Money. We all want more of it, we all want to know how much others have and what *they* do with it, and we all want to know that we're doing all the right things with it. But when you're just figuring out this whole adulthood thing, it can seem downright silly to figure out that last part—specifically when the majority of your money is going towards student loans, pizza, and Netflix. (Thanks to your ex who you broke up with in 2013 who only now has decided to change their password. Really, thank you.😒)
But it's 2017 and you are an adult, goddammit. So make the time to get your budget in line with these helpful tips. Because when all is said and done, knowing exactly where your money is going and how to make the best use of it is kind of the goal, no?
There are two main ways to budget (along with some takes on these two types). Mainly: Zero-Based Budgeting (or Reverse Budgeting) and the 50/30/20 Guide (or some take of such). Here's how to figure out which is best for you.
1.) Zero-Based Budgeting
Sounds exactly like what it is. Essentially, you are accounting for every single dollar and cent you come into contact with by knowing allocating specific amounts to categories and bills. So if you have a monthly take-home pay of $2,000, you're allocating a portion of that to your rent/mortgage, fixed expenses (cable, phone, heat, etc.), and savings. You're also giving yourself a discretionary budget (AKA fun money) with a specific, set amount. Basically, you work to get your "sum" to zero. This is generally the go-to budget tactic for most people who live in urban areas, make a small amount of money, or are just trying to save as much as they can on their income.
This is generally the tried-and-true budgeting tactic you'll see, well, everywhere. Fifty percent of your income goes to fixed items, including rent or mortgage payments, utilities, car payments, and even things like your Netflix account or gym memberships–basically anything you're paying for on a consistent basis. The 30 is for financial goals, including emergency funds, paying off any debt, your 401K or Roth IRA, and future purchases—like a down payment for a house or big trip. The 20 is for pretty much everything else. Think: groceries and restaurants, shopping, hobbies, etc. It's making sure you pay yourself and the necessities first, then figure out how much you truly have for everything else. Many youths, those living in urban areas (AKA people whose rent is definitely more than 50 percent of their income), and those making ends meet tend to think this budgeting is outdated and pie in the sky, but it's nice to know how much you *should* theoretically be putting away for yourself and spending on things like rent with your income for a more stable financial future. So don't dismiss it. And if you can follow this budgeting rule, we say—do it.
There are riffs off both of these budgeting tactics as well as different ways to implement them (envelope system, cash only system, etc.) but it really comes down to allocating for yourself and things you *have* to pay for–then figuring out how much you have left to spend on the rest.
1. A Checking Account
I mean, self-explanatory, right? This is where you will take out money to pay for things. Done.
2. An Emergency Fund Savings Account
Most experts recommend having an emergency fund of 3-6 months worth of expenses/necessities (rent, food) ready, in case anything disastrous happens or you lose your job. Do this. Put it in a high-yield account that you can't touch. Automate the savings until you reach the goal. Boom.
3. A Small But Mighty Savings Account AKA Your Lifesaver Account
No, we're not talking about the candy. This is a personal choice, but if you are a person who looks at an emergency fund and goes "yeah that's good enough," then goes and buys a pair of shoes before realizing you have a wedding to go to you didn't plan for, you should probably have one. This savings account will have, pending your expenses, a thousand or so bucks that will account for any "extra" expenses that come up that will totally f*ck your budget/deplete your checking. Think: car repairs, random medical bills, wedding gifts, etc. It should also be highly available—so usually connected to your main checking account. The trick is that if you take out of this account, you have to get it back to where it was before. Otherwise, there is no point.
4. A Retirement Account
You need to have one. Period. Done. If your company doesn't match 401K contributions, you might want to look into a Roth IRA. But in any case, research your options, pick one, and automate those pre-tax dollars.
5. A High-Yield Savings Account You Never Ever Ever Look At
This is a biggie. Until you know how/where you'd like to invest/have a good amount of personal stock/are a millionaire, a high-yield savings account (meaning high interest rate) is the best thing. It's where you'll put money that is *NOT* your emergency fund (repeat: not your emergency fund) and that is not paying for anything but future hopes and dreams. Like a house. Or a boat. Or a house boat. Or, you know, retirement at age 45. Whatever. This account is like your little nest egg, and you need to make sure it's earning the most amount of interest it can. So shop around, do some digging, and deposit. Then, keep depositing.
