How to Balance Saving and Spending—to Live Your Best Life

If you’ve ever felt stuck between “I need to save money” and “You only live once,” don’t worry—we’ve all been there. Listen, it’s an expensive world that we live in, and we’re all just trying to live our best lives. If at times that means allowing yourself to try that swanky restaurant that’s the talk of the town, splurging on that overpriced face serum your friends can’t stop raving about, or finally booking that Europe trip you’ve been dreaming about for ages, then so be it. There’s no denying these things certainly have the power to romanticize your life, but it’s also important to remember they have the potential to sabotage your savings goals, too.

The key is striking a balance between spending money in the present and saving money for the future. It’s a delicate line to walk, TBH, which is why we spoke to Robin Growley, Head of Consumer Deposits at Bank of America, to get some of her expert advice on the matter. If there’s a singular thread that appears consistently throughout Growley’s guidance, it’s this: Having a budget is the secret to reaching your money goals. “The awareness that a budget gives you of your financial situation is important to your financial health,” she says. Not only does it help you stay on top of where your money is going each month, but it also prevents you from accidentally spending it all before the month is over.

Look, we get it—budgeting is a less-than-glamorous task. But it really is the *best* way to keep your spending habits in check and stay on track to hit your savings goals. While spending and saving can feel like competing priorities, budgeting helps you find a balance between the two, giving you better flexibility to spend money on things that bring you joy in the present (like that monthly mani-pedi) while also making sure you’re consistently saving for things that’ll bring you joy later in life (like traveling the world when you retire). Read on for Growley’s best tips for creating a balanced budget—so you can enjoy life now and in the future.

MEET THE EXPERT

Robin Growley

Head of Consumer Deposits

Robin Growley is the Head of Consumer Deposits at Bank of America. In this role, she leads the company’s efforts to provide a full range of consumer deposit products and payments, and she oversees the strategic direction and growth of everyday banking, savings, and payments solutions for 42MM consumer clients. Robin is responsible for a $775B deposit portfolio, which has achieved a #1 position for retail estimated deposit market share and U.S. Debit Card Issuer. She is active in enterprise-wide efforts to support women and Hispanic Latino teammates and serves on the Deposits and Payments Committee for the Consumer Bankers Association. She also served as a mentor for the Cherie Blair Foundation for Women, which supports female entrepreneurs in low-to-middle-income countries. Robin resides in Charlotte, North Carolina with her husband and twin boys.

Find the best budgeting method for your lifestyle

“While FinTok seems to offer a new budgeting trend every other week,” says Growley, “the best budgeting method is the one that works best for you and your lifestyle.” She believes a budget can be as simple or as detailed as you would like it to be. Essentially, it’s an outline of your finances and should track your estimated income and expenses each month, as well as your savings goals. Growley recommends testing out a few methods to see which one best suits your needs. Here are a few common methods you can try:

Spreadsheet budget: Type “spreadsheet budget template” into Google, and you’ll be amazed at how many different budget templates there are out there. You can download one and customize it by plugging in your personal income, expenses, and savings goals. Spreadsheets are especially handy because you can formulate the various columns and rows to automatically add everything up for you.
Handwritten budget: If you absolutely detest working in spreadsheets (seriously, why do the cells have to be so tiny?) and you’d prefer to write out your budget by hand, you can keep track of your finances in a notebook or on a whiteboard instead. You’ll need to write out the same things that you would type into a spreadsheet budget—income, expenses, and savings goals—and you’ll have to tally everything up by hand, too.
Budgeting app: Luckily, we live in a world where there’s an app for everything. And there’s no shortage of budgeting apps that you can utilize to manage your finances. Bank of America’s mobile app has a budgeting feature that allows you to view your spending habits and helps you identify where you are frequently over or under budget.

