This is a topic we often talk about in passing, but we don’t actively teach. This leads to a lot of young people having issues saving money and keeping all their bills in check. There is a pretty basic way to budget, but it becomes much more efficient the better you track your own purchasing habits. Before we get to the budgeting, we should talk about debt.
Often young people have student debt and credit card debt. Most financial institutions have free access to financial advisors so it’s always worth talking to them about lowering your interest on your debt. In my case, we took a student loan and turned it into a line of credit with much lower interest, saving me a lot of money in the long run.
The best rule of thumb with a credit card is to avoid using it, and always pay it off completely every month. Unfortunately, life happens, and often the amount of debt is higher than the income needed to pay it back in a one month period. Banks are run by people, and they are willing to help you as long as you are actively trying to pay back your debt. You can often talk to them about your minimum payments and setting up payment plans.
Another thing to be aware of is that if you are a member of a credit union, your savings account can gain a small amount of interest for you without giving up access to your funds by investing.
Being able to budget well means you need to know what each month costs you. Keep an eye on how much fuel you pay for in a month, the cost of your groceries and other costs that vary but are seen on a monthly basis. The more you are aware of how much you spend, the easier it is to manage it.
You can always call your phone, internet companies and discuss cheaper plans. Your utilities providers are often willing to give you a new lower rate if you call them. Buying only what foods you know you will need for the week will reduce food waste and money dripping through your fingers. It takes self control not to grab a bag of chips or what ever your snack food is, but it is worth it to keep your budget down. Limiting your driving time or carpooling can really help your budget and being mindful of what you need versus what you want is always something to keep an eye on.
The basic set up of a budget sheet starts with your income after taxes (the amount that actually goes into your bank account). Then you remove every cost you have and determine how much you have left.
Your computer almost certainly has a budgeting spreadsheet template if you want to keep track of your money manually. You can always write it out and there are apps that connect to your accounts and track your spending habits available as well.
Even if you have less than a couple hundred dollars left at the end of the month, do your best to put it into a savings account. Oil changes, flat tires, rent increases and life happens. You will thank yourself for putting away as much as you could.
That is how to budget. If you are young and struggling know that the people at your bank will go out of their way to help you if you ask. Students often get discounts of their insurance and in some cases their rent. Ask questions, ask for help and you will in a better spot.