Investing and saving are only 2 pieces of a larger puzzle to get ahead in 2022. Budgeting is a very important and overlooked strategy that most do not utilize. As the saying goes, you cannot improve what you do not track.
In 2020 about 35% of Americans had a budget, in 2022 only 32% do. Interestingly enough, this seems to correlate with the reports that estimate between 50-70% of Americans are struggling financially. While it’s more likely due to inflation, gas costs, and poor oversight from our governments, there is something to be said about personal accountability too.
Budgeting isn’t simply just about trying to be frugal. You can still spend poorly while tracking your expenses. The idea is that you can have a holistic view of your finances and know exactly what’s being spent where. Sometimes, it’s as simple as taking a look at your budget once a month and thinking about where you could cut down and how much that could help you out. You can move things around as needed and explore how much money you could save with different options. It also helps you keep track of things you may have forgotten about such as old subscriptions or services.
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You can download the simple template version here and start following along: https://mega.nz/file/ATx3iAza#ZUhllHs4YZjMMjtC1FyN_Qhkkwmy-P98UxXqsVj8xS4 or https://bit.ly/templatebudgetting
In the video, I will explain how I budget by going through how I break everything out. It seems daunting at first, but if you keep a link to your budget on your phone you can easily update it daily, weekly, or at whatever frequency is easiest for you. I do it daily to make sure I don’t miss anything and so that it only takes a couple of minutes rather than dedicating a large chunk of time to it.
If it helps, I will explain how I organize the major sections to give you some insight. I break it into sections of bills, necessary extras, and completely discretionary. Then I have some extra sections for extra money, subscriptions, events & one-time purchases, business expenses, and financial expenses. You can break these up how you need to.
Bills cover anything that you need and have to pay for such as rent, food, and healthcare.
Necessary extras covers things like haircuts, hygiene products, electronics, tools, and things that are necessary, but you could live without them assuming you were 100% broke.
Completely discretionary covers things like eating out, gaming, gambling, alcohol, celebrations and things that you could cut out if needed, but if you can afford to do it, then you will.
Extra money is a section to put away some extra money to balance your budget where needed as your budget will fluctuate and change based on your needs.
Subscriptions is a separate section for me as I want to lessen the amount of subscriptions I use, bundle up with people if possible, and pay yearly for discounts. For example, I split a Spotify family bundle with several people to save money because every dollar counts.
This is as far as you need to go if you simply intend to track your expenses and nothing more. However, if you want to improve your finances, save more, and ultimately live better, I suggest you finish the rest.
Once you’ve got everything set up, decide how much you intend to save from your income beyond what you need and adjust your budget accordingly. For example, I would like to save 50%, and previously I was saving close to 70%, but in 2022, I’ve only been saving about 25% of my income as I’ve been buying prepping gear amongst many other things like a car. I only just recently acquired a car and have lived with roommates the majority of my life. If you can do this in your twenties, you can save enough money to put yourself at a massive advantage. As the saying goes, you must be willing to live like dirt in order to put yourself in the position to live the way most never could. I intend to get that back up to at least 50% very soon.
Now, in order to save money, you can start spending some time each week or each month where you sit down and look at various expenses and try to see how much you’d save if you did something differently. This could be going out once less per week saving you gas, and money spent on food. This could be using a cheaper coffee or switching from Starbucks to homemade coffee. This could be switching to a cheaper insurance, canceling a subscription, or negotiating cheaper internet service. Whatever method you try, it's easy to plug in numbers and see how it will affect your overall monthly expenses. Then with that number, you know how much more you could invest. So not only are you saving money, but you’re making money. Maybe you do want some extra money for nights out, but I’d recommend saving it for a good purpose or investing it rather than just spending it elsewhere because then you’re still in the same problem of trying to find extra money to set aside for investing.
Most people don’t budget because they don’t see it as something important they should do, but they also have no idea how much they spend on a regular basis, and when you don’t know how much money you need, you don’t know how much you can set aside for investing or whatever else you need to do. Knowledge is power, and if you don’t know enough about your own finances, how will you improve?
Do you invest? Do you budget? What are some financial tips you use to save? Let me know what you think about this in the comments below and don’t forget to subscribe!
Disclaimer: This is not financial advice and is purely for entertainment purposes. What you see, hear, or read is my personal opinion, and any statements made are based on my views and should not be misconstrued as fact. My crypto portfolio may or may not be simulated
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