Budgeting Basics: Conquer Your Finances in 2024

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Juggling career goals, social lives, and independence can be exhilarating, but it can also feel overwhelming, especially when it comes to managing your finances. Fear not, this post is your crash course in budgeting, designed to help you save money, avoid debt, and build a solid financial foundation for your future self!

Step 1: Track Your Spending

Knowledge is power, and the first step to financial mastery is understanding where your money goes. Use the use the MyMoney Budgeting tool in our UCBANKMN app, or get crafty with a pen and paper. Track your income and expenses for a month, categorizing everything from rent and groceries to entertainment and subscriptions. You might be surprised by some hidden spending patterns!

Step 2: Categorize Your Expenses

Once you have a clear picture of your spending, it’s time to categorize your expenses. Here are some essential categories for young professionals:

  • Essentials: Rent/mortgage, utilities, groceries, transportation, loan payments, minimum debt payments
  • Savings: Emergency fund, retirement savings, financial goals
  • Fixed Expenses: Netflix, Spotify, gym memberships, insurance
  • Discretionary Spending: Dining out, entertainment, shopping, hobbies, fun!
  • Extras: Anything that doesn’t fall into a category above can go here

Step 3: The 50/30/20 Rule

This simple rule provides a helpful framework for allocating your income:

  • 50% Essentials: Rent/mortgage, utilities, groceries, transportation, loan payments, minimum debt payments
  • 30% Wants: This is your fun money for dining out, entertainment, and hobbies. Netflix, Spotify, dining out, entertainment, shopping, hobbies.
  • 20% Savings & Debt: This is your money for building your financial future. Emergency fund, retirement savings, financial goals

Step 4: Saving Strategies:

  • Automate: Set up automatic transfers to your savings and retirement accounts to ensure consistent contributions.
  • Round-Up Savings: Use Round-Up Savings from UCB to help you start saving automatically. RUS rounds up your purchases to the nearest dollar and deposits the difference into a separate account that you designate.
  • Challenge Yourself: Try the 52-week challenge, where you save $1 in week one, $2 in week two, and so on. By the end of the year, you’ll have over $1,300!

Step 5: Debt Repayment:

If you have debt, it’s important to tackle it strategically. Here are two popular methods:

  • Debt Avalanche: Focus on paying off the debt with the highest interest rate first. This saves you money in the long run, but it may feel slow initially.
  • Debt Snowball: Pay off the smallest debt first, then move on to the next. This gives you quick wins and keeps you motivated.

Bonus Tips:

  • Cook at home: Eating out is a major budget drain. Explore delicious and affordable recipes to save money on meals.
  • Hunt for deals: Utilize coupons, discount codes, and loyalty programs to stretch your budget further.
  • Review regularly: Revisit your budget every month or quarter to adjust as needed. Your income and expenses might change, so your budget should adapt too.

Remember:

  • Small changes add up: Eating in instead of out once or twice a month can add up!
  • Be realistic: Don’t try to change everything overnight. Start small and gradually increase your savings and debt repayment over time. The more you practice the better you’ll get!
  • Find a support system: Share your goals and struggles with friends or family. Accountability can be a powerful motivator for you and your money buddy!
  • Celebrate your wins! Treat yourself to something fun when you reach a milestone. Enjoy the little things!

Conquering your finances might not be as exciting as scaling a mountain, but it’s definitely more rewarding!

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