Spending vs. Saving

A person cracking open a piggy bank with a mallet

When is the right time to spend and when is the right time to save?

It's really hard to know the answer when you're on a tight budget.

So how do you live a good life without breaking your bank?

Step 1: Try Living With Your Parents

An actor thanking his mom and dad while accepting an award

Typically not a fan-favorite pick, and not an option for everyone, but it's cost-effective! Immediate pros include saving money on common expenses:

  1. Rent/utility bills

  2. Grocery bills

  3. Renovations

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This will free up your budget, giving you the flexibility to pay off any outstanding debt and sure, finally buy that one thing you've had your eye on for ages.

Additional bonuses may include:

  1. Less housework & more home-cooked meals

  2. Quality time with your parents

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Step 2: Move Out And Build A Budget

Okay, so you tried living with your parents, and maybe you hated it. Or you loved it! But even so, you're ready to move out and stop introducing yourself like this:

George Costanza from Seinfeld saying,

You'll need to up your budget game! More freedom means more responsibility.

Step 3: Start With The Essentials

Where to start?

Getting as close to a 50/20/30 breakdown as possible is a good starting point to make sure you're covered on a month-to-month basis.

Breakdown of your take home pay:

  • 50%The Essentials: rent, groceries, utilities, commuting costs, childcare, etc.

  • 30% Treat Yourself/The Wants: entertainment, eating out, clothing etc.

  • 20%Savings/Debt Repayment: putting a small amount aside every month for emergencies or unexpected future expenses will be a lifesaver in the future!

A jar filling up with dollar bills


What would NOT fall into the 50% of your take home pay category?

Step 4: Define Your Wants

After the essentials are taken care of, it's time to figure out how best to spend your remaining cash.

On a tight budget, this typically means choosing what matters most to you.

A man saying,

So how do you choose?

We all have passions in life. Are you a foodie? A gamer? A stylist? An athlete? Budgeting luckily doesn't mean you can't do the things you want, it just means you have to figure out how and when you can do them.

Write out a list of things you believe you want and divide them into sections: Short Term (for things you can do anytime) and Long Term (for things you need to save up for). Here's an example if you're working with about $500 of disposable income per month:

Short Term

  • 1x a week: Trivia Thursdays (with burgers and drinks) - $30

  • 2x a week: Starbucks (just basic coffee, no fancy lattes) - $7

  • 1x a week: Movie theater - $20

  • 1x a month: Hair products - $20

Long Term

  • New Xbox: $500 (save $100 a month for 5 months)

  • New bag: $200 (save $50 a month for 4 months)

  • Used bike: $150 (save $75 a month for 2 months)

Spongebob producing a really long list

After you make your list, look at it with fresh eyes (maybe after a break) and figure out what you can and can't swing.

  1. If your disposable income allows you to keep all your short term expenses while saving up for your long term expenses — wow, you already nailed it!

  2. If you can afford all the short term expenses, but there's no room to save up for long term expenses — hold off on some short term stuff to save up for some big ticket items later on.

Step 5: Plan Ahead And Stick To The Script

Though no one would care to admit it, the hardest part of the budget is following it.

An angel telling Frank from the movie Scrooged that sometimes, the truth is painful

Once you've planned out what you expect to spend and save on a weekly basis, unplanned expenses can lower the funds available for everything else.

Stay strong and consider the opportunity cost of any unexpected activities or payments! Sure, you should absolutely grab drinks with John (if he ever finally asks), but make sure you consider how much cash that'll leave you for lunch the next day, or long term expenses in general.

Take Action

Spongebob's hands extending into a rainbow, over the text

Your 50/30/20 budget is a great foundation, but it isn't set in stone. Plans change and you need to expect the unexpected.

As long as you stick to the overall budget, and adjust the finer points as needed, you should be able to lead a balanced life without sacrificing the things that make it worth living!


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