Most families that don’t use an effective budget system use an “imaginary bucket” system. They put all their income into an imaginary bucket. They spend money through the month and hope that at the end of the monthnth there is something left in their bucket. This is why 78% of American households live paycheck to paycheck and 27% have little to no savings.
When people start assigning every dollar to a purpose, it helps them realize money they are wasting on items that don’t matter. It’s shocking when they finally see how much they are spending on eating out, frivolous spending, and entertainment.
Assigning every dollar a purpose helps you reach your goals faster and makes your money work for you instead of you working for your money. The Mvelopes budgeting system is built around assigning every dollar for a purpose. This helps you reduce debt, save for an emergency fund, and help you reach your financial goals.
By assigning every dollar a purpose, you can set money aside for expenses instead of using credit. Eventually, you’re going to need to repair your car at some point. Setting money aside for car repairs helps you reduce your dependency on using credit and helps you live within your means. Also, budgeting your money so that you can be aggressive as possible on paying down debt reduces the amount you spend on interest and saves you money in the long run.
Not saving for a rainy day seems to always have consequences so you should always pay yourself first. Organizing your finances so you can build an emergency fund is essential to stopping the paycheck to paycheck cycle. Many experts say you should start with a $1,000 emergency fund, then save a one month of expenses, and then set a goal for savings three months of living expenses.
There is more to life than just paying bills. Assigning every dollar disciplines yourself so you can set money aside for the things that really matter. Family events, vacations, replacing your vehicle are just some of the things that people find important. Assigning every dollar helps you save for these events so they don’t become a debt anchor.
The Mvelopes budgeting app can help you assign every dollar to a purpose and give you a better picture on what you are spending your money on and help you reach your financial goals. Procrastination is the enemy of financial wellness so don’t put off your road to financial wellness.