Are you among the 62% of millenials who, according to a Charles Schwab survey in 2019, live paycheck to paycheck? Take heart: You can climb out of financial insecurity and into financial stability by taking control of your spending.
Will it be fun? Probably not at first. Will it be gratifying? Absolutely. 10 Simple and Free Budgeting Tools
Before you start, take a few moments to think about your goals, both short-term and long-term. Are you wanting to pay off student debt or credit cards? Perhaps build savings – for retirement, for an economic cushion, or for buying a house – or generously support favorite charities? Write down your goals.
Next, write down every purchase you make, every day, for a month. Cash, check, credit card, digital app, online bill pay – write them all down, including where, what for, and how much. You can make notes in your smartphone, but combine them into a single file each evening. Then tally them each week and group them into categories such as groceries, meals (restaurant and take-out), utilities, etc. It’s old-school, but a small notebook that fits in your pocket or purse works well. If you have a spouse or partner, make sure you’re both recording expenses. Multiply by 12, then add in intermittent expenses, such as auto insurance, auto tags, and membership fees. Now, divide by 12 – that’s your average monthly expenses.
Now, add your total income. Be sure to include average income from any side gigs, child support and alimony. If you’re shelling out more than you’re bringing in, you need to figure out where you can cut expenses. It’s usually easy to see. Cutting back from a daily $5 designer coffee to three days a week saves $10 weekly, or more than $500 a year. That’s not chump change.
Just got married? Start your life together on solid financial footing with these tips: