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From opening two different savings accounts to giving your money a job, here are 12 answers to the question, “Give your best tip for how to balance the need to save and invest for the future with the desire to enjoy my life and spend money on things that are important to you?”
- Open Two Different Savings Accounts
- Consider Your Housing Costs
- Focus on The Three Aspects of Great Personal Finances
- Use Financial Aggregators to Monitor Spending
- Spend Money On Your Passions; Avoid Pointless Purchases
- Invest in Things That Will Last
- Understand Your Cash Flow
- Consider the 50-50 Rule
- Create and Follow a Budget
- Use Fixed Percentages for Saving /Investing
- Schedule a ‘Spending Period’ in Your Life
- Give Your Money a Job So It Has a Purpose
Open two different Savings Accounts
Most people have a checking account and a savings account. If you want to save for the future, open up a second savings account and put your long-term savings in that pot. Find the best interest opportunities you can find for that account and leave that money alone to the best of your ability.
For the money that you want to use in the shorter term (shopping, traveling, buying gifts), manage that money in a separate savings account. Your checking account should cover all of your expenses while your primary savings account should be your “fun-spending” money.
The third account should be your long-term savings and that should be the money that you take to your financial advisor for the best long-term investment opportunities. Let that build up for a while and then try to make smart investments with it. — Brittany Dolin, Co-founder, Pocketbook Agency
Consider your Housing Costs
If you’re struggling to save and invest for the future while also enjoying life, consider your housing costs. Housing is one of the biggest monthly expenses, so if you’re living in a home that’s too big for you, or you’re paying more than you can afford for it, you may want to consider downsizing.
Consider your needs and wants when choosing a home. Do you really need a five-bedroom home if you’re a family of two? Can you live somewhere with fewer amenities if it means you can save money on your monthly housing costs? Homeownership is an investment in yourself and your future, so it’s important to find a balance between spending on your housing and investing in the future. — Matthew Ramirez, CEO, Rephrasely
Focus on the three Aspects of Great Personal Finances
I’ve learned from my mentors that great personal finances can be broken down into three areas: Budgeting Expenses, Creating Income, and Developing Cashflow-Producing Assets.
With any money-related goal, identifying which area(s) to focus on is key. For example, getting out of debt requires stricter budgeting and increasing income. Meanwhile, retirement has to do with areas 1 and 3. This also makes it simple: budget a percentage of your income to save and invest based on your long-term goals.
Then determine your priorities. Perhaps you need to be strict with some other living expenses to be able to spend money on what’s important to you and set savings and investment goals for larger purchases while you also work to increase your income. — Eric Chow, Chief Consultant, Mashman Ventures
Use Financial Aggregators to Monitor Spending
The balance between saving and investing for the future, while also enjoying life and spending money on what matters to you, is a difficult one to achieve.
One uncommon way to reach this balance is by using financial aggregators. Financial aggregators are tools that allow you to connect all your accounts, such as investments and bank accounts, into one place in order to get a better look at where your hard-earned money is going. This makes it easier for you to budget wisely and allocate money towards satisfying both savings goals, as well as needs or wants for immediate enjoyment.
With this knowledge in hand, you’ll be more aware of how much flexibility you can have with your monthly expenses since both needs are being fulfilled simultaneously. — Carly Hill, Operations Manager, VirtualHolidayParty.com
Spend Money on your Passions; Avoid Pointless Purchases
The best way to save money and enjoy life is to spend money on your passions and cut back on everything else. For example, you might grab a Starbucks drink before work every day. But does this really add value to your life? You can make the exact same coffee at home for a fraction of the price. This is just one example, but most people are spending thousands of dollars a year on unimportant things.
Once you’ve cut expenses out of your life that don’t provide value, spend this extra money on your passions. Let’s say you’re a big fan of motorbiking. You can use this money to buy a sport bike and go to your local racetrack every weekend. Or, if you love hiking, buy quality hiking gear and hike with friends and family. This strategy allows you to cut back on unimportant expenses, save money, and spend more on things that bring happiness. — Scott Lieberman, Owner, Touchdown Money
Invest in Things that will Last
A great way to balance the need to save and invest for your future while still enjoying life is mindful spending. This means considering each purchase you make, big or small, and evaluating if it will add long-term value and benefit you; an uncommon example of this would be investing in a massage package.
