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Becoming Frugal with Your Finances – Youssef Kabbaj – Medium

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Most people don’t realize how much money they spend until they see how much they don’t have to spare. Saving money is a task that many people struggle with, especially in an age where online shopping and payment apps are becoming more prevalent. Luckily, you do not need a New Year’s resolution to get a start on your savings. With these tips, you can increase your frugality with your finances.

While there are many applications making it easier to spend your money through the convenience of your smartphone, there are also a number of apps that are geared towards building a budget. These apps all utilize different savings techniques which can be personalized to how you best see fit. Budgeting apps are an automatic way to save money subconsciously, as most will follow a set of rules and do not require you to open them to save money. In keeping with savings, these apps are also usually free.

If automatic apps are not your forte, and you prefer to budget using pen and paper, you can follow old school methods that have seen success in the past. There are many money saving techniques that have been shared throughout the years, but one of the most popular is the 50/30/20 rule of thumb, coined by Elizabeth Warren. In her budgeting rule, Warren recommends organizing your budget into 3 categories, with a portion of your income allocated to each of these sections. The first section is comprised of 50% of your after-tax income and is specifically for your “needs,” like rent. The second section would be made up of 30% of your income and is for your “wants” like new clothes or eating out at restaurants. The remaining 20% of your income would then go to your savings. This simple to follow budgeting guide is one of many that is a great first step in taking the initiative to save more.

Another change of lifestyle that seems simple but can have a major impact is to get rid of your credit cards. Although some people recommend switching to an all-cash budget, a debit card will work for this practice as well. The point of the practice is that you immediately see the money diminish as you spend it. If you use a credit card, you can see a balance accruing, however, your bank account only reflects your spending habits when you pay the bill, usually with interest. This makes it much easier to continue to spend as you are virtually seeing no penalty for it. Switching to a cash or debit card budget allows you better control over your spending.

Ultimately, the best way to become financially healthy is to get into the mindset that money does not equate to happiness. While financial stability is important, so is knowing that you can be happy and succeed in life without riches.

This article was originally published on YoussefKabbaj.com

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