“Money doesn’t grow on trees”, as the classic saying goes. And because it doesn’t come as easy as wishing for it, you need to abide by some money-saving rules.
Otherwise, you’ll panic. Stress will mess with your head with regard to how you’ll stay afloat when bills come in.
And sadly, many of these money rules are rather strict. They ask you to give up certain items and activities that you don’t want out of your life. By the looks of it, they need you to drastically downgrade your lifestyle if you want to save money.
Fortunately, there are these two money-saving rules. Unlike other rules, they will help you save money without getting rid of anything you still want in your life.
Observe 50-30-20
This rule is the brainchild of a Harvard bankruptcy expert named Elizabeth Warren. She says you need to stop relying on personal loans and instead, be wise with your finances.
Her 50-30-20 rule is a breeze to follow and a straightforward approach to saving money. It states that you need to acknowledge 100% of your income, and then divide it accordingly.
Here’s how you do it:
- 50% = needs
- 30% = wants
- 20% = savings
Here’s an example. If your monthly income is $10,000, you should divide it like this:
- $5,000 should go to your needs. This includes expenses for your housing, health insurance, groceries, and utilities. This takes up the bigger portion because your expenses here should come first.
- $3,000 should go to your wants. Hobbies, fine dining, and social activities are some examples.
- $2,000 should go to your personal savings account. If possible, it’s best to leave this amount untouched.
30-Day Period
Have you ever asked yourself this question: “What if you’ll change your mind after some time?”
If you have, then you’re likely to favor this rule. The idea here is to prevent impulse buying. After all, a big hindrance to your ability to save money is your urge to make sudden purchases.
Here’s a breakdown of how this rule works:
- Stop yourself from buying an item that’s clearly a luxury.
- Instead, pause. Then, write the name of that item on a piece of paper and leave it someplace accessible – and will still be accessible after 30 days.
- After 30 days, think about whether you still want to buy that luxury item. If you don’t want to pay for it any longer, consider your problem solved.
For example, you might not want that cute (but expensive) electric bike you wanted before. After all, there are affordable electric bikes that are just as cute.
And if you still do, your problem is still solved. This time, you’re 100% certain that you want the item. You also have more money to pay for it this time around.
Wrapping It Up
Money can affect your happiness. It can make you feel like you’re down on the ground. And it can make you think as if the world is your dominion.
That’s why you need to use your money wisely. If you use it wisely, you’re more likely to upgrade your lifestyle and ultimately, live happily!
