Ever wondered how some people seem to always be on top of their finances while others struggle to make ends meet? The secret lies in budgeting. While this might not be the sexiest term out there, it is one of the most important, especially when it comes to navigating the unpredictable economic shifts. Budgeting goes far beyond just cutting down on your spending; it also helps individuals develop a healthier relationship with money.
Follow our tips and tricks below to find out how you can set yourself up for financial success without compromising your quality of life.
#1. Define Your Monthly Expenses
First things first, if you are going to create a budget and stick to it, then you need to keep track of all your monthly expenses. We’re not talking about money you spend on a night out but rather money that must go out for necessities such as bills, rent, and groceries. Knowing how to distribute your salary will help you determine what disposable income is left to allocate for non-essential items, savings, and even investments, allowing you to make more informed financial decisions.
#2. Choose Hobbies Mindfully
Being frugal in your spending habits needn’t mean you cannot have hobbies. Life is all about balance, after all! Say for example you enjoy the odd online game, there are thousands of games to choose from, all of which are free. Then, of course, you can also gamble online, with little to zero funds. There are even 100 free spins casinos, where you can register without having deposited any of your funds.
However, some hobbies are unfortunately a little more costly than others. As such, it is important to ensure that your source of relaxation does not turn into a financial burden. If your hobby requires equipment such as a fishing rod or a tennis racket, shop at second-hand re-sellers for a good deal. Moreover, if you like to unwind by taking photographs or drawing illustrations, you can easily turn these pastimes into lucrative side hustles, providing you with an additional stream of income.
#3. Say No To Unnecessary Subscriptions
Look, we get it. In today’s technology-driven society, it’s almost impossible to avoid subscribing to some kind of service. From television and music to even food, we’ve become spoiled for choice, gaining access to all the latest offerings with just a click of a button. However, what many people don’t realize is that a $10 monthly subscription fee can quickly add up, especially when paying for multiple services.
Moreover, since these types of purchases are set up to charge your credit card automatically, they are much harder to keep track of and can inflict more financial damage than you may even be aware of. We suggest saying no to unnecessary subscriptions. For example, if you are going to subscribe to a streaming service, pick one, not five. Furthermore, listening to music with ads is not the end of the world, especially if it can save you a few bucks
#4. Meal Prep
Ordering a cheeky takeaway after a long day of work can be a nice treat once in a while. However, it can become quite costly if you make it a habit. One way to prevent this from happening is by planning your meals for the week ahead. This can be done by researching new recipes you want to try, listing down all the ingredients you need to buy, and determining what you are going to eat throughout the week.
Don’t be afraid to mix it up to prevent yourself from getting too tired of a particular meal. This will help you cut down on all the unnecessary spending that happens when you are too exhausted to cook or when you can’t find any groceries in your house.
#5. Do Your Research
Whether you are thinking of booking a little getaway, looking to upgrade an appliance, or even buy a new outfit, it’s always important to conduct some research in order to find the best deals available. Scrolling through different online storefronts will allow you to compare prices across various brands, helping you avoid overpaying for the same item.
You can even stumble across fantastic discount codes and promotions that cut down the cost of your purchase. Moreover, before making a big purchase decision, it’s important to head to the review section so you can gain an idea of the product’s quality, durability, and value for money. Trust us, there’s nothing more expensive than a bad decision.
#6. Establish A Savings Goal
Having something tangible in mind, like a family vacation or a car, can make it easier to cut back on certain expenses, as it provides a clear purpose for your savings. This will encourage you to be more mindful when it comes to your spending, as you are more likely to allocate money towards things that truly matter to you, rather than giving in to impulse purchases. Tracking your progress over time can also provide a sense of accomplishment and act as additional motivation as you watch your savings grow closer to your target.
#7. Track Your Transactions
One way to keep on top of your finances and budget accordingly is to track your transactions. Not only will this allow you to be more aware of where your money is going, but you will also be able to notice financial habits and patterns, making it easier to identify problem areas. For instance, you may discover that you are spending too much money on impulse purchases or dining out. Knowing this information will help you take corrective actions and become more financially responsible, before it’s too late.
#8. Create An Emergency Fund
The saying ‘save for a rainy day’ still rings true, as you always want to have a nice pocket of cash to fall back on during tough times. Unfortunately, we can’t predict the future; as such, no one truly knows what’s just around the corner. Whether you need to take some time off to look after a sick family member or you are made redundant, having an emergency fund will help relieve some pressure and provide some flexibility should anything unexpected occur. As a rule of thumb, your emergency fund should be able to cover at least three months’ salary or six months if you have a mortgage to pay.
#9. Take Advantage of Resale Platforms
Just like you may be on the hunt for some good deals, so are many others. As such, why not take advantage of all the resale platforms available, like Depop, and turn your annual wardrobe clear-out into a money-making opportunity? Not only will you be able to free up some storage space, but your unwanted goods can find a better home. It also doesn’t hurt that you could end up taking home a nice chunk of change for clothes that may have just continued to accumulate dust.
#10. Don’t Splurge on Payday
As tempting as it might be to go out and treat yourself as soon as you see your paycheck come in, you need to prioritize your monthly expenses and savings. Any leftover income after these important categories have been taken care of can then be used throughout the month as you see fit. This mentality will allow you to assess whether a purchase is necessary or a fleeting desire, preventing you from making poor impulse decisions. While everyone’s financial decisions may vary, it’s important to strike a balance between meeting your immediate needs and determining how to achieve your financial goals.
As a Mathematician and Data Analyst Pauline Lemar, knows a thing or two about budgeting since working with numbers is what she does for a living. When she’s not immersed in the complexity of digits, she loves to unwind with a chilled glass of wine or a nice cocktail in the company of family and friends.