They always say, “Do what you love and love what you do.” You love watching Netflix, sleeping, shopping and being with friends, so you should do that all the time, right? If only there was a way to profit from such activities.
Unless you are chosen for a NASA sleep study, you’re going to have to continue working in order to keep doing what you love. In order to continue doing what you love or plan your next big adventure, you’re going to have to start becoming a successful budgeteer.
A clean and successful budget means you’re taking care of your money and you can start saving it for the more enjoyable things in life.
Track Your Spending
You or someone you know may have gone on a diet lately or tried to change their eating habits. In order to track what you’re eating, many people write down every they’re eating, no matter how big or small. That way, you can keep track of how many calories you’re bringing in and what you can start to cut out.
The same principle applies to your spending. Start writing down everything you do over the course of a month. Write down where and how much you spend every time a transaction takes place. Do whatever is easiest for you, either tracking your credit card statement, carrying around a small notebook in your purse or entering it all into a spreadsheet.
Once you have this step taken care of…
The Essentials vs. Non-essentials
If you’re looking at cutting back and saving, you should start looking at what you can cut back on and what needs to stay.
Essentials are going to be the following:
- Personal care
Some non-essentials could be:
- Magazine subscription
- Eating out each week
- Starbucks run
There’s obviously room for some flexibility here. While one person may not need a high-speed internet connection, you may need it if you work from home.
While a gym may fall under personal care, you might be going only once or twice a month and get your exercise walking through the park every day during your lunch break. Look at the big picture and see what you can cut back on.
Why would you need to cut back anyway?
Making Financial Goals
Do you have any financial goals? If not, that’s perfectly fine but if you think hard enough a few may pop into your mind.
You could be saving up for heading to your friend’s wedding this fall, a fun vacation or paying off your student loans. A plan may already be in place and if so, great! If not, start making goals you can keep and reaching them each month. Center your budget around those goals (after covering your basic life expenses first, of course) and start making progress to them each week?
How can you make progress each week?
Save, Save, Save
Let’s just get it out of the way now: there is nothing fun or sexy about saving money. You will never walk into a room and have someone tell you, “Looks like someone just contributed to their IRA today!” like they would complement you on your new outfit.
As Benjamin Franklin once said, “A penny saved is a penny earned.” Set up an automatic process that takes X amount of money from your paycheck and puts it into savings each month. If your paychecks come twice a month, make it happen twice. You’ll be surprised how much money you’ll build up in a short amount of time. That way, you can start to budget your leftover income with some money already saved up.
Your income is never going to stay the same and you’ll have to make changes here and there on your budget. In addition, your financial goals are start going to change. Are you planning a move? Looking to buy a house? Are you saving up for your wedding?
With each big goal, you’ll want to start making more and more changes in order to keep your budget intact and facing the right direction.
Besides being financially intelligent, all of this tracking will come in quite handy when April 15th rolls around. You’ll be able to track all of your expenses and possible deductions in order to (hopefully) get the best refund out there.
Even though budgeting can be annoying and unsatisfying, it will definitely help you in the long run!
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