Having a monthly budget is a rite of passage into adulthood. Once you’re out of college and enter the real world, you’re going to have to begin paying bills, such as rent, auto loans, student loan debt, groceries, gas, utilities, and so much more. If you’re not budgeting correctly, you can quickly fall behind on payments that can land you in debt.
To avoid financial trouble, it’s important to stay on track with your personal budget. However, this can be easier said than done. There are better things to spend your money on than rent and phone bills, such as going to the movies or buying new clothes. Sticking to your budget doesn’t mean you have to give up these pleasures; it just means you need to be smart in regard to where you spend your money. Below, we’re going to cover how to stay on track with your personal budget without having to give up your favorite pastimes.
Set a goal
The best way to stay on track with your personal budget is to start out with a goal. Having a goal written down on your bulletin board or refrigerator, for example, will remind you every day what you’re trying to achieve. Whether it be paying off credit card debt or saving up for your first home, setting a goal can make you more likely to strive for it. You can even download a goal reminding app on your smartphone to send you notifications of your goal and provide steps to help you achieve it.
Track your expenses
If you’re like most people, you probably take your credit card out once every day or every few days to make a purchase. It could be for a water bottle at a gas station, groceries, an online order, or to pay a bill. While some expenses are necessary, such as paying your insurance premium or for your utilities, others can be digging a hole in your wallet and budget.
Tracking your expenses can give you a complete overview of where your money is going each month. To track your expenses, take a look at your bank statement and receipts from the last six to twelve months. Comb through each expense and place them into categories, such as:
- Housing: Rent, mortgage, utilities, maintenance
- Personal care: Haircuts, toiletries
- Health: Medical expenses, prescriptions
- Entertainment: Movies, streaming service subscriptions, eating out at restaurants
- Car: Gas, maintenance, auto loans, and car insurance
There are many areas where you spend money. Once you look at your expenses each month, look at areas where you may be able to reduce spending and put that money into savings.
Place money in savings
The first thing you should do with each paycheck is directing a portion to a savings vehicle. Paying yourself first will help you set aside money for a rainy-day fund, a house, or your dream vacation. There are many different types of savings vehicles you can take advantage of, such as:
- High-yield savings accounts that offer a high-interest rate to grow your money over time
- Health savings account that allows for tax-deductible contributions that grow untaxed and can be withdrawn untaxed if they’re used for qualifying medical expenses
- Employee-sponsored 401(k) account that puts money toward retirement
- Stocks, where a broker dealer can help you make lucrative investment decisions
- Certificates of deposit that act as a safe and short-term investment option
With a robust savings account, you’ll have peace of mind knowing you’ll have funds set aside in the event you have an expensive bill come your way, such as a medical bill or car repair bill.
Give yourself an allowance
Part of your budget should go toward your own personal interests. With each paycheck, set aside a certain amount of money that you can afford to treat yourself, such as going out to lunch with your coworkers or spending the day at a local museum. Just because you’re an adult now doesn’t mean you can’t have fun. Plan accordingly, and you won’t even remember you’re living on a budget!
Cut any vices
Some expenses can be eating away at your savings. If you have any vices, such as gambling, smoking, or drinking, seek help from a professional. Not only will you be able to save money, but you’ll also be doing your body a favor, too. There are plenty of items on the market that can help you get away from vices, such as vape pens to reduce smoking tobacco and playing online video games if you have a gambling addiction.
The bottom line
Sticking to your personal budget can be a challenge. However, with these tips, such as tracking expenses and setting a goal, can help you stay on track and enjoy a successful financial future.