I think the biggest hangup for a lot of people when it comes to living on a budget or working toward paying off debt is that they really want to keep enjoying their lives. You only live once after all. I totally understand this stress. You don’t want to live a crazy frugal life, put all your money toward debt and then die without really seeing or doing the fun things you wanted to. So how do you live debt free, save for the future and still enjoy the one life you get to live? AKA the YOLO life.
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The YOLO Life
What exactly is the YOLO life?
YOLO: You. Only. Live. Once.
A lot of people focus on trying to live the YOLO life but they do it in the wrong way. They’ll dig themselves deeper into debt, live life too dangerously and actually end up making life harder for themselves.
Tom and I were definitely these people at one point in our lives. Even before YOLO was a thing. We bought a house that was too big, put too many things on credit cards, took vacations without having
So, how do you avoid the same fate?
The importance of saving
It’s good to remember that you only live one life and while it’s important to have fun, it’s also important to remember the future you
iscounting on the present you to make some smart choices.
Don’t get to the point in life where you have traveled the world, owned the best cars and done all the crazy adventures and then find yourself 80, broke and having to work while trying to take care of your health. Instead, start building savings for yourself as early on in life as possible. Retirement age you will thank you.
The easiest way to start saving:
When you aren’t used to saving or
The Saving’s Builder is one of the highest paying savings accounts (maybe even the highest) and all it takes from you is $100 per month. That’s it.
Of course, I always encourage you to put more in per month if you are able to but committing to $100 per month is a less scary commitment to make when you aren’t in the habit of saving. With the savings builder, this commitment gets you an awesome interest rate of 2.45%! Open a Savings Builder today!
Building a strong financial life
The best way to be smart with your finances in order to help yourself save for the future is to make sure you are living below your means. With nearly 80% of workers saying they are living paycheck to paycheck, it’s fair to say that most people are probably living above their means.
Best percentages for a strong financial life:
So how do you know if you are living above your means? These budgeting percentages are a smart way to get started.
- Housing: 25-35%
- Insurance (including health, medical, auto and life): 10-20%
- Food: 10-15%
- Transportation: 10-15%
- Utilities: 5-10%
- Savings: 10-15%
- Fun (entertainment and recreation): 5-10%
- Clothing: 5%
- Personal: 5-10%
Take your monthly earnings and figure out how much money you are spending each month in these major budgeting areas. Are you within the safe zone or is there an area where you are way over-spending?
You can also check out my post, Living Above Your Means: How to Break the Cycle.
Building a budget
Once you have your budget percentages in place, it’s important to make sure you are sticking to them by planning a budget. Budgeting sets limits on these types of items so that you don’t find yourself with no money left at the end of the month.
Even budgeting your fun or entertainment money is a smart way to make sure you are still able to enjoy that YOLO life while still being smart about planning and saving for the future.
More posts to read:
- How to Make Money Last from Paycheck to Paycheck
- A Funny Thing Happens When You Become Debt Free
- How Downsizing Saved My Marriage, Family and Finances
How to plan smart spending
Besides budgeting fun money into your budget, what can you do to make sure you get to live that YOLO life while still saving for the future?
Sinking Funds are a smart way to save your money for big purchases you know you’ll be making like car repairs, car tabs or a new roof for your house.
There are important things to save for, but you can also use sinking funds to save for things like vacations and travel.
How sinking funds work:
Say you want to save for a $2,000 vacation and you’re hoping to go in a year. All you need to do is take that $2,000 and divide it by the number of paychecks you’ll receive during that year.
If you get paid twice per month, this leaves you with 24 paychecks. Your math will look a little something like this:
2,000 ÷ 24 = $83.33
This means that per paycheck if you want to make it to $2,000 in 1 year, you’ll need to set aside $83. Learn more about Sinking Funds.
Many people will see these numbers and think sticking to Sinking Fund savings is just too hard. But consider the alternative: credit cards.
Sinking Funds vs. Credit Cards
The average credit card payment right now is around $189 per month according to Money.com. That means you can either set aside $160 per month in Sinking Funds or pay $30 more to pay off your credit card…and actually pay more than your $2,000 in the long run.
How to build a solid savings
Now maybe you have some ideas on how to save for the future while still living that YOLO life, but let’s talk about the 3 steps you need to help you save for the future.
Step 1: Have an emergency fund
Having an emergency fund of $1,000 minimum for things like unexpected car repairs, doctor bills or other emergencies is absolutely crucial to making sure you’ll have enough money to help you in tough situations.
Step 2: Get a debt payoff plan
Any debts you have in life are only holding you back from saving for the future and having fun in the now. Learn about the Debt Snowball.
Step 3: Get paid to save
If committing to $100 per month seems like too much right now, then I recommend a Money Market Account. You will receive a lower interest rate (compared to the Savings Builder) at 1.85% but there is no monthly minimum required.
Be smart, have priorities
The biggest lesson I could give you to help you save for the future and still live the YOLO life is to make sure you have your priorities in place.
If what you want the most is that $2,000 vacation next year, then don’t spend your $83 on new shoes or a video game. It’s as simple as that.
Keep your sights set on the big picture things that you want for your life. That includes things like a vacation as well as a comfortable retirement!