A Guide on How to Live It Up Within Your Means
In today's fast-paced consumer-driven world, it's easy to get caught up in the frenzy of spending and lose track of our financial well-being. If the word “budgeting” scares you, then you are in for a ride as we list these effective steps that you can live it up but still within your means. Contrary to popular belief, budgeting doesn't mean sacrificing your dreams and desires. Instead, it empowers you to make informed choices, prioritise and have enough for the things that truly matters.
Mastering the art of managing your money especially in times of volatility and job instability can put you in the best position for whatever may come your way. If you want to learn how you can budget and still make smart financial choices, here’s how to get started.
1. Be Real, Be Realistic
The first step to becoming a budgeting ninja is to create a realistic budget. Start by tracking your expenses for a few months to understand your spending patterns. Categorise your expenses into savings, investments, fixed expenses (insurance, car) and variable expenses (entertainment, dining out) costs. Set limits for each category based on your income and financial goals. Remember, this is part where you will need to be honest with yourself and create a budget that you can stick to.
2. Priorities Please!
Once you have a budget in place, it's important to prioritise your spending. Focus on your needs before your wants. Essentials like taxes, groceries, and utilities should take precedence over discretionary expenses. However, this doesn't mean you can't have any fun! Allocate a realistic percentage of your budget for entertainment and leisure activities, but be mindful of not exceeding your limits.
3. Pay Yourself First
Saving up your hard earned money is the most crucial aspect of budgeting. Adopt the habit of paying yourself first by allocating a portion of your income to savings. Start by setting aside a small percentage, and gradually increase it over time. Consider automating your savings by setting up automatic transfers to a separate savings account. This way, you will not be tempted to spend the money meant for saving.
4. Be Very Careful of Debt
While having debts may not be all that bad, debts should be noted and priortised according to their interests rates. Make it a priority to pay off the ones with the highest interest rates as soon as possible. Always pay the minimum amount for each debt and never allow them to roll over to the next month. Consider consolidating your debts or negotiating lower interest rates to accelerate the repayment process. Remember, the sooner you become debt-free, the more financial freedom you'll have.
5. Plan for the Worst
Life is full of uncertainties, and having an emergency fund is crucial to stay prepared. Set aside a portion of your income regularly into an emergency fund of at least three to six months' worth of your monthly income. This safety net will provide peace of mind and help you avoid dipping into your savings or going into debt during unexpected situations such as retrenchment.
6. Pay Lesser for More (If Possible)
Look through your expenses and note down what expenses can be lowered. For instance, insurance should be reviewed annually with your advisor to see if there are available ones in the market that could possibly be more affordable. However, circumstances may vary due to life or career changes, therefore it is crucial to have a discussion with your advisor first.
7. Look Out for Smart Shopping or Saving Hacks
Living within your means doesn't mean giving up on quality. Explore smart shopping and saving hacks to stretch your budget further. Look for sales, discounts, and coupons when making purchases, online or retail. If you are budgeting for something, you may need to balance between your immediate needs and your desires. If need be, meal planning and cooking at home can save a significant amount of money while still enjoying cooked and delicious meals.
The Takeaway
Becoming a budgeting ninja is all about taking control of your finances and making conscious choices. However, all these will not be possible if you are not able to stick to your initial budgeting plan, or you lose focus and discipline along the way. This is why tracking and monitoring your monthly budget at the end of the month will be just as important as creating the budget itself. Be accountable but also have fun doing so. Remember, it's not about depriving yourself; it's about making smart choices that align with your financial goals. So gear up, unleash your budgeting ninja skills, and start living it up within your means!
