In the age of credit cards and Cash App, keeping your finances in check can be a challenge. Tim Rupert has some advice.
In the age of credit cards and Cash App, keeping your finances in check can be a challenge. When it comes to creating a budget it can be hard to know where to begin — not least because conventional wisdom can vary depending on a person’s financial situation.
Tim Rupert, a professor of accounting at Northeastern, has some advice. Rupert has presented to communities in and around the Boston area on taxes, budgeting and financial planning.
In the world of money management, there are several variations on a theme. You’ve got the 50/30/20 rule, meaning 50% of your income should be put toward your needs, 30% on wants and 20% into savings. There’s the 60/20/10 rule that accounts for increases in the cost of living. And there are variations that make room for some charitable giving.
But before you figure out how to slice the pie, it’s important to take stock of your earnings — especially if you’re someone with multiple income streams.
“One of the key things is figuring out what your income really is,” Rupert says. “And that’s difficult for a lot of people in our current economy because many don’t have that consistent employment, with a set number of hours.”
“There are a lot of people who have a side hustle or are involved in the gig economy, which means there can be a lot of variation in your income. In those cases, it can be much more challenging to budget.”
The modern conveniences of our digital world can make it hard to get a handle on your spending, Rupert says. Whether it’s paying the bills or splurging on a fancy dinner, many people are used to swiping a credit card or transacting over mobile applications such as Venmo or Zelle.
If you’re used to doing business online or on your phone, Rupert actually recommends reverting to using cash for a period of time. It can help you track your spending and save money. “It can sometimes be a little bit harder to part with cash,” he says.
Keeping cash in an envelope designated for specific expenses can help you track exactly how much you are spending for every budget line. “Cash stuffing,” as it’s come to be called, made a brief comeback last year on TikTok. The practice really dates back decades — a budgeting method called the cash envelope system.
“It’s so counter to what we’re used to doing now,” Rupert says. “But doing that for a period of time can make you a little bit more sensitive to the spending decisions that you are making when you go back to not using cash.”
Anywhere from half to more than 60% of Americans currently live paycheck to paycheck. And with inflation remaining persistent, saving money can be difficult, which in turn makes it all the more important.
“That 20% goal for savings can build pretty quickly once you sort your spending habits out,” Rupert says.
Conventional wisdom suggests that having an “emergency fund” — a store of savings that represents your monthly spending multiplied by three or six — is recommended in case of life’s curveballs. Rupert agrees: the more you have stashed away the better.
“You have to have that safety net, and too many of us don’t,” Rupert says.
It’s important to note: saving and putting money away is not the same as investing, as much as they tend to be conflated.
“One of the things that concerns me when I talk to people about their savings behavior is we have people who are going into some of those risky investments without having any backstop,” Rupert says.
Crucial to saving money is paying down debt. In an economy fueled by debt, it can be easy to overspend, Rupert says. Credit card balances in the U.S. total roughly $1.21 trillion, which is up $45 billion during the last quarter of 2024 — and 4% above the level a year ago, according to estimates.
Fundamentally, credit cards can be a lifeline for Americans who have the ability to pay down the debt.
“There’s both a convenience and a necessity aspect — and it’s great to have that flexibility,” Rupert says. “But you have to be careful with it because if you’re just paying the minimum on the credit cards, the amount that you owe is increasing.”
When it comes to paying down debt, small steps can make a big difference — especially when coupled with ways to curb spending.
“Once you’ve really pulled down on the debt that you have, it makes it easier then to start on that 20% savings part,” Rupert says.