The Freedom Budget: How to Enjoy Life While Saving Money

If there’s one thing I hate, it’s some finance “expert” telling you to stop eating out because you’re in debt. 

None of us knows how long we have on this earth, and I firmly believe that it is our right to enjoy our lives, no matter our financial situation. If having date night every Friday with your partner is the best part of your week, GO FOR IT! 

But, your weekly night out absolutely needs to be part of your budget. 

Follow these 5 steps for enjoying life, without compromising your budget:

1. Assess where you are today 

You can’t make a plan for your money until you know where you’re starting from. This first step is all about figuring out your existing financial situation. 

First, write down your monthly income. If it’s variable, write down the lowest possible amount you can expect to make. 

Next, pull out your last 3 months of credit card and checking account statements. Write down ALL of your expenses and put them into one of these categories: necessities or discretionary. 

Necessities are anything that you will suffer *serious* consequences without buying or paying for. Groceries are a necessity. Rent is a necessity. Your car payment is a necessity (if you don’t pay it you’ll get charged fees, and eventually the car will be repossessed). But be cautious, we often convince ourselves that we “need” things when really we just want them - like gym memberships or grocery deliveries.

Discretionary is anything that living without will not cause serious consequences to your health or well-being: shopping, streaming services, eating out, or Halloween decorations. 

Finally, you’ll need to find out how much debt you have. Include car loans, mortgage, ALL credit card debts, student loans and any other money you owe. Write down the amount owed and the interest rate.

It's important to start your financial journey by assessing where you are today.

2. Set clear short-term and long-term goals

After you’ve figured out where you are now with your money, you’ll need to figure out where you want to go! 

There are no *right* answers for your money goals. Your money is yours and you get to spend it however you want! 

But, it is important that your goal be specific. Like, really specific. 

The most common money goal is: I want to save more money. 

But no one can answer: why??

There has to be a reason for you to save or you either 1) won’t or 2) will hoard money and never spend it. 

Short-term goals should be between 0-3 years. Long term goals are longer than 3 years. 

Some examples of short-term goals may be: 

• Buying a new car 

• Taking a trip to Paris 

• Renovating the kitchen 

• Paying off credit card debt 

• Having $30,000 in emergency savings 

Some examples of long-term goals could be: 

• Retiring (this should be on everyone’s list!)

• Buying a home 

• Paying for children’s college 

• Caring for aging parents 

• Taking a 1 year sabbatical and traveling the world

Think about your short term and long term goals and write them down. Be as specific as possible, and remember to write down (approximately) how much money you will need to save to reach them. 

3. Make a budget

If you’re starting from scratch, I recommend a 50/30/20 budget. 

This is where you allocate 50% of your income to necessary expenses, 30% to discretionary spending, and 20% to savings. 

For example, Elizabeth makes $5,000/month. Her 50/30/20 budget would look like this: 

By following a 50/30/20 budget, Elizabeth knows exactly how much she can spend on her monthly expenses.

Necessities: $2,500

Elizabeth has $2,500 to spend on all of her necessary expenses: rent, gas, groceries, utilities, etc.

Discretionary: 

Elizabeth has $1,500 to spend on all discretionary expenses: eating out, subscriptions, food delivery, gym, etc.

Savings: 

Elizabeth should be saving $1,000 per month, divided between retirement savings, emergency savings, and any other savings goals she has.

4. Have a “Frindy Dindy” account 

The term Frindy Dindy comes from my grandmother. She used to send me a $25 check on my birthday every year for “Frindy Dindy” spending. It’s basically fun money that you get to spend on anything you want.  

Even if you’re paying off debt or on a tight budget, it’s important to have some money set aside for pleasure spending. Even if it’s only $50/month, you get to spend that money on absolutely anything and you’re not allowed to feel guilty about it. 

Go to happy hour, buy a new pair of pants, see a movie or buy a new lamp. Give yourself permission to spend that Frindy Dindy money however you want.

5. Celebrate your wins 

Finally, celebrate your wins! 

Having goals is important, but it’s also important to celebrate your progress along the way because it helps you see how far you’ve come. 

Celebrating your wins is an important part of acknowledging your progress - you rock!

Without periodically stopping to celebrate your wins, you’re at risk of burnout. 

If you’ve already saved up $10,000 for your $30,000 emergency fund - amazing! 

If you started contributing to a 401k or Roth IRA - great job! 

If you’ve paid off $5,000 of your $20,000 credit card debt - way to go! 

Acknowledging your progress is an important part of maintaining your morale and keeping your momentum towards achieving your goals. 

In conclusion

Enjoying life while managing your finances doesn’t have to be an either-or scenario. By following these five steps, you can find a balance between enjoying the moment and planning for the future. 

Remember, a budget isn’t just about cutting back; it’s a tool used to make informed decisions about your money that allow you to live more fully. 

So go ahead, treat yourself to that dinner out or that weekend getaway, all while staying mindful of your financial goals. After all, life is too short not to savor the moments that bring you joy!

Your life may not be perfect, but it is imperfectly yours. The only way to live it is your way.