We’re back with another post in the financial independence series! This week we chatting about all the money principles you need to know to help you save BIG for your money goals.
If you feel like you need a better handle on the basics, check out Personal Finance 101.
Are you ready to keep going on your money glow up? Let’s dive in to these money principles:
Pay Yourself First
I’m so thankful my dad taught me this one since I was really little. This essentially means to always put money away for you in your retirement accounts and savings accounts, before you pay for literally anything else.
The way I like to do this is by setting up automatic payments at the start of every month that will take the money I want to pay myself and deposit it into my savings, retirement, and investment accounts. That way I don’t even have to think about it, and whatever money is left over after I pay myself, is what I’ve got to work with that month for bills, necessities, and spending.
Live Below Your Means
If you want to save money and grow wealth, it’s important to develop habits where you are spending less that what you are earning.
This is a lot harder than it sounds, and privileges can play huge factors into someone’s ability to do this. Get familiar with how much money you’ve got coming in every month (after taxes and after paying yourself), and what you spend your money on.
If you’re spending more than you’ve got to work with, where can you make adjustments?
The 50/30/20 Rule
This is a classic that many of us have probably heard of before. It’s a simple, but effective budgeting method that says to take your after-tax income and divide it in three ways:
- 50% for necessities (rent, bills, utilities, groceries, etc.),
- 30% for wants (anything that sparks joy), and
- 20% for savings & investments
I think this is a great strategy to use if you’re just starting to budget and get familiar with your finances.
If you’re wanting an extra challenge, or if you have more aggressive goals, try the approach I generally try and stick to: 50% for savings & investments; 30% for necessities; and 20% for wants.
Value-Based Budgeting
I don’t believe in seriously restricting yourself in order to save effectively. It’s not fun, doesn’t feel good, and just leads to a lot of guilt. Overall, it’s just not realistic.
It’s 100% possible to save money, invest, grow your wealth, and spend money on things you like. But thats the thing, you have to spend your money on what you actually want to spend your money on.
Go through your monthly expenses and credit card charges and ask yourself: “do I actually want/need that?”
Cancel subscriptions you don’t use anymore, and stop buying stuff you don’t actually use or like! Give your bank accounts a little bit of spring cleaning. When in doubt, channel your inner Marie Kondo and ask: “does this spark joy?”
Don’t Spend Over 30% of Your Credit Limit
This is a great tip for those trying to up their credit score. If your credit limit is $1000, only charge $300 on your credit card each billing cycle—and pay it off in full! Don’t spend more than you are actually able to pay for!
Take Your Full Employer 401(k) Match
Don’t leave free money on the table!! Ask your HR department if a match is available and how much. Work with them to make sure you’re contributing at least that amount into your account.
When in Doubt, Pay Off Debt First
If you don’t really know where to begin, a great way to start is paying off debt. Time to start chipping away at those student loans! And, any credit card debt you have.
Set yourself a monthly goal and use the pay yourself first strategy. Put that money aside and don’t even think about it.
I paid off my student loans (several thousand dollars) right before my 26th birthday. I did this by taking every work bonus and tax return, and automatically using it to pay off my loans.
You don’t have to be as intense as I was. Start by taking half of any extra money you get and paying your loans off that way. If you have extra money in your budget at the end of the month, use that too!
Automate Everything
This will make everything we are talking about here soooo much easier. It’s honestly just a little bit of legwork to set it all up, and then you’re on your way to having your money work for you.
Automate your credit card payment (in full!), your bills, and paying yourself first into your savings, retirement, and investment accounts!
Your Money Glow Up Is On It’s Way…
Well, there you have it friends! These are my top tips and money principles for starting to save big bucks towards your financial goals. And, they are the exact same tips I used to save enough money to take my first ever career break. When used responsibly and sustainably, they really do work!
Please remember this: saving up big bucks doesn’t happen over night. It takes months & years of intentional action and consistent habits to achieve this. Saving money isn’t always easy! And, it’s a very personal journey unique to each and every one of us. Use your best judgment, and implement the strategies that make sense for you, your lifestyle, and your goals.
TL:DR don’t beat yourself up if this feels overwhelming. It’s takes work and sustainable systems to make it happen.
I’m cheering you on!
Stay Stellar,
Celeste
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