Save money effortlessly: the “reverse budget” trick

Does saving seem like a tedious and restrictive task? There's a financial philosophy that simplifies everything: "reverse budgeting." Instead of saving what's left over after spending, it forces you to spend what's left over after saving.

For most people, the savings process is an afterthought. They receive their paycheck, pay bills, spend on wants, and if there's any money left at the end of the month, they put it into savings. This approach, known as "saving what's left," is one of the main reasons why people struggle so much to build wealth.

However, there is a counterintuitive and powerful strategy that completely reverses this logic: reverse budgeting, also known by the famous saying "pay yourself first." This principle, hailed by financial experts and practiced by countless financially successful people, automates saving and makes it a priority, not an option.

The central idea is radically simple: treat your savings as the most important bill you have to pay each month. Instead of waiting to see how much you have left, you decide in advance how much you'll save and set it aside as soon as you receive your income. The rest of the money is what you have available for your expenses and needs.

The process can be broken down into three simple steps:

• Define your savings goal: Decide what percentage of your net income you want to save. A good starting point is the 20% suggested by the 50-30-20 rule, but you can adjust it based on your goals (saving for retirement, a down payment, an emergency fund, etc.).
• Automate the transfer: This is the most crucial step. Set up an automatic, recurring transfer from your payroll account to a separate savings or investment account. The transfer should be executed the same day you receive your paycheck. By automating it, you eliminate the temptation to spend that money and the need to rely on willpower.
• Live with the rest: The money left in your main account after the automatic transfer is what you have available to cover your needs (rent, food, utilities) and wants (entertainment, shopping). It forces you to adjust your spending to your available money, rather than adjusting your savings to your spending.

"Stop thinking of savings as an option and start treating it as a fixed, non-negotiable expense is the most important mental shift you can make for your financial future."

This method is powerful not only for its mechanics, but for its psychological benefits.

• Eliminate decision fatigue: You don't have to decide whether or not to save every month. The decision is already made, and the process is automatic. This frees up mental energy for other things.
• Reduces spending guilt: Since you've already met your savings goal, you can spend the remaining money without feeling guilty or worrying that you're neglecting your future. It gives you permission to enjoy your money.
• Promotes consistency: Automation ensures you save consistently, month after month, which is critical for compound interest to work its magic over the long term.
• It forces you to be more conscious of your spending: By having a finite amount of money for the rest of the month, you naturally become more conscious of what you spend it on.

To make this method even more effective, the destination account shouldn't be a simple savings account at the same bank, as it's very easy to repay the money. Consider these options:

• A high-yield savings account: Look for options at banks other than your own or at SOFIPOs (Popular Financial Societies) that offer better returns and make immediate access to money a little more difficult.
• A low-risk investment platform: Automating transfers to platforms like CETESDirecto or low-cost investment funds is a great way to put your money to work immediately.
• Your Afore (voluntary contributions): If your goal is retirement, scheduling voluntary contributions is one of the smartest decisions you can make.

Reverse budgeting is more than a technique; it's a mindset shift. By paying yourself first, you send a clear message to your brain: your financial future is your number one priority.