If you know me, then you know that I’m like absolutely beyond obsessed with saving money.
I mean, I can’t even go grocery shopping with my man-friend anymore because he’s the “just get what you need, I don’t care how much it costs” type…and I’m more like, “hey, I’m going to be here a while trying to figure out which pack of paper plates gives us the best value.”
LOL just writing that makes me feel ridiculous.
But that’s fine…because I’ve got more $$$ in my wallet. Success!
So today, my friend Ryan is talking about budgeting and I absolutely love it because, well…I’m a nerd like that. Enjoy!
Retirement seems like something so far off into the future that young people rarely even think about it. However, it’s something that people in their twenties should really prepare for financially–aside from medical emergencies, the possibility of starting a family, and/or buying a home for the first time. To save money and achieve any—or all—of these financial goals, here are a few tips on budgeting for the smart twenty-something.
1. Learn to Differentiate Between “Wants” and “Needs”
Budgeting requires learning to differentiate between wants and needs. The line that separates a need from a want can be blurrysometimes,but you’re the only one who can make these decisions. Food, housing, and warmth, of course, fall under the needs category. Things like a fast broadband connection could be be considered a need too, especially if you work from home. But if you just use it for entertainment, then it’s probably a want, given that less expensive options are usually available.
Once you’ve created a list of things you’d want to spend on and need to spend on, then you can start creating a budget based on your income and how much those wants and needs cost. Prioritize your needs over your wants when you make your budget for those items, and don’t forget to set aside a portion of your money for your savings fund.
2. Use a Personal Finance App
Creating a budget isn’t even half the battle. The greatest challenge when it comes to managing your finances is actually sticking to one. There are lots of apps for your smartphone that can help you monitor your expenses so you can stay on top of your money. A quick search on your phone’s app store for personal finance apps will bring up a selection of budget trackers—many of which are free to download or usually pretty cheap. Apps like Mint help you monitor your checking and savings accounts and even help you keep an eye on your expenses which makes it easy to see if you’re still well within your budget at any given time. Other free apps include Toshl Finance and SavedPlus.
3. Review Your Expenses
What’s even cooler is that the personal finance apps mentioned above can often provide you with expense reports so it’ll be easy for you to check which areas you need to improve on.
If your expense report tells you you’ve achieved your budget goals, then congratulations! But don’t stop there! Periodically review your expenses and look at categories you spend the most on. You could be surprised at how much you’re spending on things that don’t seem very expensive but add up over time like impulse purchases and snacks at gas stations whenever you gas up. Reviewing your expenses also helps you find out whether your budget plan is still feasible. Prices of utilities and even your rent can change, so this can help you determine whether or not you need to adjust your budget to meet your current needs.
These are just a few budgeting tips that will hopefully help you out a bit. The earlier you learn to improve your budgeting skills, the better off you’ll be in the future when your financial goals change.
Ryan Del Villar is a Content Strategist for MoneyHero. Ryan is also a freelance writer at Helm Word, an Online Reputation Management company.
So tell me… what do YOU do to keep your finances in order?
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