Money matters don’t have to be complicated—sometimes, drilling down to a handful of basic rules can help us reset our spending perspectives and financial habits. High-level rules also give us a lifelong framework to go back to, and act more like principles for our overall financial management than intimidating restrictions. Here are a few I live by:
1. Get to know the 50/30/20 rule
Spending and budgeting gets a lot simpler with structure. You don’t need a million different budgeting rules to shore up spending habits. I’ve taken a much more straightforward approach with my finances recently and it has completely de-stressed my spending.
Using the 50/30/20 spending rule dramatically cuts down on the complication of understanding where your money goes. The first 20 percent of your money goes to savings, or “future you.” Paying yourself first is a classic budgeting rule for a reason. It makes sure we do our best to fund our retirement and unexpected needs. (Does 20 percent feel like a major chunk? That’s OK, work up to it and add a percent or two every year as your income permits.)
Think of putting 50 percent of your spending to essentials like rent, groceries, and everyday items that are recurring basic needs. Lastly, leave 30 percent for your lifestyle spending—whatever that means to you. That can be saving for vacations, more aggressively funding goals like putting extra money away to launch your own business, or even something as simple as splurging on a new wardrobe item.
2. Keep up with wish lists
We all know that it’s easy to get carried away with impulse shopping, be it at Target or behind our computer. Lists help us keep our spending on track and help break an “impulse” loop of buying that we may not be thinking about. I keep my wardrobe wishlist through websites like ShopTagr or Like to Know It, and before I hit “buy” on any item in that category, give a run through my lists to be sure it lines up with a known wardrobe gap that I’ve been hoping to fill.
Most of us are pretty familiar with doing that on the wardrobe front, but this strategy helps you further if you extend it to other aspects of buying as well. I’m also a shockingly impulsive book buyer—airports, gift shops, nowhere is safe. When I started to realize my book budget was becoming a serious line item, I started a wish list of titles. I then committed to myself to not buy on the spot, but if I was really hoping for that read in another week, I could pull the trigger. Take a look at other sneaky places where spending slips, and start keeping yourself on track with wish lists.
3. Ditch saved cards on your computer and phone
This was another game-changer in my budget. It is incredibly easy to store our credit cards in all of our favorite shopping apps or sites. Not only can this be a bit of a security risk, but it makes it so much easier to mindlessly spend. I took an evening to go through all of my regular stores and deleted any stored cards.
Now, checkout takes me a little longer, but the actual act of going through to grab a card from my wallet gives me a beat to think about the purchase. Do I really need what I’m about to click buy on? Does it line up with my 50/30/20 rule? Have I checked it against any relevant wish list I’ve got in the works? These quick moments of reflection have made sure my spending is purposeful, instead of emotional or reactionary.
4. Find the tracking system that works for you
Budgets are a little like diets: everyone is sure that they’ve got the perfect magic solution because it worked wonders for them. The truth is, the perfect budget and spending strategy is one that you and your family can stick to, brings you more clarity and comfort than stress, and helps you get to your financial goals.
There are a million budgeting tools out there today—from spreadsheets to apps like Mint or You Need a Budget. Finding whatever your system is is as much research as it is personal preference. The goal with a spending tracking system is to find something that is repeatable and you’ll actually review—the goals is for it to give you information about your habits, and how you can change or continue those to meet goals.
5. Never spend to impress
Spending to keep up with social media or a certain faux idea of what your lifestyle should look like is never a great idea. But that pressure can be really hard, and is often something we don’t even realize is around us. Are you buying something because you saw it on a friend? Or on Instagram? Or because you’re shopping with friends and they get it?
Remembering our larger financial goals in those moments is hard, but it does get easier with practice. It also gets easier when you verbalize those goals to those closest to you. Next time the crew is up for an expensive brunch, suggesting a more budget-friendly spot is easier when paired with a goal. “Could we try a coffee date instead? I’m making 2020 the year I tackle my student loans.” This strategy can feel better out loud because you’re focused on what you can do instead of what you can’t.