Savvy Budgeting Tips for Young People: Young people emerging into what adults have dauntingly told them for years is the ‘real world’ can struggle when it comes to managing their finances. This is understandable – when we’re tackling something new, we’re liable to make mistakes and to learn from them. To achieve economic independence and financial stability, gaining knowledge about the right sort of money-management methods is a smart way to avoid crawling back to the bank of mom and dad with one’s tail between one’s legs. Here are some of the brightest and savviest tips for millennials fighting to get their finances in order in an era of economic squeeze.
Savvy Budgeting Tips for Young People
Track Your Spending
With so much to consume out there, whether it be food and drink, activities, furniture, gigs and events or simply some nice new clothes, you can quickly lose sight of exactly where all your money is going. With a wage check landing in your bank account each month, watching it slowly eroding away into nothingness is an unpleasant sight for anyone with aspirations to save money and increase their quality of life. Happily, there are plenty of helping hands out there that make budgeting super-easy for young people who’re up to date on technological trends.
For instance, mobile banks will segregate all of your spending into areas of your life, creating a kind of itemized bill that shows you exactly how much you’re spending in areas of your life such as dining, entertainment or transport. Using cash machines will muddy the data in this respect, so always use your card so you have some information about what you’ve been spending money on. You’ll then be able to create a monthly spreadsheet using templates provided online to plan how to reduce your spending in certain areas – the key to budgeting like a pro.
Think Around Expensive Habits
Once you’ve got a month or two’s worth of spending data in front of you, you’ll develop some idea as to the difference between necessary spending and unnecessary spending. Your rent, bills and transport, for instance, are likely to fall well within the necessary spending camp: they’re unavoidable costs that help you live independently, and you’ll not be able to cut these down by changing your spending habits. However, nearly everything else you spend your money on, bar the food that keeps you alive, could probably be classed in the ‘unnecessary spending’ section of your budget.
A good working example of an expensive habit that can really nibble away at your finances is purchasing a morning coffee; it’s only a few bucks a day, but when that comes together over a month, you may find you’re spending nearly as much on to-go coffees than you are on rent. You’ll also find that buying a proper coffee machine would probably pay for itself in around a month’s use: savvy realizations like this mean that you’ll not have to make drastic changes in your lifestyle to save money – you’ll just have to recognize your more expensive habits, replacing them with cheaper and more cost-efficient alternatives.
Debts, such as credit card bills or outstanding loan repayments, are one of the most cripplingly damaging long-term financial issues to affect young people today. Aside from college or university loans that can total in the tens of thousands of dollars – sadly unavoidable for those who wish to pursue further studies – every other form of risky and long-term loan should be avoided in favor of less risky shorter-term loans that get you over the line when it comes to rent payments or other financial responsibilities. Such ‘payday’ loans are a comfortable safety blanket for those who miscalculate their funds for a month.
Where flexible, on-demand and easy-to-secure loans are concerned, you’ll find the necessary help here to understand all there is to know about how they work and why they’re suitable for those trying to stick to a budget. Remember that accessing this extra financial assistance should only be reserved for spending you deem is necessary – those times where you face fines from your landlord or the cancellation of your electricity and internet for missing a bill payment. Taking out loans on a whim is not the sign of a savvy budgeter and is certainly not advisable if you’re on a journey towards stable financial independence.
As soon as you find yourself in a position in which your overdraft is rarely dipped into and you’re making steady progress in reducing your superfluous spending, it’s time to create a separate savings account in which you siphon a certain amount of your monthly budget. It’s thrilling to watch some extra funds slowly build up in a separate account – maybe preparing for a move to a more pleasant property, saving for a vacation, or simply preparing for later life – and so this should be a stage that you work towards as quickly as possible.
Look again at your budget and consider how much you can afford to put into a savings account. It may only be fifty bucks a month, but that’s money that will slowly add up towards something special, as opposed to money that you whittle away inside your main account just because it’s there. You’ve learned to live within your means, now it’s time to live beneath them, allowing some cash to build up in an oh-so-satisfying way.
The final quick tip is to consider investing the money that you’re able to save, instead of leaving it in a savings account. The reason behind this tip is the low-interest rates presently offered by banks: your money makes you no extra money sitting in a bank account, but may well do if you invest carefully in stocks and shares that increase in value over time. Ensure you’re well-schooled on investment before taking the plunge, as it can be devastating to watch your savings reduced in the case of an ill-informed investment.
Young people sometimes struggle to get their finances properly under control, so these tips should be of assistance to anyone looking to budget well, save some money, and achieve economic stability through savvy deacons-making.