Spending your hard-earned money is satisfying.
Having a salary means being able to live the life you fantasized about in college. You can spend your free time and money on whatever you want -- after rent, bills, and food, of course.
The balance between setting aside enough money to survive and having some left over to enjoy living takes learning how to budget and willpower. It seems like a necessary evil of adulthood, but doesn't have to be a pain in the ass.
Everyone forms different habits when it comes to money. At my first job, I earned more money than I'd ever made in my life. In no time, I started overspending. Even worse, I failed to stick to the budget my mom helped me make on Mint, one of my many money-tracking apps, because I didn't look at it often enough.
Opening the app on my phone after a weekend packed with social events, boozy brunches and shopping trips was terrifying. It added a whole new layer to my Sunday scaries.
I started forcing myself to look at Mint more often. The more frequently I checked where my money was going, the less miserable it became. Your credit card balance is, unfortunately, not one of those things that goes away if you ignore it.
No matter what kind of spender you are, making a budget is key to building wealth and keeping the money you make. Here are the first steps to take.
1. Figure out your net income per month.
Net income means what you put in your piggy bank after taxes, social security and other deductions, like 401k. If you get paid bimonthly, find out what your monthly net income by adding the two paycheck amounts.
Calculate monthly income based on the money that's definitely going to hit your checking account. You can't factor bonuses, tax returns and birthday money into your budget because that's not guaranteed income.
2. Find out how much it costs for you to survive.
It's hard to wrap your mind around how much it costs to live when your money is going all different directions. When getting your sh*t together, it's always best to start with a list.
Take an afternoon to sit down with the caffeinated beverage of your choice, and make a list of each monthly expense. This list includes what you need to live, meaning however much it costs to survive as a functioning member of society.
These are the basics, like monthly bills for your phone, internet, cable and rent. Include subscriptions (like Netflix), student loans or any debt you're paying off. It's important to list these first because the amounts of these expenses shouldn't change month by month.
You can't forget the other essentials, though. Make sure to list out the monthly costs for transportation and groceries. Then, add how much you want to put aside for emergencies and medical situations. Even if you don't see the doctor every month, include it in your budget. That way, you're not in a crunch for cash in emergencies.
Total these expenses. Fair warning: It's going to seem like a lot because being a human is expensive. Then, subtract the total from your net income per month.
If you swear by cash, doing this will be tricky. Do your best to get it as exact as possible.
3. Calculate how much money is left over.
You figured out your net monthly income and your monthly costs. Now you know what's left over for the fun stuff.
If you've never budgeted before, you'll probably be surprised at how little money is left over. It's the struggle of starting a career and not earning as much as it costs to enjoy the life you want.
There's a reason why you can't factor expenses such as alcohol, eating out and clothes in the first part of your budget. Anything that isn't necessary is purchased with your disposable income, or “fun money.” If you spend too much on the fun stuff, you're always going to feel like you can't make ends meet.
4. Figure out where you should be spending less each month.
After seeing your survival expenses out in front of you, you may notice that you're spending a ridiculous amount of money on something like cable. Do you really need cable? You can cut if you feel like you need more fun money.
There will always be a way to spend less.
5. The fun part: Set a money goal.
Budgeting is pointless if you don't have a goal. Knowing what you're saving money for is the key to actually sticking to a plan. Currently, I'm saving up for a vacation with my boyfriend. When I'm about to splurge on something I don't need, I remember that spending now puts me further away from hopping on a plane with my boo later.
Maybe your goal is just to spend less and take control of your expenses. Whatever it is, it should mean something to you.
6. Let your budget be your money spirit guide.
Challenge yourself to spend less on clothes, alcohol, brunches, makeup and whatever else you splurge way too much on. You can only “treat yourself” so many times in a week.
Instead of buying lunch at work every day, start brownbagging it a few times a week. If you're a manicure fiend, try painting your own nails. And if you don't want to sacrifice anything in your lifestyle but always feel broke, spend less time complaining and more time side hustling for extra income.
Use your budget to guide your spending. Apps like Mint are helpful because they notify you when you're close to being over one of your monthly allowances. You'll figure out if you're spending the $40 you set aside for coffee in just one week.
There is only one consequence to ignoring your budget: You'll feel like you're broke. It's that simple. The less you spend, the more you have.
Don't be afraid to look at your budget even if you know you're overspending. Breaking spending habits and developing money conscious ones takes time and diligence. Getting control over your expenses will permanently eradicate the fear of looking at your credit card bill.