When you come across topics on saving you think about budgeting right? That’s because saving is often associated with budgeting. And the thought of that scares a lot of us. People hate budgeting. In fact, most Americans are not thrilled by it. And according to CBNC, “Many Americans dislike the term budgeting. The concept often leads to a sense of deprivation, comparable to the notion of dieting.”
While it might not be your favourite activity, it works for some people, leaving the rest to set sights on other strategies that work for them.
If you struggle with this, girl, you’re not alone. Here in this post I’ve gathered 3 easy yet effective ways to save without budgeting that I personally use, (more like can’t live without), and who knows, you just might find it as helpful as I have, if you will.
01
Applying The “Pay Yourself First” Rule
This hack is a game changer because it is so easy to follow. Just decide how much you want to save before you think about anything else, and then carry on with your day. Saving money becomes stress-free—it’s like saving without even realizing it, so you won’t be tempted to spend it. It goes straight into your savings account without you even noticing.
Here’s how it works;
You automate your savings based on a percentage of your income that feels comfortable for you. The usual advice suggests saving 10%, 20%, or even 30% if you can swing it.
For example, if you earn $1000 a week, you could save 20% of that, which is $200. Then, you can divide that $200 equally among different things you want to save for, like travel, a car, a house, or a vacation. You can add more items to the list if you want. This way, you’re covered for the things that bring you joy in life without overspending.
The beauty of this approach is that it creates discipline. You know exactly how much you can spend in each savings category, which helps you avoid overspending. Even as your income grows, you won’t start splurging on big vacations because you know you’ve already saved up for them. So, as your pay and savings increase, you can keep saving automatically and maintain your lifestyle without going overboard.
02
Tax Advantage Accounts
Whether it’s a 401(k), (if your employer offers one) or a Roth/Traditional IRA. With 401(k) or a traditional one, you won’t have to pay taxes upon retirement. It’s also a great choice to max out your Roth IRA, the Roth IRA contribution grows tax-free up until you want to withdraw.
Another good thing about this is that you can take out the principal at any time under certain qualifications, but you can’t take the actual money you gain on your investment until the age of 59 1⁄2. This comes Out of your paycheck automatically and it’s part of paying yourself first without budgeting.
03
Automate Your Investing
Investing is one thing, but automating it is a whole other ball game, especially if you’re aiming for higher returns than what you’d get from a low-interest savings account. There are tons of perks when you automate your investing, and one of them is dollar-cost averaging. It’s a method where you invest the same amount of money regularly over time, regardless of the share price. This helps you build wealth gradually, develop disciplined investing habits, and potentially reduce stress and costs along the way.
Here’s how it works: Let’s say you want to invest $100 per week using the VTI dollar-cost averaging strategy. You keep investing that amount consistently, no matter what the share price is at the time. Sometimes you’ll buy when the price is high, sometimes when it’s low, and sometimes in between. But the idea is to ignore the fluctuations and keep investing regularly.
The goal is to end up somewhere in the middle over time, as long as the investment’s value increases over the long haul, gaining a return on investment each year.
Closing Thoughts
The scope behind budgeting is being disciplined enough to stick with your budgeting list and plans. So if being strict money wise is something you find extremely hard to do, why not make it easier paying yourself first by automating your savings and investments?
