There are sites that offer budgeting tips that are revolutionary–if you’re a millionaire. However, if you’re an average earner (that’s to say, someone who earns $25,000 to $120,000 per year), then many of those expert tips and advice columns simply don’t make sense. Here are realistic budgeting tips for real people.
Get a Grip on Your Finances
Don’t buy things spontaneously unless you know your bills are covered. In order to know your bills are covered, you have to create a simple budget. It doesn’t have to be rocket science: just input all of your incoming cash and subtract all of your bills. When you have a final number (and hopefully it’s positive), then you know how much positive cash flow you have a month to put into savings, invest, or spend on an angel topiary (if that’s your thing).
The bottom line is this: you need to be aware of your finances. Don’t assume that $327 in your checking account means a green light for a $280 mini-dress: you have to consider all of your bills before your next paycheck.
Consider Your Future (for a Minute)
If you can’t handle in-depth retirement planning at the age of 25, that’s fine. Just be aware that it’s going to happen to you as surely as crow’s feet and jury duty. Always put money into savings when you can, and never ever touch it. As little as $100 a month will make a difference in the long run (compared to nothing). And, while you might feel like $100 a month isn’t worth saving because it’s not a millionaire’s savings amount, it’s better than the zilch you would be facing at 70, otherwise.
Basically, you need to save what you can when you can, because you won’t always get free drinks. Plan for those scary days when your parents won’t be around to help you out.
Learn About Investing (at Least Learn)
No one is forcing you to invest 10% of every paycheck, even though you should be doing that. Conventional wisdom says that if you do save 10% of every paycheck from the age of 25 to 68 you will be set for retirement, however, there’s another way. By saving as much as you can whenever possible and investing wisely, you could cut some corners. However, it takes a lot of hard work to invest smartly on your own: sometimes it’s best to hire professionals. Fisher Investments Address is one to learn, because they can teach you how to invest.
Essentially, you need to learn how to invest yourself or hire someone to do it for you. By investing wisely you can cut out some of the hard work of saving from each paycheck for your entire life.
Necessity, or the Straw That Broke Your Elderly Back?
While some things seem like necessities (such as new smartphones or new cars) the truth is that we can get by with the basics (such as an un-smart phone and a three-year-old car). When you have established a budget for yourself, you can decide when to splurge and have fun with your earnings (as long as you acknowledge that these things are luxuries and not necessities). Here are a few expenses we (wrongly) consider necessary:
- House Phones
- High-Speed Internet
- New Clothes
- Brand New Cars
- Eating Out
The average man knows what it takes to save money: work hard and stop eating out. Yet, it can be difficult to feel content eating Ramen and waiting for a Redbox version of a long-awaited movie. By budgeting carefully you will know when you can get expensive movie tickets and Thai, and when to crack open the SpaghettiOs.
Michael Erin Purdy studied Creative & Technical Writing at Utah Valley University while working as the Assistant Editor-in-Chief on the newspaper and the Editor-in-Chief of the literary journal, Touchstones. She mastered press releases and speech writing while working for Senator Bennett in his DC office, and studied the delicate art of persuasion in social content as the Social Content Manager at BlueGlass. Michael mastered British English as a British English teacher in Ukraine as a Peace Corps volunteer.
Today Mrs. Purdy lives in Las Vegas, Nevada with her husband who works at Nellis Air Force Base. They love their English bulldog too much to ever have kids. Michael volunteers as an English instructor at local schools, and spends far too much time on Reddit and Pinterest.