“Just Spend Less” – Here’s Why Most Advice on Saving Money Sucks (and what to do instead)
Okay, we’ll be the first to admit that spending less than you earn is actually very good advice.
But is it realistic? Spending less is great, if you can actually do it. But what good is good advice when it’s almost impossible to follow?
You might as well type “start climbing” on a piece of paper, dress it in a fancy book cover, and sell it at your local Barnes and Noble as The Insider’s Guide For Conquering Mount Everest. Great advice needs to be more than “just do it” (sorry, Nike).
Don’t worry though; we’re about to give you a (relatively) easy fix to get your money on track.
Avoid a financial diet
“I love dieting” –said no one ever. That’s the problem with saving money – most people approach it like a diet. A budget is framed by what you can’t spend – but who actually wants to deprive themselves of money (or chocolate cake)?
Pinching pennies is no real way to get ahead, and tracking every single dollar you spend just feels like a chore. Having zero flexibility (i.e. $200 for groceries) isn’t going to leave you feeling very wonderful. That’s why you need to avoid a budget at all costs. Yes, you read that right.
Here’s what you need to do instead:
The 20-50-30 plan is a fun and flexible way to account for your savings.
First – calculate your monthly take home pay (the amount you keep after taxes). The 20 is the percent of your money used to pay yourself first. This is non-negotiable, and is also awesome – investing in yourself is the biggest luxury in the world! Use this money for financial priorities, like getting rid of debt, creating an emergency fund, and then (our favorite) investing! Sorry, but this is not a handbag fund.
30 percent then goes straight towards fun! We all have cheat days when getting into shape – think of this like the financial equivalent of screaming out “I want cake!” at a restaurant. Spend this on whatever inspires you – but make sure your other parts get taken care of first (sorry, the 30 has to shrink if you need a little extra to take care of the other stuff).
50 percent is for essentials. This is the less fun part- but it keeps the lights on. Spend this on your rent, monthly bills, anything that’s a need.
Follow this plan and you’ll be well on your way to a healthy savings account, minus the headache.
Please comment and share your money-saving tips with the community! And stay tuned for more financial how-to’s.
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