Every budgeting guide out there emphasizes the importance of managing money as soon as possible, especially for people in their early adulthood.
Developing skill in the 20s requires a person to be very responsible, especially when it comes to skills that are regarding finances.
There are hundreds of budgeting tips available online. Nevertheless, we’ve created a list of the most important ones that will help you develop this important skill.
Track and Record Your Expenses
Tracking and recording your expenses is one of the budgeting tips almost every budgeting guide will mention. The reason is that if you know where you’re spending money and how much, you’ll easily be able to spot unnecessary spending almost instantly.
Once you find where you’re spending more money than you should, you’ll be able to eliminate, or at least reduce, some of the expenses, leaving you with more money for saving or other important things.
There are tons of phone apps you can use to track your expenses. Or you can use a simple, free tool such as Google sheets to enter every expense you make.
Cut Off Unnecessary Expenses
After implementing the first of many budgeting tips we’ll cover, you’ll quickly find some unnecessary expenses. Once you start noticing them, you’ll realize that even the most affordable things sum up to a significant amount after some time.
Spending $3 a day for a cup of coffee at Starbucks doesn’t seem like a huge expense. But when you sum it up, it will end up being around $1000 just in one year. And that’s just for one cup of coffee a day.
We all spend more money than we need to, some more, some less, but we’re all guilty when it comes to unnecessary spending. Instead of going to a restaurant and paying $150 or more for a meal, you should try having a nice home-cooked meal.
The money you’ll end up saving annually can amount to thousands of dollars.
Always Look For Discounts or Sale Items
When it comes to budgeting, it’s important to develop skills in your 20s because you’ll get used to saving up when you need it the most. One of the greatest budgeting tips you’ll find is to try and buy things that are discounted or on sale.
Unfortunately, this won’t be applicable every time you need to buy something. But when it comes to clothes, electronics, and appliances, you’ll always be able to find a specific product on sale or with a certain discount. By doing so, you’ll end up spending much less on products you need and saving up for the things you want.
Food, on the other hand, is usually not discounted, especially fresh meat and produce. Checking out a few stores might help you find the best prices. But you shouldn’t expect massive discounts on fresh food. Every budgeting guide will mention the importance of finding certain products on sale.
Create a Reasonable Budget
One of the best budgeting tips includes creating a monthly budget. The important thing about this is that it needs to be reasonable and under your income limit. By being aware of how much you have and how much you need to set aside for rent, utilities, and other expenses, you’ll be able to allocate the rest of the money you have for other requirements and entertainment.
By sticking to the budget, you’ll always know how much you have and how long it will take you to save up for a specific thing. It’s easy to lose track of how much money you have left if you don’t track your expenses and spend money on things you cannot afford. That’s why every budgeting guide needs to have miscellaneous expenses included. The money you don’t spend can be either transferred for miscellaneous expenses the next month or to savings.
Allocate Amount for Your Savings
One of the most responsible things you can do is start saving as soon as you get your first job. To develop saving skills in your 20s, you will need a lot of self-discipline. But to start saving when all your friends are partying and having fun is a sign of maturity and responsibility.
No matter how much you make per month, it’s important to allocate a certain amount of income for savings. It can be a few percent of your monthly wage, but to really make a difference, you’ll need to save up at least 10% of your monthly income. Many budgeting tips circle around these numbers. Some of the most famous authors, such as Dale Carnegie, mention mandatory savings after every paycheck.
Pay Debts and Secure Insurance
One thing that every budgeting guide should include but is mostly ignored is paying off debts. And when we say debts, we mean all debt, from student loans to every other thing you bought on credit.
At times, it can get tempting to buy something. But before you do, just think about how much you’re already allocating from your monthly income to pay off the debts you have. The less debt you have, the easier it will be to allocate funds to other important things such as retirement or even college funds.
Insurance is also one of the important things you’ll probably miss in a budgeting guide. But it’s as important as any other aspect of budgeting. Insurance is a cost-effective way to make sure your family won’t be left with a mountain of debt if anything happens to you.
Focus on Long Term Goals
Short-term goals are quickly achievable, and you see the results of your budgeting efforts faster. But when it comes to budgeting tips, it’s really important to have your long-term goals straight as well. Once you know what you’re striving for, you’ll find it much easier to give up on certain things to achieve a higher goal.
These long-term goals could be anything, buying a new car, house or investing in something you’re passionate about. Saving up for your kid’s college tuition is also one of the most common long-term goals people have.
Knowing that your sacrifice paid off after a few months or years is a great feeling. You’ll be happy that you achieved something you set as a goal so long ago.
Focusing on long-term goals shouldn’t be your top priority if you want to develop a skill in your 20s, especially if it’s managing your finances and learning how to budget properly. You should start with short-term goals and reward yourself every once in a while.
Look For money-generating Investments
If you want to develop a skill in your 20s related to money and finances, part of these skills shouldn’t be just on how to save money. It’s also about how to make money work for you.
Once you save up a certain amount of money, it’s a good idea to start looking for opportunities to invest a part of your savings into something that will earn interest over the course of a few months or years.
Before investing any money, you should be aware that each investment has a certain amount of risk involved. So choosing the safest type of investment will be best.
Keeping a certain amount of liquid assets you can use is a great way to be ready to grab any opportunity of a money-generating investment is not something you’ll find amongst the common budgeting tips.
A budgeting guide usually doesn’t include ways to make your savings work for you. But, it’s definitely something you should take into consideration given the fact that modern technology has given us the opportunity to connect with people and businesses around the world more easily than ever.