Whether you save or invest your money really depends on the financial objectives you are trying to accomplish. Saving usually refers to putting money away from where it can be accessed quickly and easily for an impending purchase. On the other hand, investing should tie up your money for a length of time, but it will also produce better returns.
TIAA-CREF’s video below breaks down the difference between the two. After watching, decide what financial goals you are trying to achieve in both the short term and long term.
With today’s technology, it is now easier than ever to track your income and spending. Personally, I use Google Sheets to budget. I have the ability to access my budget on any computer with internet access along with my smartphone. Another great way to budget is through Mint.com. Signing up is free, and they have an app so you can update your budget on the go.
Now that you can see just how easy it is to start your budget, I will quickly lay out why you want to budget and the benefits.
You know how much you make: Ask someone how much take-home income they have in a given month, you would be surprised the number of people who can’t give you a specific dollar amount. Knowing how much you make is vital in determining how much you can save and spend.
Plan Purchases: Saving up for a vacation? By budgeting, you will be able to determine how much you need to set aside each month so you and your family can enjoy a getaway.
Eliminating Debt: This can have a two-fold benefit. Firstly, if you know how much you make, then you know how much you are able to spend, thus you can avoid spending more than you make. Secondly, budgeting can help you set aside income every month to tackle debt, be it student loans, a car note, etc.
Enjoying your money: Budgeting allows you to feel confident about your spending habits. It allows you to plan for purchases and should limit financial stress on your life by worry about how you are going to pay for something.
This is not a comprehensive list of the benefits, but a few of the major ones. If you are curious about the benefits you can receive from budgeting then give it a shot if you haven’t already.
For more on this, consider checking out The Finance Twin’s article on how to make a budget. It’s a good solid read.