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7 Habits of the Budget Savvy

Last updated 03/19/2024 by

Audrey Henderson
If you’re always pinching pennies and wondering why you perpetually have more month than money, you may wonder how other people seem to manage their finances successfully. The key is in the word “manage.” One of the primary features shared by nearly all budget-savvy individuals is that they take an active role in managing their finances. Borrow a few of their budget-savvy strategies and you will soon be on your way to achieving financial solvency.

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1. Budget with a Purpose

Budget savvy people don’t love money. No, really. What they desire is the ability to use money to achieve their goals. They form budgets with a purpose – to save for a special vacation, to buy a home or to ensure that their basic expenses are covered with a bit left over for a rainy day. Most of all, budget savvy people view their budgets as tools rather than as punishment or a chore.

2. Live Within Your Means

Budget savvy people don’t covet bling. That doesn’t mean that they are miserly or that they never splurge. But budget savvy people realize that even the richest people are often careful with how they spend. They often ensure that they are able to pay cash for things that they want and if they want to splurge for something special, they usually set the money aside in their savings account until they can afford it without putting it on credit cards.

3. Begin Saving Now

Especially if you are young, the money you save now will multiply almost by magic. Compound interest applied over 20, 30 or 40 years can multiply a modest nest egg into a tidy sum. But if you’re late to the savings game, don’t give up in despair. It’s only too late to save if you don’t start now. You may not realize all the benefits of compound interest as a 22-year-old, but you can put away a significant sum even after only a few years of saving. And if you can afford to save a larger proportion of your income, you can make up for lost time quickly.

4. Focus on Earning More, Not Spending Less

If you’re wasting money on frivolous spending, then cutting back is a wise strategy. But if you’ve already cut out all luxuries and even several necessities, it’s time to rethink your approach. Budget savvy people realize that there are limits to how much you can cut out of your budget, but almost no limits to how much you can earn.
If you have no social life and you can’t remember buying anything other than food then it’s time to consider ways to grow your income rather than trying to spend less. Turn a hobby into a side hustle or sell unwanted items. Ask your boss for a raise or dust off your résumé and start looking for a new job.

5. Invest in Yourself

Budget savvy people know that money that you put aside for your future well being is money well allocated. Education is an especially good investment, even if you’re past the age of a typical college student. If you can’t afford to quit your job and attend school full-time, attend classes at night, on weekends or even online. Protecting your home, possessions or even your earning capacity with insurance coverage is also a wise investment. And it goes without saying that you should save for your retirement.

6. Claim All Your Benefits, Credits and Tax Breaks

Are you entitled to a senior discount at your favorite restaurant? Perhaps you are qualified to deduct interest paid on your student loans on your federal income tax return. Budget savvy people know better than to leave money on the table. You don’t have to become a money-grubber grasping for every penny, but there is also no need to forego benefits that you have earned or to which you are rightfully entitled.

7. Make Periodic Budget Adjustments

Budget savvy people make periodic budget adjustments as they enter different phases of their lives. You should do the same. The budget that carried you through undergraduate school is not likely to be suitable once you marry and start a family. As you mature toward middle age and retirement, your spending priorities are also likely to change again. Taking a periodic assessment of your budget ensures that you remain on target to create the best possible financial scenario.

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Audrey Henderson

Audrey Henderson is a Chicagoland-based writer and researcher. She holds advanced degrees in sociology and law from Northwestern University. Her writing specialties are sustainable development in the built environment, policy related to arts and popular culture, socially and ecologically responsible travel, civic tech and personal finance.

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