If you’re like most young adults, you probably feel like you can’t catch a break when it comes to your finances. Between student loans, credit card debt, and the cost of living, it can be tough to make ends meet. But don’t despair—there are ways to get your finances under control. With a little bit of planning and discipline, you can take control of your money and start saving for your future.
Here are seven budgeting tips to help you get started:
1. Know where your money is going.
The first step to creating a budget is to track your spending for a month so you know where your money is going. Use a budget tracking app or create a spreadsheet to track your income and expenses. This will give you a good starting point for creating your budget.
Know your baseline expenses. These are the fixed costs that you have to pay every month, like rent, utilities, and insurance. Once you know how much you have to spend on these essential items, you can start to figure out how much you have left over for other expenses.
Track your spending for a month. This may seem like a daunting task, but it’s important to do if you want to get a realistic picture of where your money is actually going. There are a few different ways you can do this, including using a spreadsheet or an app like Mint or YNAB. Whichever method you choose, make sure to track every single penny you spend for at least one month so that you have a good idea of your spending patterns.
2. Make a plan.
Once you know where your money is going, you can start to make a plan for how you want to spend it. Determine what your priorities are and how much you need to spend on essentials like housing, food, transportation, and so on. Then, decide how much you can reasonably afford to save each month.
Look for patterns in your spending. Once you have a month’s worth of data, start to look for patterns in your spending. Do you tend to spend more when you’re bored? Do you make impulsive purchases when you’re stressed? Identifying these patterns can help you make better decisions about your spending in the future.
Make adjustments to your budget accordingly. After tracking your spending and identifying any patterns, it’s time to make some adjustments to your budget so that you can start saving money each month. If you find that you’re spending too much on non-essentials like clothes or entertainment, try cutting back in those areas so that you can save more money each month.
3. Cut back on unnecessary expenses.
Now that you have a better idea of where your money is going, it’s time to start cutting back on unnecessary expenses. If you’re spending $50 a month on coffee, for example, see if you can cut back to $25 by making coffee at home or buying it from a less expensive place. Cutting back on the unnecessary expenses are at the core of a spending fast. Every little bit counts!
One of the best things you can do for your financial future is to live below your means. This means spending less than you earn and keeping your lifestyle modest. When you live below your means, you will have more money available to save and invest for the future. You may have to make some sacrifices in the short-term, but it will pay off in the long run.
Avoid impulse purchases. We’ve all been there—you see something that you want and you buy it without giving it a second thought. Impulse purchases can quickly add up, so it’s important to avoid them when possible. If you see something that you want, wait 24 hours before buying it. In most cases, the urge to buy will pass and you’ll save yourself some money in the process.
Eating out is one of the biggest budget-busters for young adults. If you’re spending $10 per day on lunch and dinner, that’s $3,650 per year. Instead of eating out, try cooking at home using simple recipes that don’t require a lot of time or effort. Not only will you save money, but you’ll also get to eat healthier food.
Cut back on drinking. Alcohol is another big expense for young adults. If you’re spending $20 per night on drinks, that’s $7,300 per year. Instead of going out drinking every night, try having drinks at home with friends or going to bars only on weekends. You’ll still be able to socialize without breaking the bank.
4. Make room in your budget for fun.
One of the biggest mistakes people make when creating a budget is not leaving room for fun or discretionary spending. If you try to cut out all of the fun from your life, you’re likely to end up feeling deprived—which will make it harder to stick to your budget in the long run. So make sure to include some room in your budget for activities that bring you enjoyment.
5. Automate your savings.
One of the best ways to ensure that you stick to your savings goals is to automate them by setting up automatic transfers from your checking account into a savings account or investment account each month. This way, the money will be out of sight and out of mind—and you’ll be less tempted to spend it!
6. Review your progress regularly.
Budgeting is not a one-time exercise—it’s something that should be revisited on a regular basis (monthly or quarterly) as things change in your life (e.g., job changes, pay increases/decreases, etc.). By reviewing your progress regularly, you can make adjustments as needed so that you stay on track with your financial goals.
7. Seek professional help if needed.
If you find that you’re struggling to stick to a budget or manage your debts, don’t be afraid to seek professional help from a financial advisor or counselor who can help gets things back on track again.
Whether you’re just starting out on your own or well into your career, budgeting is an essential part of financial planning. By following these seven tips, you can take control of your finances and set yourself up for a bright future.