freebie! Click the image below and enter your email to get this amazing budgeting freebie!