Budgeting Tips in Your 20s, Why and How to Get Started
Congratulations on graduating from school or landing your new job, it’s goodbye to being broke, and welcome to the world of financial independence. Now you can make and spend your money anyhow you want on whatever you want. But with this new level comes a more serious question. How much should I actually be spending? Am I overspending? Why do I feel bad each time I buy an expensive item?. These Budgeting tips are exactly what you need to answer these questions.
Many people are not bothering about how to implement a personal budgeting plan for themselves. This is the mistake many of people make that they so much rely on the fact that they knew approximately how much money they make annually, and against the backdrop had never broken down their expenses by category to figure out what they could afford on a recurring basis, or how much money they could regularly invest. My question remains, “Is having personal budget worthwhile?” The answer is “Yes.”
Creating a budget does not only help you answer those questions, believe it or not, giving yourself a financial framework actually grants you more flexibility, more money to spend and fewer anxieties to worry about. When you develop a budget plan that can be maintained over a long period will definitively linked to building wealth, while simultaneously helping your budget planner to get out of debts and cut expenses. However, very few people start practicing the art of budgeting early, most people only resort to budgeting after they’ve been hit by serious financial mismanagement crises. This shouldn’t be so.
Why You Should Start Implementing these Budgeting Tips Early in Your 20s
The Budgeting Tips helps you save and ultimately earn more
Budgeting means you are able to spread your money to cover all the important things you need to do including saving. The more you save, the more money you’ll have later on, based on the concept of compound interest. This is how it works. When you invest your money, you don’t just earn interest on that original amount you have invested, rather, after some time, you start earning interest on the interest.
So, someone who is 20 years old and starts saving N20,000 monthly, will have more money than someone who is 30 and starts saving the same amount monthly, this is assuming both of them retire at the age of 60 years. The goal is to give your money more time to accrue interest.
Budgeting Tips in your 20s teaches “Adulting”
Soon enough the money you earn would hardly be enough, you will get married and have kids, and that will automatically become some more burden on your finances. Captain Obvious has a quote that says “Don’t start saving for a home at the exact time you want to buy a home”
You may not be thinking about diapers and homeownership, but you might later on. Starting to save earlier means giving yourself a smaller financial burden when that time comes. It is also important to learn how to stick to a budget so that you’ll be set for when your finances become a little more complicated.
Live your dream life Now
Your twenties are the best time to do the things you want to do when you’re still young and free of major responsibilities. You have the liberty of choice, you could decide to spend all your earnings, or you could choose to be meticulous about spending.
With proper budgeting tips or a spending plan, you’d be surprised at how much you can squeeze out of your income. Tracking your spending helps identify areas for improvement so that you can spend less on things you don’t need and put that money towards something better. Like that sweet trip to Dubai, you’ve been thinking about.
Handle emergencies without stress
Truth is most definitely life is going to happen. That means emergency dental appointments, car problems, a leak in your roof you get the idea. Budgets help make sure you always have extra funds kept aside for those unexpected incidents. It keeps you on a good side of life, to cushion any “life” event that should normally throw people off balance.
How do I start Implementing The Budgeting Tips?
Now that we have seen the enormous benefits of starting to budget early, how do I get started? Glad you asked. It is simple and the following six ways will help you get started with budgeting right away.
Aggregate your monthly income
It’s very easy to lose track of your spending especially when you have more than one source of income. Whether all your income comes in through a formal or informal source, the first step to start and succeed at budgeting is to aggregate all your income at the end of the month and have a snapshot of your total earnings.
Track your monthly spending
The second thing to do is to have a list of all your spending. Keep it simple. You can start with last month’s expenses. Gather all your bills and receipts and figure out how much you’re actually spending per month. Break down your spending into categories that make sense for you. For example, Living expenses, transportation, subscriptions (like Data or Netflix), This helps identify unexpected areas that may be haemorrhaging money.
Set a goal
It is a great idea to finally decide to budget your finances, but it’s important to work towards something concrete. This helps motivate Page Financial to be diligent and consistent with the budgeting tips.
- It could be a first-time goal of creating an emergency fund of x amount in x years.
- It could be a short-term budget for a trip or a new coach
- It could be a mid-term budget for a car
- Or a long-term budget for a retirement plan, or buying a house.
The goal is to have something to be anxious about, something that keeps your anxiety high, something that motivates you to set aside some money for investing.
Set a financial framework
Start by weighing your expenses against your net monthly income. How much TV subscription do you do? How much do you truly need? What are your goals? What spending categories can use improvement? Start setting ideal budget goals for each category. Be honest with yourself and your lifestyle.
Use this simple tool by Page Financials to do your budgeting and keep track of your spending. At this stage, you are now ready to approach a trusted Financial Institution for a suitable investment or target savings plan that would help you achieve that goal.
Rinse and repeat
Our spending habits often change, our income often changes. It is advisable to keep an eye on the moving parts and make adjustments when appropriate. Also, make sure that your budget is actually sustainable. If you’re finding it difficult to stay within that framework, then change it. Be realistic with yourself.
If you need expert financial advice on how to get started with the budgeting tips, Page Financial professional financial experts are available for a free call. Just send an email to email@example.com, or call 016317243 and request for financial advice.