Budgets and Savings: How to have your cake and eat it too

Are you racking up high-interest debt by putting purchases on credit cards and thinking you’ll pay for it later? Are you prepared for possible challenges with a rainy-day fund, or do you spend each paycheck as it comes? For many people, it can be hard to find ways to save effectively.

I’ve said it before: budgeting and penny-pinching is not the way to think about saving, nor will it lead you to a fulfilling life. This mindset makes saving feel like deprivation—when in reality, it is so valuable and empowering to be in control of your finances.

If you were on a diet to cut back on sweets, would you put a large piece of cake on your plate for dessert and then tell yourself you could only eat a little? No, you’d take a small piece to begin with—much easier to resist temptation if it’s out of sight in the first place!

You can take the same approach with financial wellness. Here are action steps you can start today:

  • Take a look at your most recent paycheck, and find your take-home pay. Adjust that amount as needed to figure out your total monthly income. This is your starting point: now apply the 20-30-50 plan.
  • Make saving easy by keeping a set portion of your funds in your account and allow yourself to spend them: that’s the “cake” you get to eat.
  • Divert another portion of each paycheck straight into an investment account by setting up an automatic transfer that goes through as soon as you get paid. That way, the key 20% is “out of sight, out of mind.” You’re able to save effortlessly, while focusing on what you can have rather than what you can’t.