Looking Into Your Personal Finances With Reverse Budgeting
If the “pay yourself first” approach sounds like something up your street, then we at Southwest Title Loans think that a reverse budget might help you change your financial life for the better.
What are the main pros of such a budgeting method and how to get started? Let’s find out!
What Is Reverse Budgeting?
In a nutshell, reverse budgeting is about prioritizing your savings goal. The reason why the method is also known as the “pay yourself first” approach is because you are encouraged to put aside a certain sum of money as soon as you receive your paycheck.
Remember this method might not be ideal for people with variable incomes. If you’d still like to give reverse budgeting a shot, then make sure to set up a realistic savings goal based on your minimum monthly income.
What Are The Pros Of Reverse Budgeting?
You will finally be able to meet your savings goal. With reverse budgeting, it would be practically impossible to accidentally spend the money that you were intending to save.
You wouldn’t have to constantly monitor your budget. Once you take care of your savings goal, you can spend the rest as your heart desires.
You can easily set up an automated transfer. As soon as you get paid, a certain portion of your paycheck will be transferred to your savings account – you wouldn’t even have to actively think about distributing your finances.
When done correctly, a reverse budget can help you feel less stressed out about money-related issues. Once you have committed to your monthly savings goal, you are free to spend your cash however you want. Even though this might seem like a careless strategy, you’d be more in control of your finances as you’d have a well-established emergency fund.
How To Create A Reverse Budget
Figure out how much you can afford to save. Go through your credit card and bank statements and take note of how much you need to spend on your essentials and how much you usually spend on entertainment.
Though you can trim some of the expenses to meet your savings goal, a drastic cutback can quickly lead to burnout. So, try to shave off only the expenses that are unnecessary or that don’t bring you joy.
Those can be monthly subscriptions, buying coffee every day, and so on. Write down the savings goals that you want to work toward.
Having an aim will help you stick to the plan. After a quick brainstorming session, you might decide to establish an emergency fund, a vacation fund, and a holiday shopping fund, for example.
Automate your savings by setting up automatic transfers. In some cases, you might even be able to split up the sum to land into different bank accounts.
Leave yourself enough flexibility for bills. Remember that your monthly savings goal can be adjusted if you have found that paying for your basic needs has become challenging.
Can Budgeting Help Deal With A Financial Emergency?
The reverse budgeting method can indeed help you build an efficient emergency fund that would help you cope with the financial challenges that life might have prepared for you.
There can be a few reasons why you’d prefer not to turn to your savings account in case of an emergency:
- You’d prefer not to deplete your savings that you have been working on for months and lose the sense of stability.
- You didn't have the time to build a big enough reserve fund.
- A title or registration loan offered by Southwest Title Loans might come in handy in both situations.
Why Work with Southwest Title Loans?
We are a reputable financial services provider that has been offering competitive title and registration loans in Arizona since 2000. Speed, convenience, and the satisfaction of our clients are our top priorities.
The in-person process might take just 30 minutes and if approved, you will receive the money the same or the next bank day. To take out a title loan, you’re only going to need your ID, lien-free title, and vehicle. Do not own your car outright? That’s not a problem as you can always opt for a registration loan!
Give Your Finances A Boost Right Now!
Whether you have already created a reverse budget or only plan on doing that, dealing with a financial emergency would be hard. If you need some extra cash to take care of the urgent expense, a loan from Southwest Title Loans can become your way out.
It may take only 30 minutes for you to get approved for a title or registration loan. And the best part is that you might get the money as soon as the same day. If you’re ready to get started right now, fill out our inquiry form or call us at (623)266-9163.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.