Let me start by saying that I am not good with money. I have over $40k in school loan debt and nearly $4k in credit card debt. I am not writing this post to pretend that I am perfect, or to even say that I have figured out money and finances. But I have learned a lot about both of those things in the past few years, and I want to share.
There are lots of tips out there on how to save money, get out of debt, or just better manage you finances. But here are the ones that I think have helped me the most:
1. Make your budget. Having a budget has helped me tremendously in getting better at not overspending and lowering my debt. It took me about a year to perfect my budget the way I like it, and I still check it every few months to make sure that I am happy with it. I still goof on it every once in a while and overspend, so don’t feel bad if you struggle at it for a while. Also, know that everyone’s budget is different, and that’s okay! My budget (format wise) is very different from my husband’s and from my close friends. We all end up at the same destination of tracking our money, we just take different routes to get there.
2. Pay yourself for your bills before they arrive. Put money aside each month for the non-monthly bills such as car or rental insurance. I have a separate bank account just for these types of bills. Each month I make my insurance payment to myself, so that when the six-month bill rolls around I have the money and don’t have to scramble to find it.
3. Segregate your money. I have about twenty different bank accounts. I have one for insurance, gifts, tuition, travel fund, fun money, necessities, charity donations, et cetera. I also have accounts for things I want such as my next tattoo or our next big trip abroad. I have found that this is the best way to not spend my savings or money I had allocated for something else. By having distinct accounts for different pots of money it means I can’t spend the money I have set aside for date night on my car insurance and vice versa.
4. Save some of your income. It took me a long time to learn to do this. Even if your income is small, saving just $10 a month is better than nothing. The idea is to have money saved for when you need it unexpectedly. Like a surprise car repair or medical bills. I have yet to meet my goal of having at least three months income in my emergency fund, but what little I have has already saved my butt more than once.
5. Don’t be too hard on yourself. Every once in a while I freak out about my debt. I hate being in debt and not having full control of my income. And every once in a while I break my budget and overspend and get mad about that. These episodes usually graduate to me in tears, very upset. Thankfully D is there to remind me that I have made a LOT of progress from where I was five years ago. He reminds me that recognizing my mistakes is also progress. So if you’re trying to make a money change, don’t get too upset if you slip up once in a while. You will make mistakes, but the fact that you are trying to get better counts for a lot.
6. Give yourself an allowance. Every month I give myself an allowance in cash. This money I can spend on whatever I want, but it is all the free spending money I get. So if it’s the 3rd and I spend it all, that means I have no money until the next month. I usually use this money for buying lunch at work, or getting some fancy chocolates, fun stuff like that. This money lets me spend money on me without taking away from my savings or bills.
What budgeting or money tips do you have?