Elizabeth Warren Wants You to Budget Your Money

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Balance is Key to Financial Health

The National Budget isn’t the only budget Elizabeth Warren would like to fix. As the co-author of the best selling personal finance book All Your Worth: The Ultimate Lifetime Money Plan, she knows a thing or two about household budgets.

Whether you’re looking to save a little extra cash or you need to completely overhaul your spending, this presidential-hopeful has some wisdom to impart, and we’re here to tell you all about it.

Smart Money Management Is All About Balance

Many popular personal finance gurus might preach sacrificing discretionary spending in favor of getting ahead. In comparison, Elizabeth Warren is a big believer in an approach that promotes balance for the long term.

She suggests adopting a 50/30/20 format for budgeting. Fifty percent of a household’s income should be dedicated to expenses that meet needs, like paying a mortgage or utility bills. Discretionary spending is meant to account for 30% of income and the last 20% is dedicated to saving for the future. Individuals who feel intimidated by this approach can start small, according to Warren, beginning with something more like 50/40/10 and working up from there.

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Why Balance Works in Personal Finance

In a world where some of the loudest voices in personal finance promote extreme personal sacrifice to get out of debt, Warren’s more conservative approach is a breath of fresh air. The reason why balance works in personal finance is that it’s sustainable over the long term.

Life is full of decisions, made day after day for years on end. The choice to “just spend less” might be wise, but it doesn’t always work for a long period of time. In fact, there is research that suggests that humans actually experience fatigue when practicing self-control for extended periods of time. The more we make tough decisions, the harder it becomes hard to practice restraint.

Adopting Warren’s approach is less about telling yourself no and more to do with deciding in advance how much will be spent on fun. This makes it possible to enjoy your life while making steady progress toward a financially stable future — now the question is, can she do the same with the national budget?

~ Here’s to Your Financial Health!

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