Budgeting is kind of like exercise. You know you’re supposed to do it, you know it’s good for you in the long run, and you know it really doesn’t even take that much effort once you start. But still, lounging on the couch while you’re chin-deep in chips and beer is simply… easier.
So, to save money and get your finances in order, the first thing you’ll need is a little bit of discipline. Same as with exercise, it’s all about good habits, consistency, and a steady plan that you can follow.
If you’re feeling a little overwhelmed – don’t worry. We’re here to help. If you’re not sure where to start or how to handle your hard-earned cash with care, then keep reading because we’re about to give you some really handy tips and help you plan for the future.
Become truly aware of your finances
Check your balance regularly. A surprising number of people is too afraid to take a close look at their finances, so they’re not even aware just how bad things are until they max out their credit cards. If you want to save money, you have to be aware of exactly how you spend it.
The first step is to take stock of everything. Take a piece of paper or open up a spreadsheet, and write down your monthly after-tax income. Then, write down all your expenses: start with recurring bills such as rent, utilities, student loans, and insurance, then move on to variable expenses such as groceries, entertainment, and bar visits. As scary and stressful as it might be to really examine your income and your spending habits, it’s necessary if you want to make a change. This also gives you an opportunity to see just how much cash you blow on seemingly inconsequential things, such as daily coffee runs to Starbucks.
Try the 50/30/20 rule
Invented by Harvard-educated US senator, Elizabeth Warren, the 50/30/20 rule is a simple way to manage your money even if you know nothing about finance. What it boils down to is this: use 50% of your income on needs, 30% on wants, and 20% on savings. Needs are things like mortgage, bank loans, credit card debt, and food, while wants are things like entertainment and generally things in life that you don’t need to survive, but simply enjoy. Take what’s left and put it into your retirement fund, or use it to pay off a larger portion of your debt, or put everything into an emergency fund. When you split everything this way, you’ll have a much better control over your finances.
Change your insurance plan
Is your insurance policy coming up for a renewal? Then consider shopping around a bit before renewing that contract. A lot of people get stuck with one company without realizing there are much better deals out there, especially when it comes to car insurance. If you need more individualized policies and insurance riders to protect your car, be sure to go directly to reputable companies such as Youi and pick the kind of coverage that suits your needs the most. The same goes for any other types of insurance – there’s really no need to settle for less just because you’re used to something.
Use the right budgeting tools
Budgeting is a lot easier when you have the right tools to manage numbers. You can find free budgeting templates and use the spreadsheets to track everything in one simple document. You can also use a simple notebook and pen to write your budget. Don’t want to bother with any of that? Then use a mobile app to control your spending. Apps like Mint or Goodbudget are easy to use and they can really help you get your finances under control.
Cut down on small expenses
Things like after work drinks, restaurant visits, or fancy coffee seem like nothing at the time you’re spending money on them, but they do tend to pile up. Of course, you don’t have to completely stop eating out with friends or drinking coffee. You can simply do it a little bit less, or find cheaper alternatives.
Review your subscriptions
Do you really need all those magazine subscriptions or three different streaming services? Subscriptions are a sneaky money leak because most of us don’t even think about them. A lot of people forget about all of the things they’re subscribed to, and each money a little bit of money is deducted from their account without them even knowing. You don’t have to unsubscribe from everything, of course. Simply review the list – if there’s something you’re not really using, then quit the subscription and keep your cash for something better.
Do meal prep
Apart from rent/mortgage and utilities, food is probably one of the most expensive things in your life. Well, the thing is, it really doesn’t have to be that pricey if you handle it right. Instead of takeout and restaurant visits, simply cooking your own meals will actually save you a ton of cash. It doesn’t have to be that time-consuming to cook either. Instead of doing it every day, cook large dishes every Sunday, and then divide them into containers you can keep in the fridge. That way you’ll have everything prepared in advance and you don’t have to rely on takeout.
You won’t be able to turn things around overnight, but if you take small steps towards better financial health every day, you’ll make it.