6. An HSA and/or Flexible Spending Account
If your employer offers a health savings plan or you want an FSA to go along with your health insurance plan, this might be another account you opt to have. They both offer a ton of benefits and the money goes in before taxes—it can help pay for co-pays, prescriptions, etc. Look into it and decide if right for you.
7. Any Other Investment Accounts
From an Acorns account (more on that later) to other types of investment accounts besides your 401K or Roth IRA, more money = more problems (and probably more investments, to be sure). At this point, a) you're probably past the stage of needing this particular article and b) you should set up an appointment with a financial advisor who can help you figure out the best accounts for you.
Once you have your basic budget figured out, it's time to start really getting down to the nitty gritty. But that doesn't mean you have to make huge, gigantic changes to how you're thinking about money. "Financial Fitness in 2017 doesn't have to be overwhelming," says Leanne Jacobs, holistic wealth expert and author of Beautiful Money. "Consider taking a mindful and simple approach to your money. Set yourself up for holistic wealth in 2017 by applying the following easy to implement strategies."
1.) Forget to-do lists. Set 3 holistic wealth goals each week. Consider an income goal, a debt reduction goal, or a credit card being paid off. Pay close attention to superfluous spending i.e. lattes (make them at home), $15 lunches (make dinner and eat leftovers), cut down on subscription boxes, or consider canceling a streaming source i.e. Netflix, Hulu (see if you miss it after a month and mindfully calculate the savings you will accumulate after 3, 6, 9 and 12 months).
2.) Sleep wealthy. Start automating your savings today by opening an automated no-fee savings account and automatically deposit to this account weekly. Even if you're starting with $10-$20 per week, this account will grow and blossom over time and you won't miss the extra money you're directing to this account.
3.) Set up an appointment with a holistic wealth "trainer." The gym isn't the only facility that has resident experts in the house to exercise your muscles.
Working out your mental money muscles can also be facilitated by meeting up with a financial expert. It often surprises us when we meet with financial advisors that A: we do have money to save and B: it takes small sacrifices that eventually lead to a groundswell.
4.) You have to believe it before you see it. To become financially fit, we must think financially fit. It is vital to think yourself wealthy As you implement your healthy money habits this year. Don't underestimate the power of visualization and self-talk. The next time you have stressful money thought, catch yourself and trade it in for a better paying one. This small habit practiced overtime will support your money goals. Visit venues and homes that seem "out of reach" (financially, you cannot afford at this moment to dine at XYZ restaurant or enjoy a staycation in a high-rise overlooking the city). Push yourself to visit these venues, without spending money, to visualize yourself enjoying an experience in the near future.
5) Finally, commit to cash flow. As important as reducing debt is, we often neglect to put the same energy into creating more cash flow. Make a vow to yourself to get creative and generate an extra $100-$200 each month. Find a partner to do this cash flow challenge with. You will amaze yourself! It can be a solo effort, i.e. selling clothes/belongings on the internet, or using online freelance sources to do small/odd jobs.
Chances are, you're on your phone all the time anyway. Might as well use that sucker to save some $$.
It *has* to be on this list, even if you've heard about it 34,023 times before. (And if you have, please dear god, download it already). Not only is it a lifesaver in that you can see all your money accounts in one place and lets you see where you're spending your money, but it also reminds you of your bill due dates, lets you create savings goals, and even helps save you serious cash by looking for better accounts and credit cards for you.
Acorns is the easiest way to start an investment account with very little money (and without you missing anything). Essentially, it links up to your credit card (or debit card) and rounds up every purchase to the dollar. So if you spend $3.43 on a latte, it will take that $.57 and deposit it into your investment account. You can also manually add money of course, and you pay $1 a month if your account is under $5,000, and .25% yearly if over that.
3. Venmo or Circle
Going out with your friends is fun, but keeping a mental running tab of everything everyone owes or seething about the fact that you spent $43 for two meals at the restaurant but they only paid $16 at the bar for drinks for both of you is no bueno. Keep it easy on yourself by downloading Venmo or Circle, which lets you pay others (or request money) so you can keep things equal. (Plus, it comes out of your account lickety split, meaning no more thinking you're flush with cash before you realize you owe Anna $64 for last weekend's debauchery.)
