When you’re in your twenties, it’s easy to just live for the moment, to work in a job you enjoy and travel whenever you feel like it, but if you’re not careful your lifestyle might catch up on you financially and cause you to go into debt. Debt can be a downward spiral that is hard to break free from, and it’s the opposite of saving. Avoid this scenario and continue doing what you love with some smart budgeting ideas. Taking control of your finances in this way will mean that you are well set-up for the future.
Gather all your financial info
The first step in creating a budget that works is to gather together all of your financial information; this means household bills, living costs, insurance policies, travel expenses, leisure costs, and any debts you have. It’s recommended to look at your financial circumstances over a year to get the big-picture and to make sure the budget you create is accurate. Consider putting all of the data into a spreadsheet like Excel or Google Sheets.
Check your spending habits
When you’ve got a good idea of your overall annual expenses, it’s time to look at your income and spending habits. If you have a regular, consistent income, it makes life more comfortable, but if you’re a freelancer, your money might come in at different times of the month. It can be a challenge to budget on a fluctuating income but reducing your outgoings is a good start. Get the best deals on your internet, energy, and insurance. Check one sure insurance for more info.
Don’t forget one-off expenses
One of the best things about creating a plan for the entire year is that it gives you a bird’s eye view of what your expenses are. And it helps you plan for big events, like travelling in the summer. If you have a big expense later in the year, calculate how much money you will require for it then divide the figure by twelve. Putting that money aside each month will ensure that any large expense is easily covered.
Set up a savings account
If you don’t have a savings account, it’s a good idea to set one up soon, especially if you’re a twenty-something. Interest rates on savings accounts can be fairly low, and they’re designed for long-term accumulation. But if you find one with a reasonable rate you can set up a direct debit payment, even a small amount each month will build up into a rainy-day fund or the start of a depository for a house later on.
Track your spending
This one is very important. Tracking your spending can make all the difference to how much you save and how much you lose through inefficiency and bad habits. It’s all too easy to clear out your basket on Amazon, but if you decide to track your spending, you might be a bit more reluctant to hit the buy now button – budgeting apps can make this process much easier and integrate it with your lifestyle.