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Growing up, my mom always had a little “finance” book and budgeted for each month. It may sound a bit tedious or daunting for some but if you’re struggling to reach your goals of being financially independent then you NEED to budget (and keep reading, girlfriend)!
Every month she kept track of how much she earned, how much she needed for bills (and their due dates), and what she would have left. Sometimes there would be nothing left to save but thanks to budgeting, our lights were never turned off, the water was always running, and we always had plenty of food.
Alongside my mom’s budgeting tips, I’ve been able to manage a way to always have something left to save to not live paycheck-to-paycheck. So sis…that may mean sacrificing not eating out as much but it’ll be so worth it when you have an emergency fund to do anything you please!
The budgeting method I use to get closer to my own financial independence goals is the 50/30/20 rule. This simply means you allocate 50% of earned income (after taxes) towards your needs, 30% towards your wants, and 20% towards your savings! Easy enough, right?
To do this, take your net monthly income and divide it by 2 (this is your 50%). Next, multiply your monthly income by 0.3 (aka 30%) to get the amount you can allocate for your wants. And lastly, multiply your monthly income by 0.2 to get your monthly savings amount.
Please keep in mind that these are general guidelines for how to manage your money. If you want to save more versus spending more then save more (the goal is more money, right?). I personally saved more in the beginning of my financial journey for the down payment on my house!
These rules all depend on your unique personal situation and your own personal goals so tweak as needed. Now let’s jump into it (trust me, it’s so easy you’ll be wondering why you didn’t do it sooner)!
50% Needs
First things first, your basic needs as a human being are: water, food (groceries/meal delivery), and shelter (rent or mortgage). Then, you have your other needs which may include paying utilities such as gas, electric, and cable. You can’t cook if you’re stove doesn’t work and if your food isn’t refrigerated, girl!
Also, transportation (gas for your car) and anything else you need to survive on a daily basis should be included! You need your car to survive? Yes! Without your car, the bus, the train, or even an Uber you wouldn’t be able to get to work, right? That’s a need!
And lastly, don’t forget credit card payments, student loan payments, car payments, etc,. Those can quickly get out of hand if not dealt with and essentially ruin your life (I’ve seen it happen)! Make your payments on time because keeps you in good standing with your lenders and raises your credit score, lowering the interest you would pay over time if you didn’t make these payments promptly!
30% Wants
Your wants and desires have to be accounted for, too! If you only paid your bills and saved money, you’d be depressed and ultimately lower your quality of life. You don’t have to completely ignore your wants to have more money so allocate some of your earnings to love yourself a little when you need to.
Your wants include unnecessary shopping because let’s be real, most of us have enough clothes to last us for years to come (we don’t need 4 of the same pair of jeans *cough*cough*). Your wants also includes: getting your hair/nails done, workout subscriptions, and dining out (this includes DoorDash and UberEats, sis).
Throw hobbies, music subscriptions, and the obvious…entertainment subscriptions (Netflix, Hulu, HBO, Youtube, Disney +, Apple Music, Spotify, etc.) in the mix, too.
I know you probably have subscriptions to all of these (I know I’m guilty) but you’re going to have to buckle down and get real about what you actually can afford if you want your money to work for you!
20% Savings
Now the juicy stuff…SAVINGS!
Unfortunately, many millennials are out here only worrying about today’s bills but not even thinking about tomorrow’s opportunities!
It’s important to feed your wants and your needs but it’s also important to think about your cushion. Your cushion is your safe place! It’s the money you know you have available to use if any unexpected expenses pop up (which they always do)!
Take some time to properly plan and budget for your savings, girl! It’ll give you peace of mind and it’s exactly what you need to progress with your financial and personal goals!! You can’t expect to travel every couple of months if you’re not planning for your future.
If you don’t have enough left in your budget for savings, try making cutbacks or picking up a side hustle! Use your side income for your savings so you have wiggle room with the income earned from your primary job!
Side note: Some people say to include debt repayment in your savings because the more payments you make, the less debt you have. The less debt, the more you can save, and the closer you are to financial freedom. So yes, you should pay off your debts (including making additional monthly payments) but to me debt repayment is a NEED!
I include debt repayment in “needs” and keep “savings” strictly for emergencies, a house down payment, a vacation, and any other high-ticket items.
If your payments are above what you have allocated in your budget, start lowering payments and cancelling some subscriptions!!
I can’t emphasize this enough and it hurts now but in a couple of years when you’re able to move out of your parents’ house, you’ll be thanking yourself for all those hard sacrifices (try borrowing a friend’s Netflix account until then 🙂).
Be brave and make the choice to continue living like a struggling college student to later become that Queen living the financially independent life that she DESERVES!!
What are some of your money-saving tips and strategies?
I agree with this strategy. Growing up with grandparents was very different so i was always taught to have mattress money (money on hand) . Mattress money is not good always because buying a home u need a paper trail however its aways good for emergencies! She would always save at least $20 a week & homecook meals go long way!!
Thanks, Ella and even saving $20/week adds up!
Ahhh. I love this article. Good tips and a lot to think about when saving. The only thing for me is all my purchases are wants!!! Ugh! Thanks for the tips, I can’t wait to start bugetting and getting in the saving mindset.
Thank you Erin, I’m glad you found these tips helpful :)! Also, I feel you about most of your purchases being wants lol try cutting back on some things one at a time so it’s less daunting (and you don’t feel as if you’re completely ignoring your wants). Getting in the mindset of saving is definitely a lifestyle (because it’s kind of like a diet change) but so worth it!
I do agree with all the ideas you’ve presented in your post. They are really convincing and will definitely work. Still, the posts are very short for newbies. Could you please extend them a little from next time? Thanks for the post.
Thanks for your feedback (any feedback is great feedback to me so I love it)!!
I will definitely keep making the posts longer for your guys as I continue crafting my skill. Glad you enjoyed the read!! 🙂
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I’m glad you enjoyed and thanks for commenting!! 🙂
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Good luck!!
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Hey, thanks for adding me to your bookmarks! Hopefully, you’re subscribed to the email newsletter as well so you never miss out 🙂
Glad you love the layout and find it easy to read!
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I’m still learning financial literacy and finding what works for me but I love sharing what works with you!
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I completely agree!
There’s plenty of useless information on the internet and not enough information that is honestly helpful and interesting to read. Learning new things doesn’t have to be tedious or boring.
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No problem!
More people should know about this topic so I took it upon myself to share 🙂
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THANK YOU A TONNNN, MARINA!!
…More posts coming right up 🙂
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folks don’t talk about these issues. To the next! Best wishes!!
You’re completely right, there’s not enough information about financial literacy or there is information but it’s not actually understandable for the average person.
I will definitely write more about this topic, thanks for commenting!!
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Haha thank you, I try 🙂
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Thank you so much. Your comments are some of the ones that keep me writing these posts for you guys 🙂