Making Your Money Work for You
Hi, I’m Saundra Davis, financial coach here at SaverLife. Today we’re going to talk about how you make your money work for you.
What is a budget?
If you ask, “Do you have a budget?” many folks will say no, they don’t have a budget. The fact is we all have a budget, whether we know it or not. Money comes in and money goes out and how our cash flows by default becomes our budget.
Is your budget working for you?
The question is: Are you happy with the choices that you make and are your choices getting you what you want? If the way you’re spending your money is not getting you what you want, you might be happier if you make some choices about where you want your money to go before you actually spend it. There are some easy rules of thumb that you can try to see if one of them work for you.
The 80/20 rule
Let’s start with the 80/20 rule. Many people try to live within 80% of your income, making sure that 80% of all your income goes to your living and your lifestyle expenses. So we’re talking about your rent or your mortgage, your food, your transportation, leaving 20% to put in to savings. If you live in an area where it’s just not reasonable to live within 80% of your income, you might have to do a 90/10 percent split: 90% for your living expenses, 10% for savings.
The key is make sure savings factors in to all of your decisions, even if it’s only a little bit and that you put your savings aside first before you pay all of your bills.
Re-evaluate your new strategy
Now the question is: How will you know if this is working? Try on a new approach for a short period of time – one, two, or three months – to determine if you’re happier with the choices that you’re making. Remember you’re the boss. Your money, your decisions. You can decide how you save and how you spend.
What are you saving for?
Saundra Davis is a nationally recognized financial coach and educator. Her experience in the U.S. Navy, where she made every money mistake possible, and her 20 years serving community-based organizations led her to the reality that the best way to help people find a path out of poverty is to help them become their own financial expert.