Good financial management is more about planning and taking intentional action than it is about smarts. There are a million things that every single one of us knows is good for us financially.
Here are a few things you already know:
- Spend less than you earn
- Save, save, and save again (for emergencies, for retirement, for things you want)
- Buy only what you can afford today (and try to buy less than you think you can afford)
- Pay down credit card debt if you have it and limit or eliminate your use of debt to finance your lifestyle
- Make sure you have a plan in place to protect your loved ones if something happens
While this sounds really simple (because you already knew it), when you mix in life and all of its competing demands, the things you know can become much harder to implement. This year, try a balanced and achievable approach to meeting your goals related to money – try slowly working your way towards balanced living.
What is balanced living when it comes to finances? I am so glad you asked!
Let me introduce you to living in balance.
There are three ways that most people spend their money:
- Essential expenses or basic needs
- Financial priorities like saving for retirement or a rainy day
- Lifestyle choices or those things you want that make your life more fulfilling
It is simple, most people spend their money on needs, savings, or wants. The key to living in balance is about how you allocate your money. We recommend working towards covering all of your basic needs (shelter, groceries, transportation) with 50% of what you earn, then making sure to sock-away 20% in savings (for emergencies and retirement), before going and having a blast enjoying your life with the remaining 30%.
How do you work towards balanced living when you are REALLY far from the 50/20/30 split?
Start by sitting down with everyone in your household that has access to your family’s wallet (or checking account and credit cards), and brainstorm ways to:
- Reduce your expenses – slowly work on your highest priority items together
- Add additional income to the family wallet
- Celebrate wins together during the journey
If you will take it slowly, then you can and will make your way towards a more balanced lifestyle (and relationship with money).
Written by Tricia Brown
This blog post is from the Author's perspective and doesn't speak for brightpeak financial. Contact brightpeak if you want to know more about brightpeak products, and keep in mind that they are not available in all states and there are some limitations (some exclusions and restrictions may apply).
