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Learning to Save

Learning to Save

January 12, 2023

Learning to Save 

There’s a common saying that’s thrown around quite often and at times it can be harder to live by this standard than not. That saying is to “Live Below Your Means”. What does this actually mean? It is saying that all of your monthly expenses should be lower than your monthly income.

What do we do when that isn’t the case?

The best option is to review, at a minimum, last month’s total expenses and if possible, for the last three months. Print out your credit card statements and bank account statements to see all transactions for the time frame. Now, it’s time to go through line by line and highlight which expenses are required, optional, and extra. From this it will be clear where cuts can be made to spend less each month moving forward.

Don’t get it twisted, I enjoy going out to eat and spending time with family & friends as much as the next person. However, there needs to be a healthy balance between making conscious decisions about what to do. Living below your means doesn’t imply that you can’t ever go enjoy yourself and be as social (or not social) as you want.

As we move forward from spending less than we earn each month, now it’s time to figure out what we should be doing with all this extra money we have. The financial landscape can be intimidating to step into, however, with a little guidance it becomes clearer on what to do with your savings. Let’s start by analyzing the savings buckets.

The buckets are short-term (1-3 years), mid-term (3-15 years), and long-term (15+ years). With each of these there are different types of financial instruments that can be used, and each of your buckets will have different objectives. Here are a couple examples.

  • Short-Term (1 – 3 years)
    • Emergency Savings / Safety Net
    • Non-Budgeted Expense
    • Upcoming vacation
      • Potential Financial Instruments
        • Checking and Savings Accounts
        • High-Yield Savings Account
        • Money Market Fund
      • Mid-Term (3 – 15 years)
        • Education Savings
        • Down Payment for Home
        • Draw from as Needed
          • Potential Financial Instruments
            • Investment Account
            • 529
          • Long-Term (15+ Years)
            • Retire Comfortably
            • Legacy Planning
            • Charitable Giving
              • Potential Financial Instruments
                • Investment Account
                • 401(k), IRA, Roth IRA
                • Whole Life Insurance

Each bucket is going to have a different percentage of your savings going to it and there may be times when each bucket isn’t being utilized at the same time. That’s okay. It takes time to build up your system and get moving. All you can compare yourself to is where you were yesterday. Small improvements built up over a long time will have a great impact!


Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 3040 POST OAK BLVD, SUITE 1150, HOUSTON TX, 77056, 281-2202700. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is a wholly owned subsidiary of Guardian. Rethink Wealth LLC is not an affiliate or subsidiary of PAS or Guardian. CA Insurance License Number - 4172046. Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. Links to external sites are provided for your convenience in locating related information and services. Guardian, its subsidiaries, agents and employees expressly disclaim any responsibility for and do not maintain, control, recommend, or endorse third-party sites, organizations, products, or services and make no representation as to the completeness, suitability, or quality thereof.