We all wish that we didn’t have to worry about budgeting our hard-earned money. Maybe some of us are set on the idea that one day we’ll win the lottery or stumble upon a huge fortune. I hope that happens for you, I really do. In the event that it does not, budgeting your money and setting some aside for the future might not be a bad idea. Keep reading for my tips to manage your money responsibly!
Tip # 1: Do a Monthly Budget SheetBudget-Sheet-1
To properly budget your money, it’s important for you to evaluate your income versus your expenses. A great way to do this is using a budget sheet. This tool helps you to document dollar for dollar where your money is going. I recommend filling out a budget sheet to get an idea of your expenses before evaluating where you can make adjustments. I’ve included a free PDF download of a budget sheet to get you up and running with your budgeting.
Tip # 2: Track Your Mandatory Expenses
In order to develop a savings plan, it’s important to figure out how much of your hard-earned money is going towards mandatory expenses. Now, a mandatory expense would be things like your mortgage payment, a car payment, insurance, etc. – expenses that are not optional. Your new pair of Tory Burch flats? I know you might feel they are necessary to your continued happiness, but they unfortunately don’t qualify as a life necessity.
Once we subtract your expenses from your income, we can see what we’re working with. No matter how little is left over after you pay your expenses, it’s important to allocate some of that money towards savings. If after all is said and done, you only have $100 left after paying your necessary bills – try to at least put $10 into a savings account. I know this amount seems small, but it’ll add up over time, and is far better than not saving any money at all.
Tip # 3: Evaluate Your Expenses
Are your expenses difficult to manage? Take a closer look to see if there’s a way to minimize them. High student loan payment? Apply for income-based payments. This may put your monthly payment to a more manageable amount.
High health insurance? Shop around for your insurance. If you’re not on an insurance plan through your employer & you’re paying astronomical amounts of money per month to be insured, check out the Health Insurance Marketplace online. There are plenty of qualified agents who can help you find an affordable plan with adequate coverage.
Car insurance costly? Consider getting a quote from another insurer – you might be surprised at how much you can save. While all of these tips to cut your necessary expenses might not be possible, it never hurts to do your research and evaluate your options. If you can save an extra $20 a month by cutting just one of your expenses, that’s an extra $20 you can save.
Tip #4: Evaluate What You Have on Auto Pay
Many of us have auto pay set up for some not so necessary expenses every month that we aren’t even using. Have a Netfilx and Hulu membership? Are you really using both consistently? Ditch one or both if they aren’t being used, and you can save an extra $8+ a month. You can always sign up again when you have more time to binge-watch your favorite shows.
Have multiple subscription boxes you receive every month? Evaluate which ones give you the most bang for your buck. Yeah, it’s nice to get numerous surprises in the mail each month, but if you’re not reaping consistent value from each subscription, it might be financially smart to cancel the ones you could do without.
Paying $10 a month for Apple Music? Are you using the benefits of the membership enough to justify keeping it? What about that gym membership? Have you been paying it for months without really even going to the gym? Maybe contemplating these expenses will encourage you to use them more and get your money’s worth. If not, it might be time to cancel. Evaluating these automatic withdrawals from your bank account can really make a difference with how much money you have left over to save and spend.
Tip # 5: Save Your Receipts
We all make small purchases throughout the month that really add up. That morning coffee run? Let’s say you’re grabbing a $3 coffee every weekday on your commute – that’s an extra $60 a month you’re spending on your morning pick-me-up. Now, if you’re like me, you justify that expense because it makes your mornings so much better. This is only one example of a common overlooked expense, though.
Buy your lunch on work days rather than pack it? That’s an average of $160 spent per month based on a conservative $8 lunch. Consider buying your lunch a couple days a week and bringing it the rest – the savings really do add up. I would know, considering I chose to take this advice myself.
My favorite way to track these often overlooked expenses is by saving receipts. I’m just as guilty as the next person who says, “I don’t need a receipt.” I’m not suggesting you do this forever for small purchases like your morning coffee, but try doing it for a month just to get an idea of your spending habits. You’ll also find it helpful when filling out your monthly budget sheet.
Tip # 6: Budget for Fun
We all deserve to have a little fun with the money we worked so hard for. Setting up a “fun budget” helps ensure that you won’t get a little too excited and blow more money than you’d like. There’s nothing worse than opening up your banking app after a night out and being terrified over the amount of money you spent the night before.
Maybe offering to pick up a round of shots for the whole bar made you feel like a hometown celebrity last night, but it sure isn’t making your pocket feel too heavy this morning. Designate a set amount of your paycheck as your spending money. Once you cover all of your mandatory expenses, allocate a percentage towards savings and a portion towards fun.
Tip # 7: Revise Your Budget
Now that you’ve evaluated your mandatory expenses, contemplated what you have on auto pay, and saved receipts – it’s time to revise your budget and figure out how much money will go towards expenses, fun, and savings. I would recommend doing another budget sheet after getting an idea of your spending habits.
I, personally, like to fill out budget sheets monthly to track where my money is going. While sitting down to budget is one more thing added to your to-do list, it’s an important activity to help you be financially savvy and prepare for the future. We all have goals we’d like to achieve, and unfortunately most dreams require some element of spending. Setting aside just an hour per month to budget, can ensure you’re on the right track financially to reach your goals.
There you have it – my trusty tips for budgeting and saving for the future. What methods do you use to budget and save money? Share in the comments!