• Important to save money for future expenses as well as unexpected expenses (emergency fund). Many times people are making enough money and can afford to save but end up spending the money inadvertently because they’re simply not focused on saving and don’t have a plan.
    Even if not pressed for money today, have some foresight and be proactive about saving while you can – nobody complains later that they saved too much money!
  • Don’t rely on saving whatever’s left at the end of the month. Most likely will have nothing left to save. Rather, plan a specific amount you will save every month. A set goal will help you spend more wisely as you will realize immediately when you’re not meeting your savings commitment.
  • Put away your specified amount of savings at the beginning of the month. If you wait for the end of the month you’re more likely to overspend and cut into the savings. When moving to savings right off the top you will hesitate to pull it back out of savings and spend it.
    There’s no real down side, because if you do need to spend the money you can easily pull it out of the savings account and use it.
  • Do not link your savings account to your checking account. Rather pay a bounced check fee or late fee if need be – it’s cheaper than wiping out your savings. Many people spend most of their savings without realizing it because the money just automatically transfers as needed.
    Additionally, the need to consciously withdraw from savings will remind you that you are spending more than you’re earning.
  • One way I like to save is by withholding extra taxes on my paychecks. The excess will be returned to you at year end as a tax refund. Receiving it as a lump sum at year end makes it much easier to put away as savings. If it would come to you in small pieces every month you would likely have spent it and not saved it.
  • Another saving method works when you get paid on a bi-weekly schedule. You receive 26 paychecks throughout the year which means there are 2 months a year during which you get a 3rd paycheck. The idea is to base your monthly budget and the standard 2 paychecks
    per month. That way the couple times you get 3rd check it can go in full directly to savings.
  • Think twice before signing up for deal alerts (Dan’s Deals, KollelBudget.com, Metziahs.com etc). You may occasionally save some money on something you need, but the unnecessary purchases you’ll end up making will likely wipe out all of your legitimate savings. These alerts generally cost you more money than they will save you.
  • Even if not investing your savings to earn more money, you should try to ensure it grows at least along with the rate of inflation. Money sitting in your savings account will lose value (less buying power) as prices of goods rise with inflation. Most standard savings accounts pay extremely low interest rates. You can look into putting the savings in CDs (will need to lock your money in for certain amount of time) or you can try a high yield savings account (search for online banks that provide savings account with a significantly higher interest rate).. 
  • It is critical not to fall into credit card debt by making minimum payments. Leaving a balance that accrues interest at a very high rate makes it almost impossible to catch up and can begin a vicious cycle of debt. If you can’t pay a credit card bill in full, borrow money to cover the bill (from a friend, a gemach etc) instead of making a minimum payment. If you can’t make payment in full you must realize that means you’re spending more than you can afford and need to make appropriate changes immediately!
  • Many people struggle with credit cards and end up spending more than they can afford, or at least more than they otherwise would have spent. Using a debit card can alleviate some of that problem and still retain the convenience of an electronic payment method (can shop online etc). The main difference is that a debit card withdraws the money directly from your account. As a result you’re limited to the amount of money sitting in your account – you can’t spend money you don’t have. That’s not the case with a credit card; the money is paid by the credit card and essentially becomes a loan you owe to the bank.
  • Certain spends are considered to be ‘worth it’. While it may be true and it’s a very good deal, it doesn’t mean that you can afford it. Rich people can afford to buy everything that’s ‘worth it’, others can’t.
  • Every family has their own financial situation. Just because your neighbor can afford something it doesn’t mean that you can/should be able to afford it. (Many times your neighbor can’t either afford it and is just being irresponsible) 
  • Beware of making purchases based on money that’s expected to come in – you may never receive it. Some people go on vacation and rely on they year-end tax refund they know they’ll be receiving. However, there can be factors that cause people to unexpectedly lose
    part or all of their tax return they were hopeful of. Then they’re left with a big bill and no money to cover it. Be patient and wait for the money to be in your account before you spend it.
  • Newly married couples usually have relatively few expenses. It’s important to realize that expenses can rise sharply as your family begins to grow. Be careful not to develop lavish habits simply because you have the money for it at the moment; the equation can change quickly and that lifestyle will be difficult to maintain.
  • In general one must choose a standard of living they feel can be maintained in the long run. Even if affordable at the moment, one may face difficulty at a later point when expenses naturally grow or may have a setback on the income side. As a wise man once said, “if you sleep on the floor, you can’t fall off your bed.” 
  • Very important to get life insurance. Many agents will convince you to buy a full life policy but not necessarily the best choice for everyone; there are many that disagree with the approach. Do your research before deciding term or full life, but important to get insurance for both husband and wife.
  • Set a specific time each month to sit with each other and review the budget. Make it a fun atmosphere – doesn’t have to be painful experience.
  • Remember budgeting doesn’t mean you can’t buy something expensive. You can purchase whatever you want as long as you can fit it into the budget. If it doesn’t fit easily, you can try cutting in one area and re-allocating towards your expensive purchase; it’s all a matter of choice.

–Written and compiled by a Mesila coach