Instead of splurging on something that won’t provide sustainable value, such as multiple nights out with friends, consider treating yourself to regular professional massages — which have medical benefits from managing pain to reducing stress — that promote mental health and well-being. Practicing mindful spending ensures money is not wasted frivolously but also allows for some indulgences now that can later prove beneficial. — Grace He, People and Culture Director, teambuilding.com
Understand your Cash Flow
Understanding your household cash flow is among the most important aspects of securing your financial future. In order to have more money to spend or save now, you must be acutely aware of your spending habits.
Review your spending on a weekly basis: this takes less time than a monthly review, and makes it easier to pinpoint areas in which you may have spent more than planned. Furthermore, it will be more challenging to get back on track after a month of overspending. Monitor your cash flow closely in order to make smart purchasing decisions that align with your desire to save and invest for the future. — Dakota McDaniels, Chief Product Officer, Pluto
Consider the 50-50 Rule
In order to make things simple, I advise people to implement a 50-50 strategy for handling their finances. Here’s how it goes: After you pay your bills each payday, you take the remaining money and split it in half. Half of that sum should go into a savings account (or the equivalent) and the other half can be used on things you enjoy or want to do.
So, for example, if you have $200 left after paying your necessary bills: you should put $100 into your savings account and the remaining $100 can go toward something you enjoy. It’s a simple, basic calculation, but it’s a good place to start. As you learn more, you can adjust this, but just get started with the 50-50 strategy until you better understand your situation. — Shaun Connell, Founder and CEO, Credit Building Tips
Create and Follow a Budget
Contrary to common belief, it is possible to save and invest for the future while spending on things that you enjoy in the present. Budgeting your income and expenses is an effective way of doing that.
One budgeting strategy that I am very fond of is the 50-30-20 split. This strategy recommends that you allocate half of your income to your needs, 30% to your wants, and 20% to your savings and investments. If you follow it correctly, you’ll have 30% of your income to spend on nights out, dinner dates, travel, and other enjoyable things.
However, if that is too tight for you, you can create your own budgeting scheme. Compute your monthly expenses and identify which things you need and want to spend on. Then, cut a little bit of those expenses to make room for your savings. There is no magic number that you need to follow. Just make sure that you save and invest a certain amount regularly. No matter how small it is, it’ll help you build a habit that will serve you in the long run. — Jonathan Merry, Founder, Moneyzine
Use Fixed Percentages for Saving /Investing
Much like fire itself, the dream of FIRE (financial independence, retire early) can be all-consuming. If left unchecked, we can easily dedicate all of our time, energy, resources, and money toward our financial goals, leaving us miserable in the interim. However, life itself is to be lived, and one should not sacrifice their entire present for the future.
Instead, I recommend following a fixed-percentage approach, whereby you dedicate a fixed percentage of your income to savings/investments. This specific percentage could be larger or smaller depending on your income, age, and proximity to FIRE, but the key thing is the fixed nature. This will negate the temptation to over-save, guaranteeing at least some money for luxuries and meaningful experiences. — Oliver Savill, CEO and Founder, AssessmentDay
Schedule a ‘Spending Period’ in your Life
As the founder of Retirement Investments and someone who writes about these types of things, I understand how difficult it can be to balance the now, the tomorrow, and the future that’s years away. Especially with the rising cost of living, it’s a difficult thing to manage at times.
For one, everyone must be tracking their finances and keeping track of everything. This means tracking the in, the out, what spending is necessary versus avoidable, and much more. Track every detail of your spending and research it at the end of the month to understand where you stand with things.
Secondly, I would schedule a ‘spending period’ in your life that gives you something to look forward to, allows you to spend on things that are important to you, and also eliminates unnecessary spending. Every two months, give yourself an allowance to spend (perhaps $250 to $500). Leading up to it, do your research on what to purchase and get excited about it. You’re still spending, but you’re doing it right. — Donny Gamble, Founder, Retirement Investments
Give your Money a Job so it has a Purpose!
As a Certified Financial Planner who has been working in the industry for almost 12 years, one thing I’ve noticed is that people are unable to stay committed when it comes to managing their finances.
This is why I always recommend to my community, “Give Your Money a Job.” Just as businesses have different departments and employees within their organization, such as Operations, Marketing, Sales, and Customer Service, we should also give our money a job in a similar structure.
For example, an Operating Account to pay our consistent bills; an Emergency Savings for any unplanned or unexpected expenses; a Planned Savings for any annual, semi-annual, or one-time planned expense; a Slush Fund Savings for any travel, splurge, or major purchase expenses; and then investment accounts according to our “time horizon.” Once we can clearly give our money a job, it has a purpose and we know exactly what the money is for.
Always ask yourself, “What is this money for?” before you do anything with it. Give your money a job! — Raman Singh, Founder, SteelPeak Wealth
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