How to Invest: Budget Your Savings, Spend, and Investments | Phil Town
The Save-to-Spend Budget
If you’d like to become an avid saver, and/or if you scored in the lower range on our budget quiz, try this Save-to-Spend plan. While most budgets are designed to control spending, this one is designed to expand your saving.
And strangely—wonderfully—the focus on saving helps you to spend less.
Here’s the plan, based on a monthly income of ,000. You can work from your pre-tax or after-tax income; pre-tax helps you save more. Either way, aim for these percentages:
- Set aside 10% per month for retirement. (,000 x .10 = 0)
- Save 10% for long-term needs, i.e. a new car, a down payment.
- Save 10% for short-term and unexpected expenses, i.e. a friend’s wedding this spring, replacing a lost cell phone.
- Stash a final 10% for fun, frivolous, pleasure.
Total saved: ,600
If living on the remaining 60% (in this case, ,400) sounds impossible, don’t flip out. This is the save to spend plan, remember? You don’t really live on beans and 60% of your income. You end up spending two of those four savings buckets every month, and the third one as needed.
The beauty of this system is three-fold:
- By creating stashes of cash, you will be able to cover all your expenses—especially the curveballs—and avoid relying on little Ms. MasterCard.
- As you ramp up your savings, you’ll pare down your spending…because you’ll want to save.
- You never feel like you’re on a budget. You feel rich, because you have cash growing in your accounts.
Let us know which spending plans (budgets) you’ve tried and what seems to work best for you.
Video: How Much Money Should I Give, Save, And Spend?
Great resumes are the price of admission, not the focus of our hiring process
How to Cook Adzuki Beans
60 Auburn Hair Colors to Emphasize Your Individuality
Dr. Andrew Weil’s Life Advice
How to Use a Fax Machine
11Natural Remedies That Can Make Your Allergies Disappear for Good
The Challenges of Starting a Business When You Have Ulcerative Colitis
How to Make Plum Puree
How to Come Out to Your Friends
Why Cream Foundation Belongs In Your MakeupKit
How to Make a Felt Ice Cream Purse
Ive Never Had a Period But Im Still a Woman
How to Deal With an Evil Ex Boyfriend