Saving is painful as you will reap its benefits only in the future. But sadly, many who restrict themselves to a rigid and strict discipline end up going far away from their dreams. It’s always better not to be hard on yourself and it’s vital to set up realistic goals. This year, it’s time to prioritize your happiness with your finances. Make sure you spend on what makes you happy.
Spend on what refreshes you
In 2022, let’s start spending on things that keep us refreshed with pleasure. Some things bring you much-needed rest and joy. These things could be anything: eating at your favorite restaurant, a gym membership, or a day at the spa. These expenses are usually considered unnecessary, and financial advisors had always recommended cutting down these products, services and activities.
Today, however, life has become difficult because of various Covid-19 pandemic-related factors. And it’s challenging to navigate during these tough times.
Set aside money to spend
Setting aside some money for the expenditures mentioned above will keep you refreshed and motivated to pursue other savings goals, like building a retirement fund, which is generally stressful.
It may appear to be a waste of money, or you might also feel like this money can help you reach your goals faster. But the last two years have been challenging for most of us. Generally, people who make quick progress with strict discipline don’t really reach their financial goals. On the other hand, people who take it slow, patiently, and consistently achieve their realistic goal over a long period of time.
Spend on what makes you happy with the 50/30/20 plan
You might have heard about the 50/30/20 budget rule. It’s simple: set aside 50% of your income for needs, 30% for wants, and 20% for savings and debt repayment. Your new, let’s say, revive and refresh spending category will come under the wants category.
Suppose the idea of creating a budget is overwhelming. In that case, you can simply use the money left after making payments for housing, food, transportation, insurance, child care, and other expenses like loan repayment or emergency fund.
Spend on what makes you happy
Once you have set aside some money, the ideal place to save them is high yield savings account with high-interest rates.
However, you’re usually limited to six withdrawals or transfers a month for these accounts, beyond which you will incur fees — this rule is temporarily relaxed in view of the Covid-19 pandemic but can come into effect anytime again. In any case, don’t rely on a savings account for emergency withdrawals.
For everyday transactions, use a checking account. Always try to find a bank that charges no monthly fee and has no minimum balance requirement. Some checking accounts also come with interest. Research until you see these banks.
Let the goal for 2022 be different than the previous years. Let’s not be too hard on ourselves. Let’s prioritize physical and mental wellbeing over strict financial habits that require plenty of sacrifices. You will be astonished to see how much progress you make in the long run when you have realistic targets with frequent indulgences and slow consistency.