Three ways to budget, save, and build wealth.

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Cash flow management is the foundation for building wealth. Calculating net cash flow is easy to do. You simply total your monthly income and subtract monthly spending. Money left over is a cash surplus. This extra money can be saved for emergencies or short term goals. It can also be invested for long term goals like retirement.

But, if you spent more than you earned, it’s called a cash flow deficit. We can get by with deficits from time to time by using money in our savings or carrying a balance on a credit card. Though, continuous deficits will lead to a growing mountain of debt and financial instability.

To build wealth you have to first manage your cash flow. That means creating a budget or a plan for spending AND saving each month. There are different ways to budget and new financial technology makes it easier than ever to track your spending and savings goals to make sure you stay on track. Here are three ways to help you budget, save, and build wealth.

1. Use budget percentages to guide saving and spending

The Balance or Everydollarrecommend using budget percentages. Budget percentages help you decide how much of your income should be allocated to spending and saving. For example, it’s recommended to stay within 10% of your income for fun and recreational spending. That means if your monthly income is $3,000 you shouldn’t spend more than $300 a month in this category. This is something I should have been more mindful of in my 20s! It can be difficult adjusting spending habits in your 30s when new financial responsibilities (mortgage, daycare) start to take away from your discretionary spending. If I could give my younger self some financial advice it would be to try to stick to the 10% budget recommendation and save as much as possible for future expenses. Using budget percentages allows you to see where you are overspending or might be able to cut back to reach a saving goal faster. It’s important to make savings one of those categories. By allocating a percentage of income to savings you are “paying yourself first” rather than saving what’s left (if any). This will keep you from spending money on items you don’t need. Also, if you get a raise your savings will automatically increase as well.

If you are feeling restrained or overwhelmed trying to stick to individual budget percentages you could try using the 50/30/20 rule. 50% of your income is budgeted for needs, 30% for wants, and 20% for debt/savings. Victor Antonio, host of the TV show Life or Debt, recommends using a 30/30/30/10 rule. 30% of your income goes towards the rent or mortgage. 30% towards living expenses, 30% towards debts/savings, and 10% towards fun and entertainment. I like this version better than the 50/30/20 rule because it provides specific guidelines for rent and mortgage, as well as, entertainment. Housing is often the largest expenditure and entertainment is a category where we easily overspend. It’s difficult to say no to an extra night out with friends, a concert, sporting event, shopping or traveling. FOMO is real and right now I wish I was on spring break with my sister in Florida.

2. Use personal finance apps to keep track of spending and savings goals

Tracking your spending and saving on a budget or personal finance application will save you time analyzing your cash flow and where your money went. These applications allow you to link checking, savings, retirement accounts, credit cards, loans, and other bills to help you manage finances in one place. and Clarity Money allow you to create budgets and track bill payments. It’s easy to categorize spending and keep track of where your money is actually going. Often we make a budget, but don’t take the extra step to go back and see if we’re actually sticking to it. These apps send you personalized tips and advice as well. Clarity Money will even help you cancel costly unused subscriptions. Personal Capital has five free tools to help you budget and plan for your future. You can track spending, track retirement and college savings, compare your investments to benchmarks and find out whether you are paying too much in fees.

3. Use cash back shopping apps to save on purchases

Other budget friendly apps include Rakuten, Drop, and Ibotta. Rakuten gives you cash back for shopping online or in-store at places you already shop. I received cash back on Christmas presents purchased from Amazon, Target, and GAP. Ibotta users earn cash back for specific purchases at retail, grocery, pharmacy, and convenience stores. Drop users earn points from everyday purchases using their linked debit or credit cards. These points can be redeemed for gift cards at their partner brands (Uber, Trader Joe’s, Best Buy, Adidas, and Sephora to name a few). Cash back rewards for the purchases you already make will help stretch your discretionary spending budget.

Use my bonus referral codes to sign up!

Use code 02yoc when signing up for Drop. We’ll both get $5 when you link your first card.

Use this link to when signing up for Rakuten. I’ll receive $25 and then you’ll receive your own referral link to share and earn cash back. Just click on the “refer and earn” link =)