When you’re just starting out on a new financial path, it can be a bit daunting to work out an effective budget and start building some solid savings. When in doubt, you should always fall back on this simple rule when managing your finances:

Spend money like there’s not enough; save money like there’s too much.

Simply put, you should not be using a surplus funds to fuel your spending habits.

Receive a big windfall this month? Stop thinking of it as more money to spend. Remember, windfalls are for buying freedom, not Jet-skis.

To see true breakthroughs with your money, begin thinking of your savings as crucial for the health of your financial life. Savings shouldn’t be a nice-to-have or a one-of-these-days goals. Consider this: if you invested $100/month in index funds for ten years, you’ll be ten years older and around $17,000 richer.

But I’m not talking about $100/month savings. If you live in a middle class, dual-income household, that’s a case of saving like you’re poor. You can do better, and you owe it to yourself to do better. If your dining out budget is higher than the amount you save and/or invest each month, it may be time to re-evaluate your saving habits.

If you budget regularly, it’s important to set realistic numbers for your various expenses. At best, you’ll stick to them, but sometimes, you need to roll with the punches and move money around. When done properly, you should be moving tens of dollars into those expense categories rather than hundreds. Adding an extra $20 to your entertainment budget should ache. Adding $200 to your investment funds should feel like victory (and it is).

Don’t overlook your savings. Place saving money higher on your priorities than your spending it, and your financial life will turn to solid gold.

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