I was never great at saving money, but I’ve found a budgeting hack that makes it easier for my family

couple looking at bills

My husband and I didn’t have much saved a few years ago — we preferred to spend our money on travel.
After we got hit with unexpected medical bills, though, we knew we needed to build our emergency savings.
We both earn variable incomes, so instead of saving a set amount every month we live on a specific, conservative budget and save whatever we have leftover. We’ve built up a six-month emergency fund this way.
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Several years ago, our family’s financial situation was a bit different than it is now. We didn’t have much saved, but we were always able to pay our bills in full and had leftover money to travel. Our goal was to take at least one international trip per year, and we loved planning these vacations.

This was before we owned a home, and before we got married and had kids. Not having a lot saved didn’t bother us at the time, but we realized as we got older that it was not very responsible of us. We ended up learning our lesson the hard way when we got hit with unexpected medical bills with no extra savings, resulting in credit card debt that we had to figure out how to pay off.

Since then, we’ve come a long way on our financial journey. While we’ve had our ups and downs, especially as I left a stable-income job to pursue entrepreneurship, we now have ample savings. Having variable income forced us to come up with a plan to increase our emergency fund, while still being able to travel and enjoy life.

Building our emergency savings

I know from working with my financial coaching clients and from personal experience that it can be tricky to create a budget based on variable income. My husband works in a commission-based job and I have my own business, so we had to figure out how to create a budget that allowed us to afford and enjoy our life, yet still build an emergency savings account.

We decided the easiest way to save quickly was to base our budget off of the lowest income amount we could comfortably live off of, and then sock the rest away. This can be really difficult to do, especially if you love to spend money when you have it. “Lifestyle creep” is a real issue for many — that’s when you spend more to upgrade your lifestyle whenever your income goes up. The peace of mind that comes with having an emergency savings account, however, is worth the sacrifice.

Analyzing our spending and setting a budget

In order to determine how much we needed to live off of, we had to analyze how much we had been spending in the months leading up to that point.

First, we conducted an inventory of all fixed expenses by combing through …read more

Source:: Business Insider


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