Long-term wealth depends not only on how much you earn – but also on how much you save! Indeed, many high-flying professionals tend to live beyond their means, which might not impact them as much in the present moment, but can cause them to lose sight of their long-term plan.
Ultimately, whether you are satisfied with your income or you are moving towards a more suitable one, you should not wait to start budgeting and saving. With the tips below, you can start working towards long-term wealth today – no matter what your salary is!
Use the 50/30/20 Budget Rule
Before creating a budget to achieve your financial goal, it might be worth looking into your spending patterns. You might notice that a large percentage of your expenditures goes towards things that you don’t need. So, the first step towards a smart budget is to learn how to prioritize.
Create three separate categories according to the 50/30/20 rule. One for your high-priority, unavoidable expenditures, such as food, rent, and debt repayment – it should account for 50% of your expenditures. The second category should account for 30% of your budget and represent your “wants” section, where you can list all items to spend on that might not be strictly necessary. The third category – 20% of your budget – should be dedicated to savings.
Use the “Budget to Zero” Strategy
Learning how to budget to zero can take some practice, but it can be the best strategy to raise your accountability. Budgeting to zero means finding the right place for every dollar you earn. To do so, create a budget at the beginning of the month, starting with your salary.
For example, if your monthly income is $2,000, you will allocate every dollar to a purpose without leaving any behind. Allocations might include fixed expenses, investments, contributions, savings, or vacations. This is a great way to make the most out of your resources.
Make Budgeting Easy and Enjoyable
Budgeting is always seen as a dreaded duty for anyone. And, it is thought to be a lengthy, time-consuming process that forces you to look at your own spending mistakes. However, budgeting does not have to be such an annoyance with the right tricks and tools.
Firstly, you might consider using a mobile app to track your expenditures on the spot. You might even directly link the app to your bank account, so you always know how much of your budget you have been using. Another option is finding out if your employer offers an employee financial wellness program. Becoming financially literate increases your ability to create a sound, realistic budget. If this isn’t a benefit currently offered at your job, get in touch with HR to explore options.
Start Working Towards Your Retirement
Retirement always seems to be a period very far away in the future, and we always think of it as years of semi-luxury and relaxation by the beach and with our families. If that’s your goal, you need to start working towards it today!
You can do so by opening a retirement account and making some safe, long-term investments.
Have an Emergency Fund in Place
Emergencies are always a matter of “when,” never of “if.” So, you should always have a separate account from which you can’t withdraw for emergencies and unexpected events. Whether it is the death or illness of a loved one, unexpected medical treatment costs, or a baby on the way, an emergency fund can offer you the support you need for long-term financial wellbeing.
If you are working towards long-term wealth and financial stability, you should start budgeting for it today. No matter whether you are at the top of your career or you have just started climbing the ladder, there is a dollar that you can spend mindfully or save today!