Turns out, the millionaire knows a thing or two about saving.
You probably would’t expect someone on a financial news website to tell you to model your spending habits after a celebrity’s — but here I go.
Ed Sheeran won multiple Grammys and made $33.5 million last year, but he doesn’t let the dollar signs cloud his judgment. In fact, he actually lives pretty modestly.
OK, so maybe building a bar in your multi-million-dollar home isn’t modest, but relatively speaking. Hear me out.
Usually spotted in a $50 pair of Converse, jeans and a hoodie, the “Thinking Out Loud” singer told U.K. radio station Capital FM that he limits himself to about $1,000 a month.
If he didn’t, Sheeran says, he’d blow his fortune.
“If I had all my money in one account, I would spend all of it,” Sheeran said. “I get an allowance, maybe a grand. I spend most of it on taxis.”
Of course, Sheeran didn’t go into much detail on what that allowance is used for. I’d love to ask him, but I’m guessing it doesn’t include utilities or maintenance on his $2 million ranch or the gym he had built in his parents’ home.
But even if it’s just for extra things like shopping and eating out, a monthly limit like Sheeran’s is a pretty good idea. Here’s why…
With today’s software, budgeting isn’t just for the math whizzes and the detail-oriented. Anyone can do it. Despite being around for a while, Mint — a free budgeting assistant for iPhone and Android — was named one of the best finance apps of 2017 by PCMag and “the king of budget management software” last year by Time.
It works by pulling information from your bank account and guiding you through categorizing your spending, so you can tell at a glance whether you can afford to make that splurge or not. Mint isn’t the only option: We like PowerWallet.
What you save can go toward an emergency fund
An emergency fund isn’t one-size-fits-all. We reported that one expert said you should stow away $1,000, while another says eight to 12 months’ worth of expenses is the goal. But virtually all financial experts agree you should have one. Even $500 could be a good place to start. That’s only half of what Sheeran says he spends per month, so it should be easy.
It could go toward debt
Whether it’s student loan, auto, or credit card debt, it’s still something you’re paying interest on — ignoring it or doing the bare minimum literally makes the problem worse. You have to get ahead of it.
A budget may not bring instant gratification the way buying everything you want does, but what you save will accumulate over time, and putting it toward debt will do you double the good. While Ed Sheeran is a positive example, many celebrities struggle with debt, and you don’t want to end up like one of these.
You could start a retirement fund
We can’t all be as successful as Ed — but budgeting like him can sure help.
If you’re not set for life and have already dealt with your debt, money you save can go toward a 401k plan (bonus if your employer matches it: free money!) or another retirement fund.
Article last modified on May 23, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: You Should Manage Your Money Like Ed Sheeran - AMP.