Tips for balancing allowances and savings accounts
Depriving yourself completely is a sure-fire way to overspend on your budget.
09:54 25 May 2013
News lately shows that the UK experienced lower than expected growth in the retail sector. While many blame the poor weather or internet sales, it could also be that more people are trying to establish savings.
With any budget, it’s important to allocate funds for shopping, but also to deposit funds in savings accounts as well. This way you are able to shop for unexpected things you need and stimulate the economy, but also have funds for emergencies.
Here are a few ways you can strike a balance in your budget between spending and depositing in savings:
- Expenses—first and foremost, everyone knows that expenses need to be covered. We usually think of these things as your typical monthly bills, loan payments, and groceries. If you work at a place which does potlucks, or you sometimes need to purchase new clothing, you may want to work these into your budget as well.
If these are not monthly costs, you set this money aside in a savings account until you need it. Since these are things, like vehicle maintenance, that may happen every few months, you don’t really need to worry about earning interest, but it never hurts to compare savings accounts anyway in case you end up not needing the funds.
- Splurge—this is a same philosophy that some people have on dieting. They keep themselves on a very strict budget, without any allowance for extra splurging. This could result in feeling too restricted, followed by significant overspending and no savings. Setting an amount aside, even if it’s small, is better than not setting any kind of limit. You’ll be more likely to adhere to a preset goal.
- Entertainment—people like to budget this in a variety of ways. You might feel this belongs in your splurge category, or you might consider this an aspect of your budget. Either way is fine, as long as it works for you and allows you spend while still maintaining savings.