While blowing your money on Adele tickets or buying the newest iPhone might seem like great ideas, they may not be the most logical ones. An essential part of growing up is not relying on your parents to pay for everything you need so you can spend on things that you want.
Luckily, it’s not hard to create a monthly budget, so you can still have fun while being financially stable at the same time. Creating a budget for yourself doesn’t mean you can’t spend money on things you want, it means you can spend money on yourself and still have money left over.
Budgeting your finances reduces stress, allows you to set goals, gives you financial independence and helps you plan for the future, which are all things you’ll need once you’re out in the real world.
With that in mind, here are some tips to follow before creating a budget that are easy, inexpensive and surprisingly fun.
1. CREATE VISUALS
There’s no better way to see how much you’re spending than to write it down. Seeing the numbers right in front of you keeps you from hiding your spending. Whether it’s a spreadsheet, chart, binder or file folder, it’s always good to write down your expenses in some form or another. There are plenty of budget templates online that can help you get started!
2. SET GOALS
If you want to travel abroad next semester, buy a new car, or start saving to pay your student loans, setting financial goals is a big part of planning a budget. Every month, set aside a specific amount just for your future goals and think of them as current expenses. Before you know it, you’ll have enough saved to do the things you wouldn’t normally have the money for.
3. FIND BUDGET APPS THAT WORK FOR YOU
Technology can be helpful in a variety of ways, including using it to help you plan your monthly budget. Simply swipe through your phone, laptop or tablet and you’re sure to find a budgeting app or two that will keep all your finances in order. It’s perfectly fine to prefer a digital spreadsheet over a handwritten one. You can use apps such as Mint, DollarBird, Wally and Best Budget to track your expenses, send you bill reminders, make spending improvements and more.
4. MAKE CUTS WHERE CUTS CAN BE MADE
There are plenty of small expenses that put a dent in your wallet such as eating out, going shopping, gas and cable. If you can, try to cut back on some of these expenses by replacing them with cheaper alternatives. You can pay for a cheaper Netflix or Hulu subscription instead of paying for cable, make more meals at home, bike to the store instead of drive and go shopping a couple times a month instead of every weekend.
5. FOLLOW THE 50/20/30 RULE
The 50/20/30 rule is perfect for twenty-somethings who are just learning how to budget. Essentially, 50 percent of your income goes to essential items like rent, food, gas and utility bills. 20 percent goes to things you should pay off and/or save for. These include retirement plans, student debt, credit cards and savings accounts. Finally, 30 percent of your income goes to your “wants,” such as cell phones, gym memberships, eating out and other luxury items. While you don’t have to follow the percentages exact, this rule is a great start to helping you live financially stable.