How We Budget and Save
HOW WE BUDGET AND SAVE!
We are big on saving our hard earned money, but also love spending $8 on an almond milk latte. It’s all about finding that happy medium; you still need to be able to treat yourself and have fun, while simultaneously budgeting and saving for your future.
Before we go any further, we want to point out how imperative it is to understand how much you are truly spending vs what you are earning per month. If you’ve never gone through an exercise like this before, you absolutely need to - it will immediately paint a better picture as to where you are at financially (not necessarily good or bad, just clearer!). It can be a daunting and overwhelming task but so worth it. We created a budget doc in google sheets to help visualize personal finances and seamlessly break down money coming in vs money coming out, ultimately telling you how much you are saving. We will share below! If you want to use ours, then great that makes us so happy you find value in it! But if you think something else will serve you better than go that route and then you can circle back re: our tips below.
♡♡ OUR BUDGET DOC: S&T BUDGET — MAKE A COPY! ♡♡
*Make a copy. **Please note that these values do not reflect our own personal finances, please input the values that reflect your monthly income and expenses. This document is to help make finances not so scary for the everyday person. We are not certified to advise on finances, please seek assistance from a professional if you are needing financial guidance.
Once you have a grasp on your income minus all of your expenses, it’s time to start setting goals and finding ways to budget accordingly.
Here are a few of our money saving tips and ways to budget:
Understand your current state. The first step, is to conduct your own findings and have an all encompassing visualization of your current financial standing. This can be scary, but it is also liberating to have a clear view of where you’re at vs where you want to be. Our google sheet (shared above) is how we personally approached this and many others have found it helpful, but seek what works best for you! You just want to get a general idea of where you’re at, so you can start making realistic goals for yourself.
Set short term and long term goals for yourself. These need to be achievable! When you have a breakdown of what you have saved up and an understanding on what your income less expenses are, you can begin setting realistic goals for yourself. If you make $50k a year, then obviously your goal cannot be to save $50k (unless you win the lottery or there is something else going on? Lol) - we know it sounds simple but it’s easy to get caught up in wanting to become rich when we don’t really calculate a feasible way to take the steps to get there. You have to start somewhere, even if it’s small. When we had our first jobs out of college, we definitely weren’t walking away with large chunks of money to contribute to our savings; a lot of our income was being immediately used to pay for basic needs like rent, food, car payments, etc.
Examples of some goals we set:
♡ Save “$X” amount or a % per paycheck, whichever seems more reasonable
♡ Have X number of “Zero Spend Days” This means you spend zero dollars actively that day. AKA make your own meals, no online shopping, and skip the Starbucks. It sounds like a small thing, but a few zero spend days a week and you are reeling back your spending before you know it!
♡ Any time we purchase a piece of clothing we must remove one from our closet. This helps us get rid of unnecessary “stuff” and makes us think twice about our spending.
Don’t get discouraged. Saving money truly takes time and patience - if it was easy, then everyone would be rich. Savings isn’t always linear either, and a perfect example of this is during the pandemic. Millions of people took a step back financially, which is why it is so important to have both short term and long term goals. Many people will not be saving what they had anticipated in 2020 which is uncontrollable, but you do have the opportunity to control how this impacts your long terms goals. Whether it’s something as catastrophic as a global pandemic or something as simple as a career switch, there are going to be times when income might not be as stable. Everyone goes through periods of financial hardship, and we recommend having a rainy day fund if feasible. Slow and steady wins the race when it comes to saving!
Find simple ways to cut down your spending. If you haven’t done this before, it is easier than you may think. Cancel unused subscriptions and create joint accounts with friends or family like on Netflix or Spotify. Start making coffee at home. Commit to only going out to eat or grabbing drinks x amount per week or per month. Find things second hand or on sale before paying full price! We use Poshmark (create an account here with code “SWEATANDTELL” to get $10 // follow our Poshmark profile here to shop), Facebook Marketplace, and other online sites. Increase the number of zero spend days you have and get creative with budget friendly ways to spend your time.
You can also try apps like Mint that help you budget monthly and provide real time updates!
Use some basics metrics to benchmark progress. We will include some metrics below so you can conduct deeper research into the calculations. Please keep in mind that these are just simple calculations that don’t always take everything into account. Again, don’t get discouraged if you’re not where you want to be! As a rule of thumb, there’s the 50-20-30 rule which states that you can spend up to 50% of your after-tax income on things you need or must have. The remaining half should be split up between 20% savings and debt repayment and 30% to everything else that you might want. For more information, click here to access an Investopedia article.
Other Metrics to Keep in Mind:
♡ Monthly Savings Rate
♡ Net Worth (Your assets minus liabilities)
♡ Expenses per category (Food, Utilities, Transportation, etc.)
♡ Debt to Income ratio
Use the right tools and diversify to help you save and budget. Some people prefer to have minimal risk savings while others are less risk averse, and want to invest their money in more secure ways. There really isn’t a one size fits all approach, it comes down to what you feel comfortable with and where you want to put your hard earned money. We personally like to leverage a personal account, business account, High Yield Savings, 401k’s/IRA’s and other investment options to diversify our portfolios. If your company offers a 401k match and/or stock purchasing plans, we highly recommend taking advantage of it!
Make savings something that is automatic, and you don’t even have to think about. There are so many ways that you can leverage tools to automatically pull a specific dollar amount or percentage into account(s) so you don’t even have to lift a finger. One of the best feelings is logging into an account and realizing how much it has grown without have to actively move money there - It’s almost like free money… almost :) There are a variety of sites that can help you with this and some employers even provide this as well.
We hope you enjoyed these tips and hope they help you budget! Let us know if you have any others that you’d add to the list.
