In an era when Americans have a lower savings rate than during the Great Depression, it seems that “budget” is a dirty word. Eating out, $5 cups of coffee and designer labels have become staples in many of our lives—and many of us have the debt to prove it.
But budgeting and living the good life CAN co-exist. It’s all about setting priorities and sticking to them. Here are some tips for achieving a good balance between smart spending and splurging:
- Prioritize your needs and wants. At the top of your needs list are obvious things—food, mortgage or rent, health care, taxes and the like. But saving money and eliminating debt should also be at the top of your list of needs. Your wants are the other things that are important to you—travel, eating out, cable TV, shopping. Prioritizing your wants can help you identify the things you “can’t live without,” as well as areas where you may be willing to compromise, or even cut out spending entirely.
- Be realistic. While you can enjoy the good life on a budget, you can’t have it all at once. Be honest with yourself about your wants. If you only visit the gym once a month, you can probably save money by eliminating your monthly membership fee. And the $300 pair of shoes you want might mean cutting out restaurant dinners for a few months.
- Consider your long-term goals. If you’re committed to sticking to a budget and prioritizing your spending, then you probably have some long-term goals in mind. Do you want to buy a house? Start your own business? Retire early? Maybe go back to school? Ask yourself if you’re doing all you can to contribute to those goals. Enjoying today is important, but something as simple as skipping your daily coffee shop run can help you get a jump-start on saving for tomorrow.
Remember, too, that as your priorities change and evolve, your budget should change with them. Enjoying the good life on a budget is possible, and you’ll feel good knowing you’re saving, spending responsibly and still leaving room to splurge.