No matter how good you think you are at budgeting, most of us end up hitting the ‘I’m broke’ brick wall at some point before pay day. So what can you do if you’re trying to save money/get out of debt but you’re working with limited funds?
Credit cards make it easy to give in to impulsive purchases but they can put a major dent in your ability to save when you’re forced to use March’s paycheque to pay back February’s purchases.
We’d like to suggest an alternative system: The ‘Adult Allowance’
What is it?
It’s exactly what it sounds like – you look at your financial situation (how much money is coming in, how much money is going out, and what’s left over) and figure out how much disposable income you have available. Deduct how much of that disposable income you want to put into your savings and the money that’s left? That’s your allowance.
Depending on how often you get paid (weekly, bi-weekly, or monthly) you might want to break your allowance down further. For example, if you get paid once a month, divide your allowance into 4 so you know exactly how much you have available to you each week.
How does it work?
Now comes the hard part: Take as many of credit cards out of your wallet as possible to avoid the temptation to spend more money than you actually have available. Make sure you have an online banking app installed on your phone or available on your computer so you can actually track your spending and make sure you’re not going over your allowance. Another option is to take out half of your allowance in cash; having the money physically in your wallet is a foolproof way of ensuring you don’t go over your limit.
The Adult Allowance doesn’t work for everyone. If your income fluctuates month to month, then having a set allowance likely isn’t a viable option. But we think it’s the perfect solution for anyone who’s got a fairly stable financial situation and who wants to save money and stay on top of their finances.
If you feel like you need extra help with your finances, you can always fill out our online credit app here!