Dear Fashionable Friends,
Today we’re talking $$$. Your twenties are the best time to do the things you want to do when you’re still young and free of major responsibilities. If you’re not in your twenties these same practices can still apply to you! With a spending plan, you’d be surprised at how much you can squeeze out of your income.
Draft A Budget and Stick to It
A personal budget will help you determine the amount of money you have as well as your priorities in life. A strategic financial plan means much more compared to working or gathering as much income as you can. It’s all you need to gain confidence in your finances. Creating a personal budget is simple, but the real test is sticking to the budget.
The 50-30-20 Budgeting Method
The 50-30-20 Method is a helpful place to start for budgeting newbies. Simply divide your budget three ways: 50 percent towards living expenses and essentials (i.e. rent, groceries, utilities), 30 percent towards flexible lifestyle spending (i.e. entertainment, eating out, travel) and 20 percent towards your financial goals (i.e. savings, debt payments, investments).
Rather than giving up your social life, the 50-30-20 Rule gives you a whole 30 percent of your budget to spend as you please.
Store your allotted budget in the form of cash inside dedicated envelopes for each spending category. It’s a pretty old school method, but a great option for people who want to set stricter limits for themselves or typically use cash.
Open a Savings Account
It will grow with time, and you will be motivated to increase the percentage. Open a high-interest savings account to earn extra money through interest. Save half of any bonuses or benefits you receive in form of cash, before they can become part of your monthly budgets. This is something I am currently practicing and have immediately noticed a difference.
I understand that savings can be difficult, especially when you are getting established in your career and at the same time, paying the student loans.
At this stage in life, you must also be thinking about the major purchases such as your first home or luxury car, and this can only be achieved through savings. Just incorporate savings into your monthly budget before you can be accustomed to spending the whole income.
It’s a new month and it’s time to get your finances in order – so let’s do it together!