Discover six budgeting basics that apply to everyone
As Royal Credit Union’s School Financial Outreach Supervisor (try saying that five times fast!), I get the opportunity to teach people of all ages about anything related to money. For the younger age group you’ll see me in classrooms around the community counting coins, reading money stories, and helping our young friends on how to be entrepreneurs. As I work my way up to the older students, those topics turn into topics like budgeting, credit, and saving. Not the most exciting of topics for many, but they are some of the most important a student can learn all throughout their high school years. Why? Because money doesn’t go away as we enter adulthood and it is always involved in some way throughout our entire lives.
The trend that I have noticed is that no matter what age we are, we all could learn a thing or two when it comes to the dreaded “B” word. My goal as a financial educator is to take the negative connotation out of the word “budget” to help others understand that it is one of the best things we can do to accomplish our goals. Budgets don’t need to be restrictive or stop you from buying what you really want. Getting in the habit of budgeting can actually give you more financial freedom than not budgeting at all. Let’s put the FUN back in BUDGET!
1. Pay Yourself First
Did you know that 40% of Americans don’t have enough savings to cover a $400 emergency expense? Paying yourself, or putting money into your savings, is one of the best things you can do for yourself. Think of yourself as a bill that needs to get paid every month and pay it. Building a savings account helps you be able to afford the things you want in the future and can be used as a backup in an emergency situation. Paying yourself first will assure that you will be covered in some way should anything unexpected come up.
2. Track All Of Your Spending
I’m sure we have all spent money on something we are unwilling to admit, but those things can add up and add up quick! One of the easiest ways of tracking your spending is with online banking. From there you can see every transaction (including the total of all of those Starbucks coffee’s you have been getting). This can be an eye opening experience if you’re someone who likes to avoid checking your banking account just hoping your card will go through. Don’t get me wrong... I am not saying you should give up Starbuck’s. But maybe instead of every morning, you go every other morning. The first step is realizing how much you’re really spending.
3. Set SMART Goals
It can be hard to stick to a budget if you have no specific goals in mind or reason for doing it. SMART goals are Specific, Measureable, Attainable, Realistic, and Timely. You are 42% more likely to achieve your goals if you write them down. Once you have those goals written out, it is much easier sticking to a budget knowing what you need to do to accomplish your goals.
4. Be Realistic
Does your income cover your monthly expenses? Do you constantly have to use a credit card to purchase things? It’s impossible to follow a budget if you don’t have enough money to cover your basic expenses. If you don’t have more money coming in than you have going out, maybe it’s time to evaluate your situation to see if you can actually afford some of the things you’re spending your money on.
5. Include Entertainment
This tip almost seems contradictory to all of my other tips, however, this is a HUGE reason that many budgets fail. It is unrealistic to think that you will turn down every invite for a girls' night out, hitting the batting cages with a friend, or watching the new movie in the theaters. Having no money for entertainment may make you feel trapped at which point you’ll throw your budget up in the air and not do it altogether. Don’t get me wrong, there will be times that you will need to say no, but setting aside some funds for entertainment will help assure you aren’t sacrificing your entire social life.
6. Don’t Give Up
Nobody is perfect and therefore it may take you a few tries to get it right. If it doesn’t work the first time, make some adjustments and try again. It’s never too late to start budgeting.
I hope you found these tips helpful! Check out the Education & Resources section to keep learning.