Sure, I wrote a budget when I was in college – then glanced at it again a few months later and laughed. Even though my bank account was usually just a handful of change above empty by the end of the month, I could always survive off of whatever was in the fridge or convince my mom to send me a Starbucks gift card or two. But, when you’re on your own, there are suddenly many more important expenses that need to be taken care of on a regular basis: rent, insurance, and, yes, food. Budgeting is somewhat of a necessary evil, but, if you follow these easy tips, you can make the process a little less painful.
1. Track Your Expenses
It’s hard to make a budget if you don’t know what you have to budget for. Take a week or two to track all of your expenses – how much do you spend at the grocery store? How many times a week do you eat out? Write everything down (yes, everything) or input your purchases into a free budgeting app like Level Money or Budget Ease. When you make note of what you spend, it’ll be easier to make a more realistic budget.
2. Look at Your Rent
When stepping into the real world, the first thing you’ll need to do is find a place to live. According to financial experts at publications like the Washington Post, your rent (before utilities) should be no more than 30% of your gross income. However, if you have a lot of student debt, you may need to spend a little less. And, if you’re living in a very expensive city (i.e. NYC), this might sound a little unrealistic. Just try to find a place as close to 30% of your income as possible.
3. Start With the Important Stuff
Sure, I’d love to spend $500 a month on shopping at the mall or fancy dinners with friends, but then I’d be living in my parents’ guest room surviving off the free Goldfish from my office. When writing your budget, start with the things you actually need: rent, student loan payments, car insurance, cable/Internet, and groceries. These sorts of expenses are pretty easy to predict since you’ll spend almost the same amount on them every month. Whatever you have left after these crucial expenses is the money you have a little more flexibility with.
4. Plan Ahead
After a month of working hard and spending smart, it’s easy to convince myself I deserve a nice hour-long massage or a new pair of shoes. But, then next month rolls around and, uh oh, I need new tires. When writing your budget, don’t just think about expenses for the month – be thinking about the months ahead. Then, put aside a little bit each month for those future expenses so that something like new tires won’t force you to dip into your savings account.
5. Balance Smart Saving with Silly Spending
Whoever you talk to about budgeting, I can guarantee there will be one common thread: save. You’ll never know when a sprained ankle lands you in ridiculously expensive urgent care (yeah, that happened to me), and if you don’t have any money saved, you might end up in a pretty sticky situation. You don’t have to save a lot every month – just put away whatever you can. For me, that’s about $100 per month. But, don’t always be planning for the future. Take some of your hard-earned cash, and spend it on things that are simply to make you happy. According to U.S. News, people get the most pleasure when they’re spending money on leisure. So, don’t be afraid to spoil yourself, too (within reason, of course).
At the end of the day, sticking to a budget comes down to the most basic rule of finance: spend less money than you make. Though that’s definitely easier said than done, when you’re spending wisely, you’ll be happier and feel more financially secure for your future.
By Nicole Gartside – Smartte Contributor
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