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This is a guest post by Valentina Wilson (bestdebtconsolidation.org)
Hello, the millennials,
life is not as smooth as your imaginary world drives you to think so. But, somewhere it is quite intricate to deal with.
Same happens to your finance. Yes, finance is part of your life! And, you need to be careful enough while you are handling it. Keep in mind that finance is directly involved in your personal life.
So, if you want a stable financial life, you’ll need a strong budget to maintain and live within it.
Here are the top 5 ways you can follow to live within a realistic budget
1. Resist your impulsive buying habits
The twenties is such a time period when we make more impulsive decisions and in turn make more mistakes. Gradually, it becomes our habit that affects our buying habits too.
You can follow some certain ways to resist your impulsive buying habits:
- When it is about making big purchases, give yourself at least 15-30 days. After this certain period, if it still feels like you really need the product, go ahead and buy it. But if you feel no interest anymore, then there is no need for buying it.
- A great way to resist your impulse purchases is to make a list and buy the items by following the list. Making a list of items can help you stick to buying those things you really need and in turn help you manage your cash flow in a better way.
- Don’t go shopping when you are bored. There may have chances to get tempted by the things which you really don’t need. Instead, visit those areas that can fulfill your necessities.
- Online shopping can be dreadful as the things get displayed one after another very quickly and you have to make decisions in haste. While you’re in haste, you have higher chances to make mistakes. So, if you need something to buy, go to the store, check it to be sure, and then buy it.
- Another way to resist your impulse purchases is to keep the goals in your mind. These goals can be financial or any other. You may want to save a certain amount for creating an emergency fund or for your dream vacation. Keeping the goals in your mind can prevent you from making impulsive purchases and also help you stay in a budget.
2. Check your savings accounts frequently
To stay in a budget, it is necessary to check your savings account frequently. It’ll help you to keep track of the spending and savings as well.
You can check your account once a week or at the end of the month:
- Checking your savings accounts once a week will help you to be sure that you are not overspending or whether your accounts need to be little toned down. While some people check their accounts every day, it is enough to check them once a week.
- You can use the excel spreadsheet by adding two columns. You can record actual expenses in one column while budgeted amounts in the other. Keeping the record in such a way will help you to see whether you are under-budgeted or over-budgeted. And, it’ll also let you know whether or not you require to make adjustments for the next month’s budget.
3. Start an automatic savings plan
To set up an automatic savings plan, you’ll need two separate accounts, checking and savings. The first one is for your everyday spending money like paying bills and others while the latter one you can use to grow your savings over time.
It’ll be best to set both accounts in the same bank as it’ll be easier for you to link between two accounts. Deposit your paycheck directly into your savings account not your checking account.
Figure out your monthly expenses and then split up the total into smaller amounts. Then, set up an automatic withdrawal to withdraw a certain amount you need each month or week from your savings into your checking accounts.
Keep track of how well your plan is working for the next few months and then let your savings grow alone.
Saving in such a way includes some advantages:
- You’ll be habituated with thrifty nature that can help you stay within a budget.
- As this plan is quite effortless, you can easily grip it by living within your means.
- You can set multiple goals to save your money and live according to it. Such a way will help you live within your budget.
4. Use cash instead of credit cards while buying things
Credit cards may allow you to make unlimited purchases but they can be dangerous when you fail in using them tactfully. It can entice you to overspend, which in turn, can lead you to fall into unexpected debt.
Using credit cards is not free of cost all the time; you may have to pay an annual fee. And, if you fail to pay the entire balance on time, you can be encircled with debt.
On the other hand, using cash can act as benefits in your financial life:
- There will be fewer chances to spend when you use cash to buy things as spending your hard-earned money hurts more than swiping those plastic cards.
- You can’t bargain when you carry credit cards but when you have cash in your hands you can make good use of this trick (bargaining) to buy things. This will also help you save money to a certain extent and stick to your budget as well.
5. Think about refinancing debts
If your current debts seem to hamper your budget, you should consider refinancing them. Refinancing basically replaces your existing loan with a new loan. Make sure, your new loan has better terms that will help you to get out of debt and save you a certain amount.
The advantages of refinancing debts include:
- It can help you save money. For this, you’ll have to refinance a loan with a new interest rate which is comparatively lower than the existing one.
- It can lead you to pay lower monthly payments. It’ll result in better money management and more money availability in the budget.
Debt refinancing can include any personal loans, student loans, and mortgages.
Some extra ways
You can follow some more ways to stick to your budget:
- When it becomes impossible to avoid expenses, you can consider a side hustle to make extra money and save the required amount.
- For entertainment, call your friends at your home instead of meeting them at any fancy place. It’ll lead you to make fewer expenses.
- Live meatless Mondays to cut down expenses on meat and prepare side dishes with grocery items and veggies.
- Weather changing can make a great impact on your energy bills. So, don’t try to make your house too hot during the winter and too cold during the summer months to save on energy bills.
- Love traveling? Visit your favorite places in the off-season to cut down on expenses and avoid surpassing your budget.
Some unique places to visit in the off-season include New Orleans, Orlando, Maui, Phoenix, and San Francisco. The best time to visit New Orleans is between June to September while November is the best time to visit Orlando and San Francisco. September, October, from early April to late May can be considered an off-season to visit Maui while late fall and winter can be the perfect time to visit Phoenix.
So, these are some effective personal finance ideas you twenty-something can implement to stay in a budget and save extra bucks for the future. Living within a budget can be considered as an art. Once you master it, you’ll obtain a great skill i.e., “thriftiness” an essential quality to live life gracefully.