This isn’t another generic budgeting article telling you to spend less by purchasing store brands or staying in instead of going out. That’s like reading another weight loss article saying it’s all about calories in vs calories out… no sh*t Sherlock. Budgeting at it’s core is about spending less money than what you bring in.
The real trick is focusing on how to get the most from your money. It’s about spending within your means by paying for the things that matter to you and skimping on the stuff that doesn’t. Successful spending is about getting behind your own plan by crafting a plan that’s realistic for your lifestyle and income.
I’m skipping over a bunch of budgeting basics with the assumption that you have some baseline knowledge. To bring yourself up to speed check out these three posts to avoid buying misery Part 1 Create a Budget, Part 2 Dealing with Debt, and Part 3 Emergency Funds.
Tally up How much Money You Bring In
This tip is about establishing a baseline of income above which you don’t spend.
How much money do you bring in from all streams of income every month after taxes? This is the amount you have to work with each month.
If you don’t bring in a steady income, underestimate. You can stay within budget if you make more money but if you set yourself up for failure by estimating too much income it will be tough to make the most of your money.
Tally up Your “Have To’s”
This tip isn’t about judging your spending it’s all about identifying it.
Start with the stuff you have to spend on, like it or not. Things like utilities, rent/mortgage, health insurance, groceries, student loan debt, etc.
Then add on your recurring subscription services that bill monthly (Netflix, Birchbox, cellphone bill, etc.) These may not be necessities but they come out of your account regularly.
Finally add up the other things you spend on like eating out, clothes, entertainment, hobbies, etc.
Identify Where you Waste Your Money
This tip is where you’ll free up your money to make the most impact.
You’ve pinpointed where all your money goes and it’s time to actually assess your spending.
Where do you spend absentmindedly without getting much return and enjoyment? If you’re spending without pleasure on something that’s not a basic need (food, shelter, clothing, safety) then it’s a waste of money.
For me this is ordering drinks when I eat out. I really don’t enjoy the booze and it dramatically increases the cost (and calories) of dinner!
Choose Something You Enjoy Spending Money On
This tip is the where you’ll make your money fun by identifying the most valuable things you buy. If you were good at the tip above you will have freed up some extra cash.
Identify one or two things you love that enrich your life in so many ways. It could be a hobby, your side hustle, travel, or gift-giving. Whatever it is allow yourself the freedom to spend here by mercilessly cutting spending on stuff you don’t need and don’t enjoy.
Make More Money
Oh really that’s all Jeni? Just make more money, phew thanks for that earth-shattering tip 😛
Seriously though, if you have expensive tastes and enjoy the finer things in life you’re just going to have to make more money. Start a side hustle. Check out any of these Google Search Results for ideas.
I’ve made a little extra money on the side with my book Millennial Maxims. It hasn’t been much, less than $100 and I’ve donated like $50 of that to 4 Paws for Humanity so have kept even less for myself. But I paid for the cover design and at some point will have earned enough to cover the editing.
I’m still exploring side hustle options myself because your personality determines what fits for you. My advice is to just try one you think you’d like and see what happens!
Use Mint to Track Your Finances
Mint is an app/website combo created by Intuit. This is the tool to take the grunt work out of budgeting.
Tracking your income and categorizing your spending can be a huge time suck. Mint knows the struggle is real and compiles your financial life in one spot. It has a simple and easy to read interface on both the app and the website. You can input all of your assets (home, car, investments, 401K) and all of your debts (student loans, home, car) and hook up all your accounts.
The key to Mint’s success is the ability to link all your accounts. Your savings, checking, debt accounts, credit cards, 401K, everything. This means you don’t manually have to track a thing. Mint will also categorize all your spending to the best of it’s ability. If you correct a category, Mint will remember for next time and categorize the expense correctly.
It allows a super quick overview of your overall net worth and quick views of spending. You can set financial goals (like savings, debt, or retirement goals) and track your progress. Mint even sends you updates on progress and warnings when you’re approaching budgeted spending amounts.
With these five tips and one tool you’ll have everything you need to build your financial savvy without starving or never doing anything fun ever again.
Share where you’re going to save and where you’re going to spend in the Millennial Maxims Facebook group or the comments below!
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