Saving vs. Spending: How Should You Manage Your Money?
As humans, we are naturally good at spending money. But as much fun as spending is, we have to find the balance between saving vs spending. This means you have to take a good look at your spending habits and see what changes you have to make. And when you are making those changes, it’s good to have some tips to help you. Here are five tips to help you find the right balance.
Learn These Tips To Balance Your Saving And Spending
1. Keep Track Of Your Income
When it comes to your saving vs spending, the first thing you need to do is keep track of your income. First, sit down with your bank account invoices and pay stubs to determine how much you’re making every month. Even if your income varies month-by-month, come up with the average number for what you’re making every 30 days or so.
Be sure to include any extra cash you bring in from things like government assistance, alimony, child support, side hustles, or other sources. You’ll then need to break down what your expenses are to know what you have left over to either save or spend. You can do this on paper, through a free budgeting app on your phone, or through your computer.
2. Pinpoint What’s Important To You
Making sure to pinpoint what’s financially important to you is the next thing you need to do when it comes to saving vs spending. Choosing our priorities is easier with experience, but even as an adult you may not love the idea of saving for retirement instead of taking that weekend trip with your friends now. Whether you love it or not, you need to pinpoint what’s more important to you.
You have to decide between being financially secure and enjoying your life with extra money later, or having temporary fun now but ending up with zero at the end of the month. Write down your financial goals and why you have them and then hang this paper up somewhere you can see it every day. It’s important to remind yourself why you’re balancing your saving and spending so that you can better stick to your budget.
3. Save First
Since you’re reading this article, it’s safe to say you need and want to save some amount of money. Deciding between saving vs spending is different for everyone because we all have different goals. But no matter what your savings goal is, you need to save before you spend a penny every month. We usually think of housing and food as our primary needs, but it’s time to put your savings into the same category. You need to plan to build up your emergency fund.
This could be by saving as little as $10 every two weeks; but, ideally, it should be as much as you can put aside. The goal is to have enough emergency money to cover your expenses for 3 months if you ended up unemployed. This means if your paycheck hits on the 1st and you have $1,000, you put a portion of that into a separate savings account before you spend it. This is called “paying yourself first”, and it has been proven to be more effective than saving after expenses.
4. Cover Your Needs First, Then Wants
After paying yourself first, you would then move on to pay for your housing, set aside money for groceries, and pay for any other needs such as utilities, car payments, credit card payments, and so on. You can also focus on paying down high-interest debt as well, as this is often as pressing as saving. After these expenses should you decide how much discretionary money you have left over to spend on other wants.
5. Make Sure You Can Pay For Emergency Needs
If you don’t have an emergency fund built up yet, emergency spending could win the battle when deciding between saving or spending. This happens when you need money for a sudden bill during natural disasters, car breakdowns, medical scares, or even if you fall behind on something like your electricity service. For those still working on their savings, consider applying for a registration loan through Fast Auto Loans, Inc. for help.
These loans could cover up to $900 of your urgent expenses through a quick and easy application process that starts online. All you have to do is use your registration as collateral. To get a registration loan in Arizona, start by filling out the online form found on our website. One of our representatives from the nearest Arizona registration loan locations will give you a call shortly after to answer any questions you may have and walk you through the process.
Get Your Saving Vs Spending Under Control Today
Deciding between saving vs spending isn’t easy and requires some work. With the help of these tips, you can decide which one can help you the best. And if you hit a road bump and have an emergency expense happen, let a registration loan help you get those expenses handled so you can go back to saving. Fill out our short inquiry form today to learn more about this loan today.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.