Budgeting and saving sounds boring and difficult. And because there’s so much cool stuff just calling for you to buy, it can be. But it’s also a necessary part of personal finance that you need to practice if you don’t want to end up in financial ruin.
Here are seven tips to make budgeting and saving easier.
Have goals. This one sounds obvious, but oftentimes people are so anxious to start saving they skip the most important step. Without a goal you have nothing to compare your results against. Do you want to put 10% of each paycheck into a retirement account? Only spend $500 a month on leisure activities? Ask yourself these questions before you start.
Track your expenses. Create a spreadsheet or use an app to track your finances. This is incredibly helpful when budgeting and saving. It doesn’t have be a fancy piece of work with formulas and equations, but just getting your spending and saving habits down on paper, or screen, can help give you a clear picture of your current financial situation.
Make your money work for you. Rather than let all your money sit idle in a savings account, why not put some of that money to work? Investing your savings is one way many people make money off the money they’ve already earned. There are many ways to invest–from stocks to mutual funds to bonds–and they come with various degrees of risk.
Use technology. There are many online and mobile tools that can help you with your budgeting. We recommend starting with the Zebit Instant Budget App, which helps you compare your expenses and budget to others just like you. By understanding where you are overspending, you can make adjustments to your budget. Other apps include Mint, Level Money, and moneyStrands. Check each out and see which works best for you.
Know the difference between gross income and net income. This also seems obvious, but it’s an important distinction to make. If you get paid $50,000 per year, you aren’t actually taking home $50,000. That’s your gross income. Your net income is what you’re left with after taxes and other deductions. When calculating your budget, use net income, not gross.
Cook more. Eating out is expensive, and a highly inefficient use of your money. It’s much cheaper to buy food in bulk at the store than it is to eat at restaurants–not to mention it’s healthier. Learning to cook and eating in more will not only save you money but put another life skill in your back pocket.
Watch your cards closely. Paying for things with a credit or debit card is easy and convenient. But it’s also a slippery slope. Credit card debt is a horrible, and usually an entirely avoidable, financial situation to be in. Be mindful of how often you’re using your cards and always pay the full balance at the end of the month.
At the end of the day budgeting and saving comes down to awareness. The more awareness you have over your day-to-day spending habits, the less likely you’ll fall into a pit of endless spending and no saving. Remember, spending seems easier today, but saving will be better tomorrow.