How to Budget Your Money as a 20-something

Have you ever battled with overspending? The feeling of not ever having enough cash, then having to resort to the good ol’ credit card to buy that dress that you HAVE to have, then deal with the repercussions of how much it cost later and struggle to pay it back. I know it’s something I’ve battled with, I think it’s definitely due to an unbalanced spending. I find it frustrating and I want to break this habit, and I’m sure you do too. So I browsed the internet for solutions to my relentless habit and I came across this article about overspending.

Here’s a little snippet from the article that struck me the most:
“People see a budget as restrictive, when actually it’s a tool that leads to financial freedom,” says Gail Cunningham, vice president of the non-profit National Foundation for Credit Counseling. “Without it, your money is controlling you. Not only do you not know where it’s going, but you can miss the warning signs that something is amiss.” – Daily Worth

Here’s Why:

A budget leads to financial freedom. Really??… I’m not convinced. When I think of budgets, I think of limitations and rules, which does not equal freedom ( in my mind). My idea of financial freedom means I can spend whatever I want, when I want and still have enough money without relying on credit cards. I define this as being financial comfortable. So why do budgets lead to financial freedom like this article says?
Well after reflecting I realized that with a budget you’re in control of where the money goes, whereas if you’re carelessly using your credit cards, then your money is rampant. With credit cards and no budget, your spending money you don’t have to spend, thus overspending. This means credit card payments arise and creditors (aka banks) are telling you where and when you need to make payments, you are now being controlled. You’re overspending, now controls where your money goes but it doesn’t have to end there. If you have a budget, you have the benefit of telling your money where you want it to go.

So if I want that feeling being comfortable financially and having the assurance that I always have money in my bank account, then the famous saying of “living within your means” is so very true when it comes to having a budget.

How to have a balanced budget:

1) Create a realistic budget for spending based on what I earn and the debt I need to pay off

2) For spending money, have cash in my wallet, and only pay with cash. This way, I’m more conscious of when my money is dwindling so I can say yes or no to certain purchases.

3) No more entitlement. Getting rid of the mindset “well I work hard, so I deserve it” and replacing it with “I have X amount of dollars in my account.. soooo I can afford it!”

4) Spend half of what I can really afford for an item. Considering there is so much variety (especially in first world countries) when it comes to consumable items, I have the option to find the same item for half the price somewhere else.

To attain my financial freedom and reap the benefits of a budget, I need to remind myself that I want financial comfort so I need to think twice about my purchases. I know it’s going to be challenging at first but practice makes perfect!

What ways do you maintain your budget? Let me here from you! Comment below.

Stay balanced.

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