Survivor, Meet Wealth Builder
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Budgeting is a great tool for keeping your daily spending in check, and keeping you on track to hit bigger goals.

When your budget’s tight, though, it’s easy to get stuck in survival mode and focus only on near-term goals, like covering monthly bills, starting an emergency fund and paying off credit card debt. As a result, building wealth to hit long-term goals can fall by the wayside.

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One simple remedy? As soon as you’ve found some places to free up savings—whether it’s negotiating down a cable bill or paying off a credit card balance—redirect that cash toward a longer term goal.

How It Works

So, you’ve just finished paying off your credit card balance (well done!). Instead of padding your checking account with the $300 you’re no longer paying Visa each month, give the cash a new purpose. Use it to beef up your IRA contributions, for example, or fund an account dedicated to saving toward a home down payment. (You can also allocate the money to different goals of equal importance.)

In addition to servicing your bigger savings goals, putting a plan in place now to direct those funds somewhere as soon as they’re available helps you avoid “lifestyle creep”—a.k.a. using any wiggle room in your budget due to raises, new savings, bonuses or gifts to upgrade your lifestyle instead.

Remove any temptation to spend more by automating transfers to savings and investment accounts.

The Payoff

Over time, those efforts will compound, and you’ll see a big difference in your finances. “As you hit goals more and more frequently, you gain confidence,” says Raquel Hinman, a Certified Financial Planner at Hinman Financial Planning. “Saving your money will develop into a habit, and it will start to get easier.”

Survivor, meet wealth-builder.

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