Budgeting and Savings Rules of Thumb

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Budgeting and Savings Rules of Thumb

I’m a person who likes to crunch numbers, read pie charts, and revise my monthly budget until every dime is accounted for. Does this always work to my advantage? No, not really. Sometimes I spend too much time on a budget that just isn’t realistic only to be disappointed when my savings accounts stagnate. It also doesn’t help that my income fluctuates from one month to the next and I must average the total and fudge the numbers to really meet my goals.

But with all this tweaking, I’ve developed creative ways to save something – whether it’s 10% or $200 bucks here and there, I’m able to put even a little bit into different savings accounts. What’s worked for me has been a handful of tricks, that combined, help me save close to 10% of my total income (I’m working on increasing this amount to 15% over the next year, but it’s taking baby steps to get there!):

  • Mark certain income as “savings” – Monetary gifts end up in savings, side income ends up in savings, and any gift card that I sell ends up in savings.
  • Put aside a percentage – If I have extra income in any one month, I put aside a percentage, usually 10%, towards savings.
  • Save it before you see it – I automatically have certain amounts throughout the month deducted for savings, that way it’s not available to spend.

Standard rules of thumb always sound so great, but may be difficult to achieve, like the 60% rule – spend only 60% on all of your basic needs and 40% on wants and saving. That’s a terrific idea, but when 40% of my income is allocated toward rent, it makes it hard to reduce all of my basic necessities to only 20% of what’s left.

Or what about the 50-30-20 rule? That sounds like a dream; spend 50% of your income on “needs”, 30% on “wants”, and 20% on savings and debt. Since my largest expense is rent and utilities (which are a need), there’s not much left over for “wants” or savings and debt. Reducing my “needs” is also tricky since I live in an expensive area.

However, rules are meant to be bent, broken, and changed. I might not be able to save 20% of my income, but starting with something more management (like 10%) at least points me in the right direction.

How do you save money? Take the poll below:


Join the conversation and post a comment.

  1. GB @ In Budgets We Trust

    The “Save it before you see it” habit is definitely beneficial… you’re less likely to miss the money you never saw, and this simple rule has been how I handle my IRS tax refunds if I’m getting anything back. So easy!

    What kind of gift cards do you sell? For example, are they gift cards people give you that you don’t really want to use?

    • Little House

      @GB – I usually sell retail gift cards that I receive as gifts. If I sell them on eBay they usually sell for about 90-95% of their total value. Then the cash can be applied towards savings.

  2. MoneyCone

    I don’t have a strategy per se, but I guess my needs aren’t too many either.

  3. krantcents

    I max out my retirement savings through payroll deduction. It is automatic and maintains discipline. I live on what is left. If there is any additional earnings, I usually bank it.

  4. SB @ One Cent at a Time

    I am a 60% guy, rather 50% guy. great options, do what best suited to you.

  5. ShirlleyFai

    Budgeting and saving is really not an easy thing…And I am sure this post can really help a lot…

  6. Brooke

    I follow the Save Whatever you can rule. Like you, I also have to deal with rent as well as a lot of utilities every month, so allocating a specified percentage of my income for a certain purpose simply does not work for me.

    • Little House

      @Brooke – I know I’m not the only one in this position. I’ve gotten better at saving a percentage of my income, but I really hope that I can reduce my basic necessities sometime soon – they’re eating up too much of my income!

  7. MultiMillionaireRoad

    Definitely save before you see! I have 20% of my income automatically transferred to a savings account as soon at my money comes into my current account as part of a monthly savings plan. I’d recommend all people to do this. You’d be surprised that you won’t notice the reduction in disposable income.

  8. Ashleen Moreen

    I have my own strategies on budgeting and savings as well. I think Once a month shopping helps a lot in saving money because that is what I am doing. By the way love your ideas. Thanks!


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