When you’re just starting out, it can be very difficult to learn how to save money. This goes double if your first money management experience comes when you get thrust out into the real world. How are you supposed to learn how to save in the middle of paying your bills and trying to have a social life?
Well, we’ve got a few tips to hopefully help you out in that regard. Here’s our beginner’s guide to budgeting!
You know how it’s really hard to hit the gym by yourself? It’s the same thing with saving and budgeting. If you’re married or in a long-term relationship, your significant other is a great person to hold you accountable. By each holding the other accountable, you can start to make real progress on your finances together.
If you’re single, this gets a bit tougher. The best way to be held accountable, in this case, is to reach out to a very close friend or a parent. Someone you don’t mind knowing a lot about your finances, at least!
Sit down, crack open the books, and plan a budget. Look at your monthly income and give every single dollar a job. This is tough: you need to make sure you know how much you’ve got coming in and what each dollar is for. Set aside money for your bills, your utilities, your groceries. Allocate a bit for spending money and social engagements.
But, critically, make sure some portion of your monthly income is going into a savings account or retirement account of some kind. Every little bit helps! Getting interest compounding for your money is a great goal. Even saving a little bit can add up over time.
In the same way that saving can accrue interest for you, debts accrue interest against you. Our advice would be to focus your disposable income on your highest-interest debts. The sooner you’re able to pay down the principal on that debt, the sooner you can begin saving all the extra money that was going towards it. While you do this, make sure you’re making just the minimum payments on your other debts.
Once you’ve dealt with your highest-interest debt, snowball that savings into your next highest-interest debt. This will allow you to roll your money downhill in a way that gets your debts out of the way faster. You’ll save a ton of money in the long run!