If you’re just beginning to budget now, perhaps you feel like it’s very difficult to start. It feels like all of your money already goes somewhere! How can you save if you’re only just starting?
Well, we’ve got some good news for you: here are our best tips of how to budget for beginners. Let’s save some money!
How to Budget for Beginners
Step 1: Give Every Dollar a Job
Every single dollar of your paycheck needs to have a job before you get it. Some of those dollars are going to be spent on bills right out of the gate. Others are going to go towards food and gas. Others still will be set aside to spend on fun stuff (if you can swing it.) Finally, the most important part, the rest of your dollars will go into savings.
This cuts down on the temptation to spend money that’s just chilling in your checking account. When you look at your account and see extra money there, you’re doing it wrong. There isn’t extra, no matter how much money you make. Since every dollar has a job, extra money isn’t a thing.
Step 2: Have Someone Hold You Accountable
If you’re married or in a long-term relationship where you trust each other with money, you need to budget together. Budgeting is hard, and it takes some dedication. Much like working out, it’s easier to do if you have someone watching your back on it. If you’re not married, then find someone to hold you accountable. A parent or close friend would work well in this role.
Step 3: Focus on Your Debt
If you have some kind of debt that’s accruing interest, it needs your attention immediately. Focus on the debts you have with the highest interest rate. Make a plan for this in your budget. It wouldn’t be a bad idea to cut back on spending in order to pay down your debts sooner. The longer you carry debt with interest rates, the more you’ll have to pay back. Make the smart call and pay down those interest rates.
Step 4: Create an Emergency Account
Set some money aside in the budget to save for emergencies. This is stuff that will happen but can’t be predicted, like car accidents and medical emergencies. You can’t account for when they will happen, but you want to be prepared when they do. If you normally rely on credit cards for this, stop doing that. Credit cards are not usually a good deal, and if you can’t pay your balance off every month you’re losing money on your card.
Step 5: Keep Saving
Things may seem bleak, but you need to keep saving. Maybe it feels bad to have to cut off your cable or downsize your apartment. However, it’s better to live within your means and save money than live big and be in debt. If you put yourself in debt now just to live it up, you’re sacrificing your future finances for fun today. That’s no way to live! So get out there, and start saving money!