She Strengthens

Breaking Free from Budgeting Constraints

As someone who’s passionate about personal finance, I’m about to confess a secret: I don’t follow the traditional budgeting rules. I don’t allocate specific amounts for each category every month, nor do I restrict myself to a strict spending plan. Instead, my approach is centered around achieving specific financial goals.

Goal-Oriented Savings

My primary objective is to save at least 50% of my income each month, which translates to $2,313. This amount is non-negotiable, and I prioritize it above all else. Once I’ve met my savings goals, I can then allocate the remaining funds towards discretionary spending.

The Rules of Engagement

To maintain financial discipline while still allowing for flexibility, I’ve established a few guidelines:

1. Pay Yourself First: I set aside half of my paycheck for savings goals, and then use the remaining amount for monthly expenses.
2. Energy Conservation: I treat my monthly spending cash like energy – it can’t be created or destroyed. If I want to increase spending in one area, I must decrease it in another.
3. Side Hustle Smarts: Any income generated from side gigs or irregular sources goes directly towards emergency savings or debt repayment.
4. Deferred Spending is Still Spending: I don’t consider it “savings” if it’s earmarked for a luxury item or vacation. Instead, I budget for these expenses as if they were regular expenditures.
5. Debt Repayment is Still Spending: While paying off debt is essential, it’s still a form of spending that reduces my overall wealth.

Staying on Track

To maintain my financial focus, I utilize Mint’s “Goals” tab to ensure I’m meeting my savings objectives. I’ve divided my goals into three categories: early retirement, rebuilding my emergency fund, and restoring my investment accounts.

Flexibility and Freedom

By prioritizing my savings goals and following these guidelines, I’m able to enjoy the freedom to make discretionary spending decisions without feeling restricted. Whether it’s indulging in a fancy dinner or saving up for a dream vacation, I can adjust my spending habits as needed while still achieving my long-term financial objectives.