If you don’t know what you’re doing, living on a budget can be a nightmare. There comes a point where we have to make tough financial decisions in life. Creating a budget doesn’t necessarily mean you’re in hot water, but it does mean that you need to start saving money.
Unfortunately, not a lot of people know how to do that. So that’s why we’re here to talk about the dos and don’ts of living on a budget. This article will serve as a guide, so make sure to read to the end. With all that out of the way, let’s start.
Dos: Save Before Spending
Your ultimate goal is to save as much money as you possibly can. This is the number one rule of living on a budget. While no doubt you’ve calculated exactly how much money goes on what, the next thing is to look at ways to save even more. Fortunately, there are loads of ways to do that.
What we suggest is to take it a step further. What we mean by that is that you should allocate 20% of your paycheck into a savings account. While it might be tempting to buy new shorts, new teas, and new kicks for the summer, a wiser strategy might be to start saving.
Don’ts: Spend Money On Things You Don’t Need
The second rule of living on a budget is to stop wasting your money on things that aren’t a necessity. Sure, everyone needs shoes. But do you really need a new pair of Air Force Ones when you already have perfectly good shoes at home? Not to mention that shoes can cost a fortune to buy.
To successfully live on a budget means putting a stop to your reckless spending habits. You’ll need to only spend money on stuff that you absolutely need.
Dos: Work Together With Your Partner
If you are married or have a boyfriend/girlfriend that lives with you, then both of you need to work together to achieve your budgeting goals. When in a relationship, the financial aspect is very important. If both of you are taking a salary, then both of you need to manage your finances. It’s quite unhealthy if only one person changes their financial priorities while the other persists with needless spending.
To easily work with your partner, set financial goals together. Be honest about your finances and don’t deviate from the initial budget plan.
Don’ts: Go Out At Fancy Restaurants Often
While everyone wants to dine at a fancy restaurant, life on a budget doesn’t allow it. What millennials struggle with the most is shifting their social needs to accommodate their financial ones. Unfortunately, if you do plan to live on a budget for some time, then you won’t be able to dine out a couple of times a week. You might be able to do it once, but anything more will ultimately harm you financially.
Restaurants, especially the fancy type, can be very expensive. If you’ve previously enjoyed quite an expensive lifestyle, then no doubt living on a budget will come as a shock to you.
Dos: Put An End To Your Investing Habits
It seems everyone is red hot into investing nowadays. But when you think about it, you might be putting too much money into your Robinhood account as of late. Since you’ve got your money accounted for, the last thing you want is to chug $100 on $GME stocks. Thus, you’ll need to put an end to your investing habits.
If, however, that’s impossible, then there are ways out there to invest with little money. All you need to do is be smart about it.
Don’ts: Use Credit Cards
Credit cards are your biggest enemy if you are living on an especially tight budget. Credit cards aren’t necessarily bad for you, but they can complicate things further. The thing with credit cards is that they’re specially designed for spending money. And money is something that you absolutely don’t have any to spend on. Since you’re living on a budget, you should put away your credit cards and instead use your debit card for purchases.
Since debit cards have no limits, and credit cards have, they won’t allow you to go over what you can afford to spend. Even so, eliminate the use of credit card debt, stop logging into your accounts, and instead only spend the money that you can.
These were our three dos and don’ts for living on a budget. Ultimately, it’s all about shifting your mentality, putting an end to your reckless spending behavior, and finding ways to save money. We hope that this article will help you in some way along your financial journey and prevent the mistakes of the past.