With all the partying and late night Mc Donald’s trips you need to do, you may be struggling to make your allowance last until the end of the month Alternatively, you could be trying to figure out how to look after a 4-year-old, run a restaurant and build your own brand. Either way, you need to be able to manage your money and know how to budget to make it through the month.
If you fall into the first category then you may not think that learning to budget is that big of a deal. If you don’t have enough money for your second Quarter Pounder at 2am then you know you can always ask your parents to transfer. Here’s the thing – when this stage of your life is over and you’re ignorant about how to manage your money, you may end up with much bigger problems on your hands. If you fall into the second category, then you know exactly what I’m talking about.
Let me get one thing straight, I see a budget as a guideline. You do not have to follow your budget to the letter (or number, rather). I use my budget as a way to keep track of my spending, know where I need to pull in the reigns and know how much disposable income I have to splurge with. I get very uneasy when I don’t know where my money is going or I’ve lost track of my income and expenditure.
A rule to live by
There is this awesome rule I discovered on this blog called The 50/20/30 Rule for Minimalist Budgeting. Basically it says that 50% of your income should go toward the essentials – the absolutely unavoidable costs. 20% of your income should go to savings – so if you’re earning R100 – PUT R20 INTO YOUR SAVINGS ACCOUNT. Trust me, it adds up. The remaining 30% is left for you to #treatyoself! I don’t think that’s a bad deal at all!
If you get used to this kind of budgeting in your twenties you should be pretty set for the rest of your life and avoid unnecessary debts – whether you owe a friend R100 or took a loan from the bank… Your twenties are also the time for travelling and seeing the word. By learning to budget you can plan your dream trips.
So where do you even begin?
I would recommend 2 things. You can either keep an excel spreadsheet on your device – excel actually have some awesome budget templates. Or you can download a budgeting app. Here are some suggestions:
- Goodbudget Budget Planner
- Pocket Expense
The awesome thing about budgeting is that you can start managing your savings. When you know how much money you can dedicate to savings you can open up various types of investments that will set you for up later in life. Or if you’re in the second group of people you know that you can afford your son’s 5th birthday present without having to use your credit card.
Avoiding debt in your twenties will also make your life so much easier (and better) later on. When you start to earn a decent salary you will have far more disposable income to do whatever you want with. You can travel, pay off student loans faster, put down a deposit on a house, pay your car off or even put so much money away that you set yourself up for early retirement.
If you are just absolutely hopeless with your money then I would highly recommend asking a family member (that you trust) to monitor your income and spending. Not for the rest of your life, obviously! But just until you get the hang of it and learn how to live without spending every cent you have. The rewards you reap from budgeting will make it an addiction.
How do you budget every month and do you recommend learning to budget in your twenties?