Money – they make the world go round, but when you’re in your 20’s they come and go so fast that it can make you dizzy. One important lesson to learn as fast as possible when you move on your own is why you need to take control of your money and how to do it.
It’s something we wish we knew how to do correctly when we first moved away from our parents.
You don’t need to have a degree in finance to be able to keep a simple evidence of your money, it’s easier than you think. But before we get into the “How to”, let’s figure out the “Why?”
Why you need to Take Control of Your Money
In your 20s, when you’re experimenting more with career paths, than perfecting one – unless you knew exactly what you wanted since you were little– money is uncertain.
You know the struggle: you need the experience to get a good job, but few people and companies hire you without any experience.
On the other hand, if you have knowledge from experience, but don’t have a degree because you were forced to work so you can live, pay bills and others, again, you can’t get the well-paid job that you deserve. These are the struggles some of us have to face, that influence our financial situation.
Because you never know what might happen, what financial emergencies you might have, avoiding debt is your number one job. You have enough on your plate as it is, especially if you decided to go and live abroad, to try and make a better life for yourself. Don’t put debt on there as well.
You need to take control of your money also because it’s very easy to go overboard with spending when you’re young. You work a lot, but you also need to feel young and live a little. Here’s where crazy happens, if you’re not careful.
On payday, you’re happy, and think: “Yey! I’ve got money! Let’s have some fun!“, and the next day you’re broke. Let’s avoid that. Because that leads to debt, that gives you stress, and that only brings other problems.
Let us help you change all that and break the shitty cycle, shall we?
How to Take Control of Your Money
Taking control of your money sounds like rocket science, but it’s so easy! Now that we figured out why you should do it, let’s find out how.
1. Keep an evidence
For this step, you’ll need a simple notebook and a pen. It’s better to do this in a physical notebook than an Excel file on your laptop because when you have it in your hands, it affects you more. Like when you write your feelings in a journal.
What you need to do is to create a simple chart. Divide your page into 3 columns: Date, Details, Total Amount. Now, what you need to do is fill this chart every time your financial situation has changed.
Under “Date” you fill in when you take money from or add money to your wallet. Under “Details” you add with a “+” when you gain money and why ( example: Salary, side hustle) and with “-” every time you spend and on what ( example – Groceries, night out).
At “Total Amount” you write the amount that results from all these changes. It must coincide with your physical amount, if it doesn’t, then you must figure out why.
This helps you better manage your money, and know how well, or badly, you’re doing, so you know what to change.
When you’re sharing rent and expenses with someone else, being only your loved one or others, and especially when you live with others, it’s really important to keep an evidence like this, so you can avoid unpleasant situations.
You need to know where your money comes from and where they go.
2. Create an automated payment plan
For your monthly mandatory expenses, you need an automated payment plan. Your rent, electricity, water, phone bill, and the internet are the most important expenses, and usually, don’t fluctuate much.
If you have debt, you’ll need an automated plan for it as well, to help you get rid of it as fast as possible. Never ignore your debt, because it adds up and usually blows up in your face.
You know how much this amount is and if you have a bank account, setting automatic payments for these expenses helps you a lot.
You know that you must have that X amount in your account on the date set for the payments, and the bank will take care of the rest. No extra stress for you.
3. Figure out your variable expenses
Here you have the groceries, the fun nights out, gas money ( if you have a car), other shopping – clothes, shoes, makeup, accessories. It’s important to know how much you spend on what, to know where you can improve and save more.
Learn how to cook food yourself, and you’ll spend considerably less every month. Try to keep your wardrobe minimal, with simple pieces that can be easily combined into multiple looks and reduce your shopping list, and because it’s Summer, take a break from your heavy makeup as well!
Save more, spend less, the smart way!
What’s left after all these hits on your budget, count as savings. To make yourself want to save more than spending what you have left, trick yourself. It’s funny how setting a goal helps you here, even though that goal may be to spend some of the money saved.
Let me explain. Let’s say you really, really, want to go to Greece this year, on vacation. That’s your goal. Figure out when it’s cheaper for you to go and how much it costs. Then add to that amount an approximation of how much you think you’ll spend on fun, and put some extra, just in case. The total amount is how much you need to save.
The final step is to evaluate your budget, be aware of every change, and think about how you can improve it, so you can hit your goals – save more and/or get rid of debt. There is always something that can be done, you just need to be open to change.
Improving your financial situation can either mean getting a side hustle or reducing some of your costs.
We all know that money makes the world go round, like a crazy rollercoaster, but remember: You need to take control of your money, and now, you know how to do it!
Our question for you is: How did you take control of your money?