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4 Rules for keeping a tight budget

That's right. Saving money is a real thing!
4 Rules for keeping a tight budget
Set up rules for yourself to make sure you don't blow your paycheck as soon as you get it. Photo credit: iStock

I am sorry if this sounds like I’m beating a dead horse, but saving money can be extremely hard. If you are like most people in the world, you probably need some guidelines for keeping a tight budget so you are not spreading yourself too thin.

We recently spoke with Jesse Mecham, the founder of the personal finance software You Need A Budget (YNAB) and author of the new book of the same name, to see if he could give us some helpful tips on how to break the cycle of living paycheck to paycheck and how you can budget for the future. Here are four rules to help you save more.

1. Give every dollar a job

If you give each dollar in your bank account a specific goal or purpose it will help you prioritize your spending in a constructive way.  If you place more importance on each individual penny to your name, you will place more focus on spending your money on bills and saving then on frivolous purchases. According to Mecham’s guidelines, you should only make spending plans with the money you currently have so you don’t find yourself in an endless loop of playing catch-up with your finances.

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“Many people make the mistake of saying ‘Well, I’m on a budget. What will I earn and what can I spend?’" says Mecham, “You should ask yourself ‘what do I have right now?’ and use that on things like groceries or rent. Whether it's a $300 or $30,000, it’s the same exercise. It really makes it concrete because you’re working with a finite amount of money. If you’re giving a dollar here, you can’t give a dollar there.”  

2. Embrace your true expenses

Everyone knows how hard the holidays can be on your checking account, but Mecham believes there is a way to avoid going into the red if you budget and plan accordingly. By putting away a little money each month to save for yearly events like birthdays and holiday shopping, you can give yourself a helpful head start. Circle those events on your calendar and then think of it like you are paying off your credit cards or student loans. Once those dates roll around, you will have some money to play with while having the rest of your finances in order.

3. Roll with the punches

Of course, it’s a commendable thing to put restrictions on your spending for the sake of saving money. But, as the saying goes: sh*t happens! Sometimes life throws things at you that you can’t avoid and you’ll need to break the budgeting roadblocks that you have set up for yourself. Because of that, Mecham believes that whenever something unexpected happens that you can’t avoid, you should feel free to go easy on yourself with the previous two rules. Afterall, to err is human!

“It’s a way to acknowledge that we’re in a chess match more than we’re dictating the future,” Mecham explains, “That’s how life is with money. You have the best intentions, but then your car’s tire goes out. You just have to acknowledge that life is going to happen and you’re allowed to change your plans...Budgeting is adjusting”

4. Age your money

Lastly, a great way to make sure that you are not living paycheck to paycheck is putting some time between when you get paid and when you spend your money. The goal is to be spending money that you have saved for over 30 days rather than money you received yesterday. Mecham believes that no one will really be able to follow this rule instantly. But after you have become used to following the first three rules on his list, you will find yourself scrambling less to cover your monthly bills and expenses.  

We know it’s hard. But with these rules, you can avoid the stress of having to wait for your next paycheck. Oh, to be a grown-up!