Learn to Reduce Spending. Developing your budget will help you spot areas where you're spending more than you realized. But the next step is more difficult: cutting your spending on unnecessary items. This will require some soul_searching on items both large and small. For example, do you really need a ŭ coffee every morning? (Some will say yes, while for others the answer is no.) Could you make do with a smaller, older car? Instead of an expensive vacation this summer, could you try a "stay_cation," where you stay home (much cheaper) and relax there? All these choices are very personal and many factors come into play, so there's no right answer for most of them. But laying them out will help you prioritize your spending, and that will help you spot places where you can save money.
Step Four: Spend 20 Percent on Savings and Debt Repayments. Now about the extra ๛ you pay on that credit card each month. That's neither a want nor a need. It's the ൜" in the 50ቺተ rule. It's in a class all its own. You should spend at least 20 percent of your after_tax income repaying debts and saving money in your emergency fund and your retirement accounts.