Everyone needs to budget for purchases both large and small. And whether you’re just learning how to save or are a seasoned pro, there are countless ways to help save another dollar. Deciding to prioritize savings in your daily habits will help you reach your financial goals, no matter what they might be.
Budget to Zero
Coined by personal finance expert Dave Ramsey, this concept is quite simple: give every dollar a job, name, or task. In that vein, when you know how much money is coming in every month, allot each dollar to a specific category, bill, or account. Every month, take some time to break down anticipated income and expenses. Then, give each dollar a job. If you have money left over after paying for everything on your list, don’t stop. Instead, continue to find jobs for those dollars. Maybe 10% of surplus money goes into your vacation fund and an extra $6 goes toward your car payment that month. When every job has a dollar, not a dollar goes to waste.
Prioritize Your Needs
The line between needs and wants can be muddy sometimes. For example, you need a car to get around, but do you need a brand-new pick-up truck or is your current sedan working just fine? A lot of people will even say, “Yeah, I need another pair of jeans or a new phone.” The reality is that while you need a mode of transportation, adequate clothing, and the ability to communicate, you don’t need to cash out on the most expensive options.
Indeed, you can get by with a used vehicle, worn-in jeans, and a phone that’s a more mature generation. Think about the things in life you need like food, utilities, shelter, and transportation, and make selections that fit your financial means. Once you’ve paid for these expenses, as well as any other debts and/or responsibilities you might have, you can start assigning more dollars to these categories to buy more luxurious things.
Buy with Cash, Not Credit
In a world where credit matters to buy a house, a car, or even attend school, building a line of credit is an important consideration. However, you shouldn’t buy things on credit that you could otherwise purchase with cash. When you buy on credit, you are paying for that convenience, and that convenience could be very expensive. Instead, decide what things you would like and start saving for them.
There are lots of great savings tools out there to put your dollars to work — and the Monorail app is a great example. By using this app, you can add items to your wish list, budget for them, and work toward your goal of obtaining them without finding yourself in extensive debt. It’s a great way to keep each of your bucks busy as you become more disciplined in saving.
Know That Budgeting Equals Progress
If you’re someone who tends to be an over-spender, trying to live within a budget can feel uncomfortable. It can be hard to not just buy what you want, especially when you have the credit to do so. As you start your budgeting journey, remember that every time you work on your budget, you are making progress toward your goals. Maybe you want to budget to save for a big purchase, pay down debt, or create a nest egg or college fund. Budgeting allows you to progress to make your money do great things!
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