Here’s the thing – sometimes you have to be willing to live like nobody else so that you can someday live like nobody else. You can have that life you’ve always been dreaming of, but that means being smart with your money now so you can reach that dream life as quickly as possible – and it starts with a budget.
Budgets are the building blocks of getting your financial life together. Think of it much like setting goals in hopes to accomplish the things you desire, or using positive affirmations in order to find happiness in your life. However you choose to look at it, it’s easier to stay on track and achieve the things you want when you have a roadmap laid out in front of you.
But the real question is how do you live on a budget and not lose your mind. How do you still maintain that sense of happiness, enjoyment, and not sacrifice the life you are fortunate to have today?
If you think it’s impossible to live on a budget and also live your best life-stick with me here. Is it going to be challenging? Probably… But it’s also important to remember that budgets are not meant to suck the life out of you. Budgets are meant to be used as a tool for your success. They are meant as a tool to help you diversify your life into all areas.
6 Tips for How to Live on A Budget
The best part about budgets is that you are ultimately in control. You can tailor your budget to the lifestyle you choose to live while still being smart with your money. It can take some time to change your mindset around budgeting, but here are 6 tips for how to live on a budget that will hopefully help.
1. Face Your Financial Fears
First and foremost, understand what it is that’s causing you to hesitate around creating a budget. Is it the fact that you know you are financially irresponsible and just don’t want to admit it? Is it the fact that you think you can’t enjoy life while on a budget? Or is it the fact that you simply don’t even know where to begin?
Here’s the thing – as with anything in life, until you are at least willing to give yourself a chance to know, you are simply never going to know.
Start small. Start by writing out all of your fears and acknowledging how you feel about each one of them. Ask yourself which ones are reasonable and which ones aren’t. For the ones that aren’t reasonable, just forget about them right now. They aren’t going to do you any good locked in your head, so do your best to just forget about them.
It can be a hard and emotional process to face your financial fears, but the payout of simply starting a budget and getting your life back on track is going to be extremely valuable and will ultimately help you live a better life.
2. Create A Starter Budget
Start small and work your way towards a more detailed budget. It makes no sense to overwhelm yourself to the point where you don’t even start.
First, write down how much you want to save. This number will help you determine what needs to go in your budget, and what you can leave out.
Next, write a list of all your non-negotiable spending. Rent, car payments, car insurance, any debt payments, student loans – you get the idea. Anything that you cannot live without goes in this “non-negotiable” category. Your $5 daily cup of coffee from Starbucks definitely shouldn’t go in your required expenses.
Third, subtract your non-negotiables from your income. The money you have left is what you should diversify. With this, you can plan out some fun things, vacations in advance, and money used to reward yourself for all of your hard work. Doing this gives you something to look forward to instead of just spending money out of pure boredom.
3. Save Before You Spend Anything
Save before you spend. Every time your paycheck hits your account, move a certain portion of it into a savings account. This amount should consist of the non-negotiable expenses you need to pay as well as the amount of money you would like to save.
I have found that a good balance for me is a 50/50 split. Every other week when I get paid, 50% of my paycheck goes towards my bills and savings, and the other half goes towards spending. Oftentimes, I have more than enough left over at the end of the two weeks that I just put the rest into savings.
If you don’t have a savings account, open one online. Do you know how easy it is to open an online savings account? Seriously, I just opened one from Ally Bank in less than 10 minutes, moved some money into it, and am now earning a sizeable interest rate on it instead of it sitting in an account that was making .01% interest.
4. Cut Some Expenses
If you find yourself still not having enough money, start cutting some expenses. Do you really need an $800 phone? Do you really need to go out to dinner or happy hour every other day? Do you really need to be shopping on Amazon?
If you find yourself strapped, start cutting back. Shop the clearance section, buy generic brand foods, or start making your coffee at home. This may seem miniscule at first, but trust me, it adds up to be a lot.
You might be thinking to yourself “Does my daily latte really make a difference?” Well, $5 over the course of the year is $1,825, so yeah, it really does make a difference. If you quit that or even eat out one less time a week, you can save nearly $2,000 per year. What would you do with an extra $2,000?
5. Pick Up Various Side-Hustles
There are many different ways you can use your free time to make some extra cash. Seriously, the possibilities now are endless. This past winter, I delivered groceries with Shipt. I would shop for maybe 3 or 4 hours a week and would make an average of $150. Especially during the holiday season when they have $20 bonuses per order, you can make A LOT of money.
If you don’t like grocery shopping, do one of the following instead:
- Retail arbitrage
- Uber or Lyft
- Create an Amazon store
- Sell stuff on Ebay
- Bus tables
- Open an Etsy shop
Seriously, there are so many ways to make money. If you are having a difficult time staying on budget, then pick up a side-hustle and use that as your spending money. The average millionaire has at least 6 different sources of income in which they rely on. Relying solely on one isn’t always the safest option.
6. Stay Organized And Track Your Progress
Keep track and update your budget on a weekly basis. If you don’t like keeping your budget on paper, download mobile apps to help you keep on track.
I love using apps like Mint to help track my progress. This is a great app to track what you spend and save and you can watch your money change over time. It’s a great way to see what your money is doing and how you’re managing your finances.
Another idea is to use Acorns. With Acorns, you can choose the “Round-Up” option, which will round up every purchase you make to the nearest dollar and will invest it. Again, it may not seem like a lot right away, but it will add up over time.
Before You Go
Living on a budget isn’t meant to be a miserable experience. In fact, it’s meant to be the exact opposite. It’s meant to help you find a balance so that you aren’t spending every last dime on pointless purchases, but also so that you aren’t overly saving and taking away from your quality of life.
Living a good life on a budget comes down to living a life based on your priorities. To live a good life on a budget, you need to decide what a good life looks like, and then build your budget around that.