Budgeting Tips: How to Know When to Spend and When to Save

Budgeting Tips: How to Know When to Spend and When to Save
  • Opening Intro -

    Many people aren't sure when to spend their money and when to save it because they haven't taken time to develop a long-range financial plan.

    When you have a budget, it becomes easier to save, as well as spend, without feeling guilty or obligated.


How can a financial plan teach you better habits with your money?


If you do not have a retirement fund, you should stash as much as possible into that fund. You should put about three percent of each paycheck into a retirement account. Once you do that, you can start thinking about how to spend the rest of your money. It’s important to note that a retirement fund should only be started after you have a sufficient amount of money in your savings account.

Housing Payment

Is Your Housing Payment More Than 30 Percent of Your Income? Those who have a housing payment should not spend more than 30 percent of their income on that payment. If you are spending more than 30 percent of your income on a house or apartment, it may be a good idea to find a roommate or find a cheaper place to live. While you want to be happy where you live, spending too much on payments can be exhausting and dangerous for your financial future.

Vehicle Repairs

Would you be able to take your car in for repairs right now without worrying about how you will pay for them? If the answer is no, you need to put more money into a savings account as soon as possible. This goes for any small emergency. You should have enough savings for unexpected bills like vehicle repair, medical care and more.

Do You Have Sufficient Assets?

If you ran into a financial emergency, it’s important to know whether you would be able to sell or lease your assets to get you out of financial crisis. If you do have assets that you might want to sell in the future, consider keeping them in a storage unit until you need or want to sell them. This will allow you to have a little extra spending money, knowing you can sell valuable items if you absolutely needed to.


Make sure that you purchase health, car and home insurance for yourself. If you do not have insurance, this is one thing that you should be spending money on regardless of how much it costs. Replacing your home, fixing a car and receiving medical care is much more expensive


Do you have any money in stocks, bonds or real estate outside of a retirement account? Make sure that you put part of your paycheck into an interest bearing or appreciating account that you can withdraw from without penalty. Any extra can be used as spending money, and this account should only be used in emergencies, not for quick cash.

By making wise choices with your money and saving first, you will find that you might have more to spend in the end. Once you have established savings accounts and a retirement fund, the extra money can be used for fun purchases, and you won’t have to feel guilty about it.

Anita is a freelance writer from Denver, CO and often writes about home, education, finance and business. A mother of two, she enjoys traveling with her family when she isn’t writing. She suggests renting a storage unit at The Self Storage Place for a safe location for your assets and valuables that you might want to sell in the future.


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Categories: Money Management

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