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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)!
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!
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!
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?