When it comes to budgeting, please know that there is no one set way to manage your finances. These are 10 tips that allowed me to reach my financial goals. Feel free to modify for your lifestyle, wants and needs.
1. Select a budgeting method.
I personally like zero-based budgeting where I account for every dollar and assign it to a specific purpose. This helps me to feel in control of my spending and I’m less likely to overspend when I know that money has a purpose, such as saving for a new pair of shoes I really want. I also now have a $50 miscellaneous category so that if something pops up, I’m not freaking out. Additionally, there are other budgeting methods as there’s no “one size fits all”.
Four Budgeting Methods: CLICK HERE.
Clever Girl Finance Budget Template: CLICK HERE
2. Decide how you’ll track your spending.
Tracking your spending by hand allows you to commit things more to memory and you may be more inclined to save by writing things down. I prefer utilizing an app because I get a more detailed breakdown of my spending habits each month. I enjoy Truebill since I can put purchases into categories and easily see the percentage I spend each month. Mint is another great option too!
3. Be realistic.
When I first started budgeting I would try to limit myself to spending $20/week on groceries. That just wasn’t practical given the amount of food that I eat and how I can’t eat the same meal five days in a row. I’m also not an extreme couponer, so I often pay for convenience. (Personal choice– do you! )Just be realistic so that you can actually stick to your goals. In reality, I spend $30-$40 on average/week for groceries.
4. Define and know your needs versus wants.
In general, a good rule of thumb is to aim to use 50% on necessities (bills, rent, etc.), 30% on wants, and 20% on savings and debt payment. The first year out of college, I only spent 20% on wants and 30% towards savings and paying off student loans.
5. Recognize your budget will vary.
Your budget will vary from others and that is ok. Don’t let someone guilt you because you like to get your nails done or buy shoes. If you value having your appearance, skin, and hair maintained–budget for it! If your bills are getting paid and you aren’t transferring money from your savings to checking constantly to pay for things, do you! Also, your budget will vary as you make different life choices (move to a new city, start a new job, go back to school, etc.).
6. Utilize a high-yield savings account.
What better way to save money than to put it somewhere that it can grow. Traditional banks have savings account rates that are much lower than an online bank. I use Ally Bank and Iove how I can easily organize my money into “buckets” with labels. This makes it easier to save money because I can visually see what the money will be utilized for.
7. Pay yourself FIRST!
When you get paid, pay YOURSELF first! I have a savings account just for paying bills. I get paid twice a month. When I receive my first paycheck I move all of the money for bills to this savings account. @Savvygirlmoney once said “Do not save what is left after spending, but spend what is left after saving.”
8. Automate. Automate. Automate.
Automate bills when you can! This will save you the hassle of remembering dates. This way you won’t have to worry about accidentally spending money that was meant for rent and other necessities.
9. Set goals.
Set monthly and even weekly goals for yourself so that you can celebrate each milestone. You can start small and try to save $10/week and increase weekly. There’s a variety of ways to do this, some even including sticky-notes. I set an overall monthly savings goal and then try to limit my weekly spending on things such as fast-food and items I don’t need from Target.
10. Educate yourself.
There are a lot of free tools out there, such as Nerd Wallet articles and various Youtube videos.
If you’re a reader, here are the 10 Best Personal Finance Books of 2021: CLICK HERE
You can also follow these great accounts on instagram for additional tips:
@TheBrokeAccountant @TheBudgetnista @savvygirlmoney @clevergirlfinance @thefinancialdiet @thefinancebar @zerobasedbudget @bloombudget @brokemillenialblog