Headed to the grocery or drugstore? Download Ibotta, which pays you for things you buy. I'm not kidding. Pick your store from the app (and connect your loyalty card), add what you'll be buying (dish soap, veggies, etc.) and after buying, upload a copy of your receipt. Ibotta will give you "dollars" that you can cash out in 48 hours.
Look, at some point you have to spend money. That's kind of inevitable. But smart purchases can save you BIG in the long run and can help that budget stay on track (i.e. no surprise purchases because something breaks/needs repair/f*cks up). Here, 5 things to consider when making a purchase.
1. Shop for Brand New Clothing at Secondhand Prices
Secondhand shopping is, I would argue, essential when trying to save money—but if you're not a huge thrift store shopper, did you know that you can actually find unworn, brand-new-with-tags items for wayyy less than they usually go for? It should be no surprise: People buy stuff and then don't wear it. Then they sell that stuff once they come to that sad, sad realization. So where do they sell it? Secondhand stores and consignment shops.
For those that like to shop in store, try Buffalo Exchange, Crossroads, or Plato's Closet, where you're most likely to find unused clothing since they pay for those items. (Though it should be noted I've found brand new stuff at Goodwill, Salvation Army, and local thrift stores like Housing Works. So, yeah.) For online shopping, head to ThredUP, where you can browse "new with tags" in every category. I've gotten brand new Zara heels for $5 and a brand new Loft sweater for $16. If you sign up through a referral, you'll receive $10 to spend and they receive $10 to spend, so make sure to piggyback off a friend. (Here's mine if you need one.) Plus, first timers generally get a percentage off their first order (around 40%). Double plus—you're helping the environment just a little bit by buying secondhand. Win-win-win.
2. Know That You *Don't* Have to Dry Clean Everything That Has "Dry Clean" on the Tag
We often fall victim to the whole "oh shit this is expensive and the tag says dry clean so I should probably dry clean" trap. But unless the tag explicitly says dry clean ONLY, you don't *need* to dry clean (and even then it's up for debate). Wash your bras and lingerie the right way, jeans zippered and buttoned up and turned inside out, and try fabric conditioner (like Downy Fabric Conditioner) to keep delicate, thin knits from piling or fading by keeping fibers smooth. The better you take care of your clothes, the longer they last, and the less you have to buy.
3. Make Your Money Count 2 Times Over
This is my biggest money-saving trick and it's because it's the easiest/laziest way to get the most bang for your buck. If buying something online, make your money count as much as possible by using a third-party website (like MyPoints or Ebates) to get points or cash back on your purchases, then use your points or miles credit card (should you have one) to get points or miles on the purchase. Make sure to search for any store promo code by simply Googling, so you don't miss out on sales. And if you buy at a certain store all the time, go ahead and read to number 4...
4. Buy Discounted Gift Cards Before You Buy
If you're a Starbucks fiend, shop only at 2 stores ever, grab your dish soap every week from Walgreens, or know that you buy your dad a gift from Lowe's every single year, it's time to stop being silly with money and plan ahead a bit. By buying discounted gift cards online, you're giving yourself a percentage off every time you shop. So head to Cardpool.com, ABCGiftCards, or GiftcardGranny and nab some gift cards for up to 35% off their actual value. Easy.
5. Try a No-Spend Month
It's not always easy, but it can be done—and you can use that extra cash to pay off some bills, student loans, or up that emergency fund.
1. Sell Shit
The easiest way to make money quickly is to sell things you have. That's just common sense. Use Cardpool.com to sell unused gift cards. Use BuyBackWorld.com or MaxBack.com to sell random electronics. Use Gazelle.com to sell phones and tablets. Head to your local Plato's Closet, Buffalo Exchange, or Crossroads to sell your clothing you don't wear anymore, list it on Poshmark's app, or request a bag, fill it up, and send it to ThredUP.com. Everything else? LetGo.com.
2. Find Lost Money
The #1 easiest way to find money is to search your state's unclaimed funds page. I'm not joking. I found money for myself, my mother, my aunts, my uncles...you get the gist. From outdated magazine subscriptions to closed banking accounts to old warranties, you'd be surprised who's owed money. It could be you.
3. Get a Raise
Okay, okay. I know I said "easy." But honestly, if you haven't had a raise in quite some time and haven't *asked* for one, it's time to MAKE SOME MOVES. Get up to speed on what your position should be making (look to sites like Glassdoor.com), brush up on tips to talk to your boss, and then schedule the damn meeting. You'll be happy you did.
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