Striking out on your own is thrilling. You can make your own schedule, cook whatever you want, and decide how you spend every dollar you make. You work hard for your money, and it feels good to spend it on things that make you happy. However, your future self might have some questions for you if you end up in debt from overspending. When you become independent, you’re suddenly responsible for managing your finances. Here are six ways you can stick to your monthly budget.
1. Outline Your Expenses
The first step in planning any budget is to figure out how much you spend every month and where the money goes. Take some time to track what you’re spending on a daily and weekly basis. Factor in things like rent, utilities, and groceries, but don’t forget to also include incidentals such as toiletries, work lunches, and more. To figure out a major budget concern such as a car payment, use an auto loan calculator to determine how much you need to set aside per month.
2. Use a Financial Planning App
Compared to previous generations who had to track everything they spent by hand, you have the opportunity to use a financial planning app. Every app is different, and there are lots of options. Some digital spending apps link to your bank account and credit cards to help you keep an eye on every penny.
Other apps are simpler in that they allow you to set up your monthly budget but then you have to input your expenses as they occur. Depending on how good you are with technology, you might even want to spring for an app that has a monthly fee if it comes with great add-ons.
3. Go Easy on Big Purchases
When you first get your own place and have a real job, you should go easy on big purchases. Instead of buying that all-in-one barbecue and wood-fired pizza oven, stick to the essentials, such as a toaster and a set of high-quality pots and pans.
One way to keep yourself from impulse buying is to avoid going shopping on the day that you get paid. Hold off on looking at the big-ticket items you want until you have intentionally saved up the money to buy them.
4. Give Every Dollar a Purpose
When you make a budget, every dollar should have a purpose. Another way of thinking about this is that you should always budget your money so that you end up with zero dollars at the end of the month. That doesn’t mean that you have no money to your name or that you spend everything. In fact, it’s the opposite.
As soon as you get paid, you should set aside a significant amount in your savings account. Whatever you have in your spending account should equal exactly how much money you need that month for your expenses. That way, you’re not tempted to spend more than you need.
5. Trim Down Entertainment
If you’re struggling to put anything into savings, consider trimming down on your entertainment budget. You could cancel a few streaming services and settle on one or two that you like the most and watch a movie at home instead of going to the theater.
Another way to save on entertainment is to designate just one night a week for eating out. You can still enjoy great food but try to do it less often. You’ll need to do some meal planning and strategic grocery shopping, but both of these things can also save you money.
6. Research and Compare Prices
Although it might not be a habit yet, you should practice researching and comparing the prices of things you buy regularly and also big-ticket items. When you buy something from the first store you see, you might be paying 15% to 20% more for it. Do a bit of digging and find out where you can get the best deals.
Once you get used to making a budget, you’ll see your financial capacity grow in exciting ways. Independence has never felt so good.