It’s Wednesday and we are rocking and rolling through this week! Maybe it’s just because of all this great weather or the fact that today is National Margarita Day…this day feels less like a hump and more like a party!
Now that I’ve got you all pumped up, I want to genttttllyyy ease into something that nobody my age wants to talk about: budgeting. You see, with the bliss of a new job comes power: spending power! But it only takes a few rent payments, takeout nights, and Uber rides to see that cash dwindle. With a little bit of effort, you can strike a balance between treating yourself and feeling good about your financial future—turn budgeting into your friend!
First things first: determine what you have and what’s important. Look at your salary and determine what you’re actually taking home after taxes, 401k and insurance withholdings, etc. This is your home base. Now, take a sheet of paper and list your non-negotiable expenses: rent, utilities, food (bare necessities like groceries, not eating out), insurance, transportation costs, fees, etc. Basically, what do you NEED to survive?
Next, list the amount you’d like to save (and give). I’d recommend trying to save at least 20% of your income—this may seem high, but it’s important to feel like you’re working to build towards something (a home, a new car, etc.) instead of just living paycheck to paycheck. Also, giving is important! Even if it’s $30 a month, we all have a little extra to share if we make it a priority.
The remaining amount you have are your “personal” expenses. Basically, all of your entertainment, health and wellness, and other important (but not essential) things come out of here. This amount might seem like a lot at first, but it can quickly get eaten up by nights out, cab rides, or impulse buys. This is the area where you make your compromises—do I want to join an intramural team or keep weekly wine nights with my friends? Am I going to take that weekend trip to the beach or put it towards those shoes I’ve been eyeing? Do not let your personal expenses creep into your essentials, savings, or giving. Instead, use this area as a testing ground to determine your priorities and needs.
Once you’ve set your priorities, find a manageable way to track your spending. You may start your budget with the loftiest of ambitions, but it’s easy to let our money get away without tracking it. Whether you use a bullet journal, Excel spreadsheet, or app like Mint, find a system where you can update your spending at least once a week. At the end of the month, look to see areas where you spent more or less than expected. If you spent more, figure out ways you can make cuts and remind yourself of your goals. If you spend less, try and see if you can funnel that extra money into savings.
Don’t underestimate the power of free! Trying to save money does NOT mean that you’re resolved to sit at home scrolling through your Netflix queue. There are TONS of free things to do around your city (and I’ve made a whole list here) that are even better with a friend. It might take a little more effort, but figuring out budget-friendly things to do will not only help you save cash, it will make you appreciate those times where you do spend money that much more.
Skip the takeout and make your meals. Eating out is super fun, but save it for a social activity—trying a new restaurant with a friend or ordering a pizza for a girl’s night in is a lot better than constantly going through the drive-through or stopping somewhere for lunch because you forgot to pack it. I have an entire section on my blog devoted to meal prepping, so try and replace half of the meals you’d normally eat out with something tasty and nutritious that you can whip up on your own—it’s amazing how much money you can save!
Celebrate the small wins! Research shows that we’re much more motivated to stick with new habits when we give ourselves a high-five for those little moments of progress. Set aside a little bit of your “personal expense” money for a treat once you’ve hit a goal, like saving a certain amount or not overdoing it on spending. Giving yourself a pat on the back will only help you to be more motivated to hit your goals next month.
Even though it’s less than glamorous, being a financially responsible adult is actually super freeing—knowing that you have control over your finances and can enjoy things without worrying about them later is a total game-changer.