Budgeting for Millennials
Hey Style Prose readers! I'm here this week to discuss something we all know and love (and sometimes hate): MONEY! Well, to be more specific, I'm going to focus on budgeting and give some tips I have on saving your coins. Regardless of your financial upbringing, I hope that this post will be helpful to all my fellow millennials out there who are looking for methods of success when it comes to learning how to manage your own finances. Basically, no matter the size of your paycheck, everyone can benefit from budgeting!
- Set a goal.
The first step of budgeting is to, well, set a budget. What I mean by this is to declare in your mind a specific number of either how much you want to save or how much you want to spend. In other words, come up with an amount that you do not want to exceed for a certain item. For example, let's say you've been eyeing a new pair of shoes for a while but you don't have the means to buy them right away, or maybe you want to cut back on eating out so much, so you decide to limit your spending at restaurants. Whatever it is, set a fixed amount and stick to it.
But wait, there's more. In order to make the budget complete, you also have to specify a period of time in which you want to meet this budget (ie. "I will only spend $XYZ on XYZ this month). This period of time can be short term or long term, but the point is that you need to at least have an idea as to the time frame of meeting this budget, which will help to make you proactive and keep yourself accountable in meeting your financial goals.
- Keep track.
The next step to effectively and efficiently manage your finances is to track how much you spend. Usually budgets are made on a monthly basis, so I would suggest for you to monitor your various expenditures every month based on your personal buying behavior. For example, keep a running tab of how much you are spending every month on groceries, uber, shopping, etc. If you have fixed bills to pay per month (ie. rent, utility, electricity, loans, etc.) then that's also important to keep in mind.
By keeping track of everything you spend, you may actually start finding yourself spending less. I love Whole Foods and usually go there after my weekly cycling class. However, initially I wasn't budgeting my grocery shopping and didn't realize how much I was spending on groceries every month. But once I became more aware of my spending and kept a monthly grocery budget, I was determined not to exceed that budget, and since then have started to overall spend less on groceries. I keep my budgeting journal in an excel spreadsheet but do whatever method works for you. Just be sure to be consistent and the rest will follow.
- The 24 Hour Rule
This third budgeting tip is still something that I'm personally working on, which is being able to separate your needs vs. wants. If you haven't heard of the 24 hour rule before, it basically means that if you're going to purchase something (usually online) you leave it in your cart for 24 hours and then go back to it. If you still want the item after the 24 hours has passed, then go ahead and purchase the item. Giving yourself this time to think about your purchase helps you to prioritize your spending in a way that makes you realize that you don't have to have everything right here right now.
As someone who loves fashion and clothes, whenever I go shopping there are a lot of clothes that I want to buy, but only a select few that I actually need in my closet. So the next time you're about to purchase something, shift your mindset and start to think about "do I really need this?" and if the answer to this question is no, then let it go. It'll be difficult the first few times, but once you continue to change your perspective about spending, you'll realize that the small choices that you make now, will be really beneficial for you and your finances in the long term.
- Young Money Cash Money
My last budgeting tip is simple and old school: keep cash on you. The millennial generation is very digital not only when it comes to social interaction but also in terms of financing. Everyone is swiping cards, inserting chips, using Venmo, Apple Pay, etc., but rarely do you see people using cash. I try to keep $20-30 on me at all times, not just for emergencies, but also because I don't like to swipe my card when I'm paying for small transactions, such as coffee or a snack. Also, constantly swiping your card anywhere and everywhere puts you more at risk for issues such as identity theft. However, when you have to spend cash, it serves as a way to self-regulate your spending because you're physically handing over money where swiping your card doesn't have quite the same effect. I challenge you to challenge yourself and see how long you can make $20 last in your pocket. Try it and you might surprise yourself!
Overall, don't lose sight of the bigger picture. Remember the goal you set in step one and keep in mind why you are keeping a budget in the first place. A budget is not meant to be a punishment or deprive you of things you want in life, it's a tool and a mechanism to give you the means to achieve the things that you want. All you have to do is prioritize and stay focused.
It also helps to surround yourself with others who are also budgeting, so you won't feel like you constantly have to turn down social opportunities with friends because it's not allocated for in your budget. However, don't be too strict or deprive yourself. I have a 'miscellaneous' portion of my budget that I've allocated for some extra costs that I may spend every once in a while to treat myself (ie. going to the spa, going out for a special occasion, etc.) which makes it easier on myself to have some discipline.
I also think budgeting helps you to be more creative, in terms of finding alternative ways to save money as well as make multiple streams of income. So, continue to educate yourself on the beauty of budgeting, and in no time you'll see how many benefits you receive by simply taking out some time to manage your spending. I promise, you won't regret it!
As I always say, sharing is caring! If you have any special life changing budgting tips, please feel free to comment below. Until next week.