Now that you have graduated and started your career, it is time to organize your finances. Many people in their twenties struggle to manage monthly expenses and still have money left over for some fun. Meet your current expenses and future goals by establishing good financial habits early in life. Sticking to a budget can be tricky at first, but with some helpful tips and practice, you will soon be well on your way to a strong financial future.
Create a Budget
Sit down with your current bills and create an up-to-date budget. Either print it out from your computer or use a pen and paper to write it out. List your monthly income after taxes and deductions and all monthly expenses including loan payments, rent, food and transportation costs. Subtract expenses from income to see what is left. Having a budget you can actually touch and knowing exactly how much money you have coming in and going out each month makes it easier to stick to your budget than if you have only a vague idea of what you should be spending.
Pay Yourself First
Include payments to savings accounts as part of your monthly expenses. Doing so removes the idea of savings as optional. Setting up a recurring transfer to a savings account or retirement plan on the same day you receive your paycheck makes it easy to save money automatically. Transferring this money immediately removes the temptation to spend it.
Visualize Your Goals
It is much easier to stick to a budget if you work towards an important goal. If your goal is a big-ticket purchase, put a picture of it on the front of your fridge or above your desk. Seeing a house, a car or a student loan balance with a big zero on it provides visual inspiration to keep to your monthly budget. Also include saving for a fun, short-term goal as part of your budget. Looking forward to dinner out and a concert or attending a favorite sporting event is a positive reinforcement to stick to a budget instead of viewing the whole process as unpleasant and restrictive.
Cut Living Costs
One of the most effective ways to stick to budget is to limit or cut your living costs. Reduce housing costs by living at home, getting a roommate or moving to a cheaper area. Cut transportation costs by walking, biking or taking public transportation instead of owning a car. Keep entertainment costs to a minimum by inviting friends over for potluck meals and a game of basketball or cards. Stay away from situations where you are tempted to spend outside your budget and limit contact with people who encourage you to do so.
A former financial adviser with more than a decade of experience in personal finance and small business banking, Sarita Harbour is a professional writer specializing in personal finance, small business, technology, and content marketing techniques. Her writing appears online at sites such as Yahoo! Homes and Bob Vila. Harbour holds a bachelor's degree in psychology and computer science from the University of Guelph and the Personal Financial Planning designation from the Institute of Canadian Bankers.