Being financially aware is important. Knowing what you can afford can prevent you from going down into unnecessary debt. Not everyone’s budget will look the same, as we have different goals, income, and perceptions on how we want to live our life. Your budget can change from month to month, depending on your income, holidays, or surprises. The key is to be prepared for them.
Some people want to be financially secure enough to retire at an earlier age, or want to be about the Lambo life. Define what makes sense and what will make you happy. This year, we’re looking into buying a home. Southern California is not the most affordable place, but we’re trying our best. This involves having to talk to financial advisors, loan officers, and realtors for those first few steps. Saving up for a down payment isn’t the easiest, but it takes time and persistence. If the next step requires you to save $1000 per month for 3 years, plan for it!
There are lots of things that are considered “nice to have”. This can include that Chanel bag you’ve been eyeing for ages, a new car, etc. We’re not against setting a budget aside to buy things. If you have leftover money after paying all of your bills and contributed towards your savings (or not, up to you), nothing wrong with treating yourself. The key is moderation and making sure your priorities are set.
One of the biggest challenges is self-control in wanting to buy things I couldn’t before. I found staggering my purchases over a period of time being more worthwhile because there is always something to look forward to.
There are many ways to plan a budget. You can use a notebook, Excel, Mint, or any budgeting tools/apps out there. If you’re a card-heavy user, Mint is great for keeping track of all of your accounts. The more hands-on you are with looking at your spending, the more conscious you are with your spending. It’s important to know what your recurring payments consist of, especially subscriptions. There are some that hits you once per year, and others on a monthly basis. If there is a service you don’t utilize to the fullest satisfaction, don’t be afraid to cancel them!
Budgeting isn’t the easiest. It takes commitment because saying “It’s a one-time thing” can add up really quickly. In my (Nancy) budget, I group purchases into major categories. This includes a recurring auto bill, gas, food, personal expenditures (tldr; shopping), and home. Anything leftover from my monthly income goes into savings. Definitely different than a zero-based budget (where every dollar HAS to be allocated somewhere), but it has been working for me so far.
How are you managing your budget this year?