Have you heard of Lifestyle Inflation? If you have not heard this phrase, you probably know the feeling. Some may call it “keeping up with the Joneses,” but it’s the idea of increasing spending as more money becomes available (for example a raise or inheritance). A better plan for extra money would be to consider building your financial security.
One approach is to adopt the 80/10/10 method. This means that 80% of your budget is spent on your fixed and variable expenses, 10% goes to savings, and 10% is allocated for your tithe. It’s important to live within your means, and living on 80% of your income allows you to do this. In addition, the 10% that goes to savings can be used in many areas – creating an emergency fund, building cash reserves, and saving for retirement.
If you’re already living an 80/10/10 lifestyle and you see your income increase, you may have the ability to increase your personal spending while also increasing the amount you save. It’s like having the best of both worlds. Of course, if your retirement account needs attention, and you don’t have an emergency fund established, we recommend those areas be prioritized.
Additionally, we recommend that you do not lump your emergency fund with existing checking or savings accounts. It’s best to park it separately so that you don’t accidentally (or intentionally) use those funds for purposes other than emergencies. Also, consider placing the money where you can earn interest, allowing the value to increase over time, like an AGFinancial Demand Certificate.
To learn more about managing your finances, we recommend the following articles:
This is not an offering to sell securities referred to herein and we are not soliciting you to purchase these securities. The offering is made only by the Offering Circular which includes risk factors. The Offering Circular may be obtained by writing or calling AGFinancial or by clicking here. An investment in AGFinancial involves certain risks that other investment options may not have. Not all risks can be quantified or compared to other investments. You should carefully evaluate all the risks in assessing the potential benefit of the various investments. AGFinancial investments are offered and sold only in states where authorized or exempt from authorization. Not available to new investors in Washington. Not available in Ohio. AGFinancial is an affiliated entity of AGFinancial.
Not FDIC or SIPC Insured. Not a Bank Deposit. No AGFinancial Guarantee.