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Let’s just be honest: budgeting can be challenging. Rent, groceries, fun with friends, drinks with coworkers, pet food, insurance… the list goes on and on. With so many expenses drawing on our limited income, it can be hard to manage your finances well. That’s why we’re here to help you with seven simple, effective, and practical budgeting tips that you can put to work in your life today.
Track your spending
Do you know how few millennials and Gen Z individuals actively track their spending? It’s much more uncommon than you might think. Many younger Americans struggle to hit their financial goals simply because they don’t know where all their money is going. Before you do anything else, sit down with your credit card and bank statements. This is to determine exactly where your cash tends to go and how much of it goes to each expenditure.
Build a budget
Using the info that you learned by tracking your spending, you can now move on to an important next step: making a budget. Budgets help you understand what your absolute maximum in any category might be. For example, you might not want to spend more than $200 a month on bars and restaurants.
The trick to making a good budget? Simple. Stick to it. It’s easy to make a budget and ignore it. By sticking to it, you’ll be able to fully reap the rewards.
Make a Spending Plan
Budgets are limits on how much you can spend; a spending plan, alternatively, tells you about how much you are planning on spending. So, using the example of restaurants and bars, maybe you know your all-in budget is $200. But, as you coordinate with friends for the month, you realize you can make a plan to only spend $160 with your current itinerary.
The same would work for planning groceries for a month, for example, or planning your subscription costs.
Start Thinking About Long-Term Savings
Long-term savings might seem distant and unreal if you’re young and mostly using your cash for fun. However, long-term savings is critically important, especially for retirement. The more time you save, the more time your piggy bank has to snowball into a large sum. If you haven’t already, this is your wake-up call: it’s time to look into retirement plan solutions.
Plan Your Large Purchases
While making a spending plan for general use each month, it’s also a good idea to make a specific plan for larger purchases. Maybe you need a new bike, a new car, or even a new pet. Each of these is likely to be a large purchase that you don’t want to catch you off guard.
Instead, there are plenty of apps to finance large purchases that can help you plan your big expenses in a way that’s friendly to your budget.
Boost Side Income
In the case where you notice that you’re not able to save as much as you’d like to every month (or maybe you’re even in the red more often than not), it’s probably time to think about boosting your cash flow. If a promotion or higher-paying job isn’t in the works, there are luckily other options, such as flexible freelancing and side gigs.
If you have a marketable skill, like writing, coding, or graphic design, you’ll likely be able to find plenty of postings that are perfect for boosting your monthly cash!
Learn to Say No When You Have To
Friends are fun, but sometimes, peer pressure leads to overspending. Rather than spending too much and regretting it, it’s a good idea to learn when it’s okay to just say “no, I’m sorry, but I can’t afford that.” Knowing your limits is part of being financially responsible and is an important lesson to learn.
Take these seven. That’s why we’re here to help you with seven practical budgeting tips for your financial planning life and see how well you can boost your personal finances in the future!