No matter what are you are, it’s never too late to start budgeting. In fact, it’s important at all ages, whether you are starting your career and setting yourself up for success, or you’re finishing out your remaining years in the workforce and pinching a few extra pennies to have to enjoy in retirement. Now you can set aside certain funds for each area of expenses, such as monthly bills, food, gas, and spending, but if you truly don’t change your spending behavior, your finances will not get any better.
Remove Unnecessary Expenses
A good way to shock yourself at home much you’re spending on a monthly basis is to look at last month credit or debit card statement. You can literally go line by line, circle the monthly bills in one color, but in another, start circling what truly could have been avoided. You’d be surprised and probably the hundreds of dollars that add up that you could still have in your account. A good area to reduce expenses is going out to eat, where if you went grocery shopping instead and prepared meals at home each day, only going out for special occasions, or picking up a pizza.
Keep an Emergency Account
I know we may only get by paycheck to paycheck generally, but when you’re able to free up extra money by reducing expenses, you can build up money in an emergency account to have in case of unexpected expenses, instead of putting on a credit card and setting yourself back. If you can’t afford the expenses, then you will slowly be paying them off each month, with little going to principal balance and mostly going towards interest. If you can at least put a few months’ worth of expenses in there, you could give yourself a nice cushion just in case.
Build Up 401(k) Account
As you get into your career, the more you get used to having the money coming in, the less you will want to save, so it’s a good idea to start contributing to retirement right away, and slowly increasing contributions every month, including when you get raises or bonuses as well, so you will not notice the money being gone. Check out if your employer matches contributions so you can at least contribute that much, as otherwise that would be leaving free money on the table that could be building up over time, giving you extra money in your retirement years.
Generate More Income
If you’ve expelled all options as far as freeing up extra money each month and it still doesn’t seem like much or not as successfully as you thought, then it’s time to generate extra income. You could, of course, get a second income with your free time picking up hours, or use your talents to sell your services to what you’re good at, such as crafting, party planning, or a home contractor. You can always look to sell items around your house that you no longer need, to gain a few extra dollars that you wouldn’t otherwise have.