Frequently Asked Questions
What is the best way to spend less than you earn?
Focus first on the biggest costs, usually housing, transportation and insurance, because a cut there saves far more than giving up small treats. Pair that with efforts to raise your income, and build some fun money into your budget so the plan is realistic enough to stick with.
How much of your income should go to housing?
A widely used guideline is to keep housing costs at or below about 30% of your gross income, which is also the threshold the U.S. Department of Housing and Urban Development uses to define cost-burdened households. Spending well above that level leaves less room for savings, emergencies and other goals.
Should you ask for a raise to keep up with inflation?
If your pay has not changed in over a year, rising prices mean your income buys less than it did, so it is reasonable to ask for a raise at least in line with inflation. Preparing a record of your results and current market pay for your role can make the conversation easier.
Is an emergency fund enough to cover unexpected expenses?
An emergency fund is an important buffer, but it works best alongside adequate insurance for your home, car and health. Insurance is designed for large losses that savings alone could not cover, while the emergency fund handles deductibles and smaller surprises.
About the author
Contributing Writer, Wealthtender
Karen Banes is a freelance writer specializing in entrepreneurship, parenting and lifestyle. She writes articles, website content, ebooks and the occasional award winning short story. Her work has appeared in a range of publications both online and off, including The Washington Post, Life Info Magazine, Transitions Abroad, Brave New Traveler, Natural Parenting Group, and Copia Magazine.
Karen provides copy editing and proofreading services, as well as content creation services, at her website KarenBanes.com.