Set clear spending and savings goals

From happy hour with your coworkers to girls’ trips with your besties, not to mention that capsule wardrobe you’re trying to build, it’s easy for expenses to add up. And while you certainly should be allocating some of your income towards some of the more fun things in life, it’s important to make sure you’re not overspending in this area. According to Growley, many people tend to go by the 50/30/20 rule, where 50 percent of your budget goes toward expenses and needs, 30 percent goes towards wants, and 20 percent goes towards savings.

“But with current high costs like rent, car payments, and groceries,” she recognizes, “sometimes you might need to allocate more money toward your individual needs.” If this means that your spending/saving ratio is more like 70/20/10, don’t stress. The most important thing is that you have a clear plan (AKA a budget) for how much you’re spending versus saving. Save whatever amount you can comfortably afford—and do it consistently each month. As your income grows over time, be sure to adjust the percentage that you’re contributing towards savings, too.

Modify your savings strategy while paying down debt

When the sight of your student loan or credit card balance gives you the sweats and your car payment feels like it leaves a giant hole in your bank account each month, building up any semblance of savings can feel like an exercise in futility. And while it’s a good rule of thumb to aim for setting aside 20 percent of your paycheck towards savings each month, this strategy might not work for you if you are in debt. In this case, it would be in your best interest to put a portion of that money towards paying down debt and reserve a smaller portion for savings.

“While paying off debt should be a priority,” says Growley, “it’s still important to continue putting aside some money in a savings account while you’re working to pay it off—even if it’s just a little.” In fact, Bank of America’s Keep the Change® Savings Program turns everyday purchases into savings by rounding up each debit card purchase to the nearest dollar and transferring the change to your account. You won’t miss the spare change each day, but you’ll be amazed when you see how much it adds up to over the course of a year. Over time, once you pay off debts and your income grows, you can slowly start increasing the amount you contribute towards savings.

Make adjustments over time

Once you have a budget, don’t expect it to stay the same forever. Whether it’s getting a raise or promotion, or suddenly realizing your $4 latte now costs well over $7, your income and expenses are constantly changing. So you should expect your budget to continually change, too. Growley recommends that you periodically review your budget, including projecting any large expenses or costs that you may be anticipating. She also says it’s important to make adjustments as needed, especially whenever you notice any red flags. “If you’re left with only bread and water in your pantry at the end of the month,” she says, “it may be a good idea to re-evaluate and adjust your budget for groceries.” Digital tools like Erica®, Bank of America’s virtual financial assistant, can give you a clearer picture of your finances by tracking exactly where your money is going each month and help you identify where any adjustments can be made, like those pesky streaming subscriptions you’ve been meaning to cancel.

Level up your savings with investments

Once you have a cushion of cash saved up in an emergency fund (Growley recommends saving anywhere from three to six months’ worth of living expenses), then you can start making some money moves with investments. “You don’t need a large sum of money to start investing—a few hundred dollars is plenty to get you started,” says Growley. She feels a great way to start your investing journey is to see if your employer offers a retirement savings plan through a 401(k) program (self-employed girlies, you’ll want to look into a Roth IRA instead). Through either of these programs, you can set up a specific portion of your paycheck to go directly into your investment fund. If you’re contributing to a 401(k), be sure to check if your employer offers any matching opportunities, which can help you save even more toward your financial future. “It is free money,” according to Growley, “that could make a major difference.”

She also doesn’t think you should let your lack of knowledge about investing stop you from getting started either. “There tends to be an investing gap between men and women—whether it’s lack of education, confidence, or even the ability to talk with others about it,” says Growley. Luckily, there are plenty of resources and tools, including Bank of America’s Better Money Habits® that you can utilize to educate yourself and make more informed decisions so that you can start building your wealth and securing your future.

Additional Resources

Erica® From Bank of America
A virtual financial assistant that can quickly answer questions and help you stay on top of your finances? Say less.

Bank of America Better Money Habits®
A resource page chocked full of pearls of wisdom, from saving and budgeting tips to educational tools and even tips on credit and homeownership.

Bank of America Keep the Change® Savings Program
A savings program that turns everyday purchases into savings by rounding up each debit card purchase to the nearest dollar and transferring the spare change to your account.