Nearly half of all people budget their money so poorly they get caught without funds when an emergency $400 expense turns up, according to research. If this is you, you need to start planning to balance your budget, and to set enough aside. Take a look a these tips.
Spend time thinking about your cash flow
Budgets aren’t of much use if you don’t spend time thinking about what you spend.
Track every single dollar that you spend by writing everything down, and then study your expense list to figure out what expenses add up to too much outflow.
Use an expense app to track your receipts
There are plenty of budgeting apps that help you keep track of your receipts by scanning them for you. With names like Expensify and Zoho, these apps put all your receipts in one place so that you never forget what you’ve spent.
Get acquainted with your bank account
If the idea of looking at the statements of your bank account makes you nervous, it only shows that you aren’t as familiar with them as you should be.
You need to face your fears.
The more time you spend looking at your bank account, the more comfortable you become with the numbers that make up your income and expenses.
Write down all your subscriptions in one place
Whether you subscribe to streaming services or beauty boxes, magazines or fitness classes, these expenses can slowly add up.
To make sure that you are aware of how much these expenses add up to, you should make sure to write them all down under one header in your budget.
When all of it is in one place, it may hit you that you’re spending a great deal, and need to cut back.
Track automatic payments on a calendar
Automatically setting up payments for your rent, your phone bill or your credit card bills is a good idea. It’s important, however, to make sure that you never go to overdraft when these automatic payments go out.
You need to manage your cash flow by marking on a calendar when these payments are made, and making sure that you have enough money on those days.
Pay attention to your credit score
A great credit score can help you find cheaper loans, better homes to rent and better jobs. It’s important, however, that you pay attention to your credit score, to make sure that it’s as high as possible.
Personal finance apps like Mint let you check your credit score for free, and give you information from your credit report to allow you some insight into how you’re doing. It’s important to take advantage of such services.
Start micro savings
Many budgeting apps with names like Acorns, Qapital and Digit help you save by rounding up every expense that you make, and putting your spare change in a separate account.
While spare change may seem insignificant, it can quickly add up to a sizable amount of money. Some of these apps even invest the money that you make in this way, to give you impressive returns.
Use cash more
It’s easy to overspend when you pay for something with a card or with online banking. If you find you overspend on certain things, tell yourself that you will always pay for those items with cash.
Cash makes expenses feel more real, and gives you a greater sense of personal control.
Pay attention to your debt
From student loans to credit cards, you need to stay on top of the money that you owe. You need to make room in your budget for payments each month.
You should also calculate how much you pay in credit card interest each month. It’s a sum that you should be aware of.
If it seems excessive, you should make sure that you pay off your entire balance each month so that you don’t have to worry about interest.
At the very least, you should attempt to find a credit card that charges you a lower rate of interest.
Take savings money out of the equation
You should take the money that you determine you must save each month, and put it away in a savings account at the beginning of each month before you have a chance to take it into consideration for monthly expenses.
You can even set up your bank account to automatically take money out of your paycheck each month to put into your savings.
In general, putting 20 percent of your income into long-term savings is a good idea.
Admit it if you can’t afford something
If your friends are making plans to go out to eat, or to go shopping, it’s important that you set aside any embarrassment about not being able to afford it, and come clean. You need to be honest about what you can and can’t afford.
Finally, it’s important to start planning for your retirement in your early 20s. Retirement can last decades, and you need a great deal of time to set enough money aside for such a long period without regular income.
Balancing your budget can be hard, because you may make an irregular income, or because surprise expenses turn up. When you spend time thinking about your money and spending it in carefully measured sums, however, you can still come out on top.