Edith's Endeavors

Welcome again to Ediths Endeavors! Whether you’re just starting your career, juggling multiple side hustles, or navigating post-college life, managing your money wisely is crucial. Budgeting might sound daunting or like a bore, but with a few smart strategies you can take control of your finances and set yourself up for a bright financial future. Let’s dive into some tips to help you get started on your budgeting journey.

1. Know Your Income and Expenses

First things first: you need to understand where your money is coming from and where it’s going. Start by listing all your sources of income, including your salary, freelance work, and any side gigs. Next, track your expenses for a month. You can use an app like Mint or YNAB (You Need A Budget) to help categorize your spending or you can do this on paper, whatever feels most comfortable and will work for you. This will give you a clear picture of your financial situation.

2. Set Clear Financial Goals

What do you want to achieve financially? Whether it’s paying off student loans, saving for a down payment on a house, or building an emergency fund, setting clear financial goals will keep you motivated and focused. Write down your goals and set a timeline for achieving them. Break them into smaller, manageable steps to make them less overwhelming. Break $1000 of savings into $500, or if you are trying to pay off $400 a month on a credit card, breaking it down into $100 a week can make it far less overwhelming.

3. Create a Realistic Budget

Now that you know your income and expenses and have set your financial goals, it’s time to create a budget. Allocate your income to different categories: essentials (rent, utilities, groceries), savings, debt repayment, and discretionary spending (eating out, entertainment). Be realistic about your spending habits and make adjustments as needed. Remember, a budget isn’t set in stone; it’s a flexible tool to help you manage your money better. When you first make a budget, you in all likelihood are not seeing some of the categories your money is going toward or expenses you have. As you discover these things, your budget will change and THAT IS OK.

4. Embrace the 50/30/20 Rule

The 50/30/20 rule is a simple yet effective budgeting method. Allocate 50% of your income to needs (rent, groceries, transportation), 30% to wants (dining out, hobbies), and 20% to savings and debt repayment. This rule helps you strike a balance between enjoying your life now and preparing for the future. This may not work when you initially start. Again, that ok! learn what your ratios are now and work from there. For some people it may look more like 60/20/20 or 70/20/10. 50/30/20 is the goal, so it’s ok if you are not there right now.

5. Automate Your Savings

Saving money can be challenging, especially with so many tempting ways to spend it. Make saving easier by automating it. Set up automatic transfers from your checking account to your savings account each payday. Start with a small amount and gradually increase it. This way, you’ll be saving consistently without even thinking about it.

For some people (Myself included), my HYSA sits with a whole different bank than my personal checking and savings account. I put money aside from my checking to regular savings, then once my regular savings is at $500 I shift it over to my HYSA. This makes it harder for me to just transfer money over for frivolous spending.

6. Cut Back on Unnecessary Expenses

Review your expenses and identify areas where you can cut back. Do you really need that subscription you never use? Can you cook more at home instead of eating out? Small changes can add up over time. Redirect the money you save towards your financial goals.

Another way to think of this is a way I’ve seen Tori from Her First 100K talk about. Everything for her is in ‘taco dollars’ or ‘how many tacos is this worth?’ For me, it’s “how many nights of camping is this worth?’ One night of camping at my favorite local campground costs about $40. so I want to buy $40 shoes? Do I want them more than 2 nights at my favorite campground? This thought process before you buy unnecessary itens can help cut back poor spending choices.

7. Build an Emergency Fund

Life is unpredictable, and having an emergency fund can provide peace of mind. Aim to save at least three to six months’ worth of living expenses. Keep this money in a separate, easily accessible account so you can use it when unexpected expenses arise. If you are really struggling to make this happen, again, break it down into smaller chunks. having $1000 in the bank isn’t 6 months expenses, but it IS enough to cover the deductible for most car accidents with some left over. Set smaller attainible goals, working toward that 6 months worth of savings.

8. Avoid Lifestyle Inflation

As your income increases, it’s tempting to upgrade your lifestyle. However, this can hinder your financial progress. Instead of spending more as you earn more, try to maintain your current lifestyle and use the extra income to pay off debt or save for your goals. A new job does not need so come with a fancy new car. Save the money.

9. Educate Yourself

Financial literacy is key to successful money management. You know this, thats why you are HERE! Read books, listen to podcasts, and follow personal finance blogs (like me!) to learn more about budgeting, investing, and saving. The more you know, the better equipped you’ll be to make informed financial decisions.

10. Seek Professional Advice

If you’re feeling overwhelmed, don’t hesitate to seek professional advice. A financial advisor can help you create a personalized plan to achieve your goals and provide guidance on more complex financial matters. This may not mean necessarily going so someone, but most finance professionals have some sort of online presence, and there is a TON of information out there for free from professionals. Utilize the internet and get some knowledge!

Budgeting doesn’t have to be a chore or a bore. It may not be easy, but it is definitely worth the work, especially in the long term. With the right strategies, you can take control of your finances and work towards a secure and prosperous future. Remember, it’s about making mindful choices and staying committed to your goals. You’ve got this! Happy budgeting!