(NEW YORK) — As rising prices continue to impact many across the country, some are turning to TikTok to learn budgeting strategies.
“More and more people are interested in taking control of their finances and you obviously see some of this because of the economy right now,” ABC News Chief Business Correspondent Rebecca Jarvis said. “But you have to be careful if you’re looking at this stuff, because not every size fits every person and every budget and you also have to watch out for scams.”
Based on some of the budgeting strategies that are trending on the popular app, Jarvis said some people are able to save a few hundred extra dollars a month.
To try out some of these strategies, read about them below.
“This is 50% of your spending goes towards your needs. 30% goes towards your wants and 20% goes into your savings,” Jarvis said. “Again, a model that can work really well for people because it creates some structure but it doesn’t necessarily work for every person. But if you’re taking home $2,000, that would basically mean $1,000 goes towards your needs. $600 goes towards your wants and then $400 goes towards your savings. What you do with that savings can really create a big difference, too.”
“What cash stuffing is — you look again at your budget, you look at every area of your spending, including where you’re going to put money towards savings and you start putting it into envelopes,” Jarvis said. “You literally cash out and put everything into envelopes each month. And then at the end of the year, you have this nice little savings cash that you can unlock and it can be really fun.”
However, Jarvis said there are risks.
“The thing you have to keep in mind is that when it’s not in a bank when it’s not in an account and it’s literally cash, you can lose that. Some people even hide it to make sure they’re not spending it,” she said. “It’s not necessarily covered by homeowners insurance. So really make sure a.) you know where you’re putting it and b.) that you’re not putting it in a place that can be taken away if someone in the worst-case scenario invades your home. And finally, keep in mind it’s not going to grow.”
Jarvis added, “If you put your money into a bank savings account with a small interest rate on it, or you put your money into the stock market, in an IRA, for example, that has the ability to grow. In the cash situation, it’s not growing but you are capping your spending.”
Other great resources
While these videos may be entertaining and useful, Jarvis warned against following advice that requires you to spend more money upfront.
Two apps that are good resources to help you get started include Digit, an automated savings app that analyzes what goes in and out of your checking account. Then, it periodically moves funds from checking to savings in amounts its algorithms believe are safe to save. Another is Qapital, which aims to help users effortlessly save small amounts of money but with a twist. It lets users set up savings rules. For example, you could set up a “guilty pleasure” rule so the app stashes money into your savings every time you buy takeout.
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