Undeniably, Americans do not have the best personal finances. Some can live frugally, while others are suckers for overspending, and living paycheck to paycheck. However, technology has paved a way for Americans to save money and track their finances. Fortunately, downloading a budgeting app may be the best solution for you if you are struggling to control your spending, and do not know how to create a budget. To motivate you, we compiled a quick list of three reasons why you need a budget.
1. Save Money
Ultimately, the goal of a robust budget is to help you save money. After all, who does not like saving money? Start by using the 50/30/20 budgeting principle. Here is how it works. First, Spend 50% of your paycheck on your needs (mortgage, insurance, food, rent,ect). Second, spend 30% on your ‘wants.’ We all have ‘wants;’ however, this is the category where you need to be careful. Sure, feel free to eat out once a week, but try to limit it. Every dollar you can save, the better. Lastly, put 20% away in your savings account. The goal of the 50/30/20 budgeting principle is to help you build up your savings account.
2. Track Your Spending
Aside from saving money, starting a budget allows you to track your finances, which is key! Most people do not know what they are spending their money on. A simple budget will help you identify your spending habits and will show you which categories you can decrease your spending in the following month. Our favorite budgeting app is You Need a Budget. This budgeting app will help you create a robust budget for a fraction of the cost of budgeting software. With You Need A Budget, you will pay a (small) subscription fee to use their services. They will help you create a budget that aligns with your financial goals. So, if you want to save for college or retirement, YNAB will help you do just that.
3. Invest Your Spare Change
Now, that you have a budget in place you can responsibly invest your spare change. This will allow you to make passive income and set yourself up for a financially secure future. Aside from budgeting, investing your money is one of the best things you can do as a young adult. Do not be afraid of investing. If you play the long-term game, then you will come out ahead and will make some serious money. The worst thing you can do is buy a stock, and then sell right when the price drops. Often, the stock price will rebound!
As you can see, starting a budget is very important. If you can’t control your spending or if you do not know how to start a budget, then remember, You Need A Budget is the best platform to help you. Starting a budget can be the difference between you retiring at 60 instead of 65. The more money you can save and invest right now, the better. What are you waiting for? Take control of your finances!