During your mid-twenties, saving up and budgeting your money can be quite a foreign concept. But when it comes to handling your finances, ignorance isn’t always bliss. Before you know it, you’re 30 and halfway to retirement. That said, you need to learn a few tips and tricks to budgeting money in your 30s.
It doesn’t matter whether you’re doing great with your career and earning more money or struggling to pay off debt. Budgeting your finances will set you up on a path to financial security.
Below is a straightforward guide to budgeting money. Plus, tips on how to resist impulse buys!
Tips For Budgeting Money In Your 30s
Categorize Your Spending
Create a list of your expenses. Then categorize each transaction. It’s best to create a spreadsheet with a category name. Or you can also write down your bank statement. Here’s an example:
- Car insurance
- Miscellaneous – this can include clothes, skincare products, etc.
You can also create a separate category for your credit card purchases. Doing so will help you keep track of your due dates, installments, and debt.
There may be categories that are unique to you. For instance, you may have expenses that occur annually or quarterly. If so, you can split that expense up as if you’re paying for them monthly.
Prioritize Your Spending
Budgeting money in your 30s means prioritizing needs over wants.
Once you’ve categorized your expenses, it’s time to determine your priorities. Doing so will help keep your spending in check.
Finance experts suggest using the 50/20/30 budgeting rule. This rule of thumb means allocating 50% of your income to needs and obligations. Then allocate 20% to your savings and the remaining for everything else you might want.
But this budgeting rule isn’t set in stone. It’s only a template to help you manage your money as well as save for emergencies and retirement.
Save For Emergencies and Life Goals
We all have different life goals. For some, it’s traveling to different countries while others want to save up for a home. But no matter what our life goals are, chances are, we need money to achieve them. That said, it’s best to start saving now!
Savings should be a priority. Additionally, you also need an emergency fund.
An emergency fund is money you stash away in case of accidents or unexpected expenses. Typically, an emergency fund should be able to cover at least 3-6 months’ worth of your expenses.
But I have an insurance plan!
I hear you. Although insurance plans cover certain accidents and unexpected events, it’s still a good idea to have access to immediate cash. Here are a few events where you might need an emergency fund:
- Major car or home repairs
- Loss of income
- Income reduction
- Unexpected medical bills
It can take a while to fully stock your emergency fund. So start saving up!
Consider taking a portion of your income every month. The goal is to save enough to cover your living expenses for the next 3-6 months. Additionally, you can also use your emergency fund for your life goals such as saving a down payment for a new house.
Frequently Check Your Accounts
By now, you know what your major expenses are. Plus, you also know which expenses should take priority and the importance of saving for an emergency fund.
The next thing on your list should be to keep track of your accounts. Stay on top of your budget to avoid overspending. Additionally, checking your accounts will also make sure that you’re not being charged with fees or transactions you did not make.
At the end of every month, fill in your spreadsheet. Compare your budget versus actual expenses. Doing so will help you keep track of which categories are under-budgeted. It will also help you make adjustments going forward.
Tips to Avoid Impulse Buys
- Don’t deprive yourself. Think of it like going on a diet. If you deprive yourself, you’re bound to overindulge in the long run. That said, make some room for your “miscellaneous” budget. This gives you enough room for impulse purchases without suffering from buyer’s remorse afterward.
- Print out your budget. Or keep your budget in a notes app on your phone. By keeping it visible, you can easily keep track of your spending. Additionally, it’ll help you list your transactions when making a purchase or payment. It’ll also serve as a reminder to stay within budget.
- Reward yourself. Another trick to avoid impulse buys is to set a goal. And once you’ve achieved that goal, you can buy the item you want at the end of the month. This way, you can save and stay within budget and still be able to buy what you want – but only if you have extra money.
- Sleep on it. If you have the urge to buy something you don’t really need, sleep on it. Wait at least 24 hours before making a purchase decision. There’s a high chance that you’ll realize that you don’t want it as much as you thought you did.
Budgeting money in your 30s is challenging. Especially since life often throws unexpected expenses at us. But this is all the more reason to start saving up. That said, start prioritizing your expenses. Follow the 50/20/30 rule and make sure you have enough cash in your emergency fund.
How do you budget your money? Share your own tips and tricks in the comment section!