Learning to Love ... Your Budget

Budgeting: it’s not about slashing your expenses, feeling poorer than you actually are, or even ---gasp--- giving up your daily iced soy latte. It’s about cultivating a symbiotic relationship between your wallet and your priorities. Here are a few quick tips to help you get that relationship off to a strong start:

1)    Know the Basics  

Try using the 50-30-20 rule for the basis of your budget. 50% of your income goes to necessities, such as rent, transportation, and groceries. 30% of your income goes to wants, such as eating out, concert tickets, and hobbies. 20% of your income goes into savings, this includes paying off debt, retirement, and short-term savings. Over time these percentages will fluctuate and you’ll find the right groove for your own lifestyle.

2)    Begin With a SMART Goal –

I’m going to save $6,000 over the next year for a down payment on a new car. I’ll save $500 a month through working 5 extra hours per week and meal prepping lunches Monday through Friday.

This goal is specific, measurable, attainable, relevant, and time sensitive. Most importantly, I’m able to be honest with myself. My clearly visible progress will help keep the entire rest of my budget on track.

3)    It’s Not Always About Cutting Back

An effective budget shouldn’t be holding you hostage -- it should liberate you to use choose your money’s purpose. Think of it as a way of helping you prioritize and categorize your monetary choices. While you might decide to rein in on a spending area you’ll do so knowing it is only to serve a higher priority.

The most efficient way to save isn’t always cutting the extra few bucks spent on coffee. Think about different ways to transform your major expenses, especially the ones in the 50% area of 50-30-20. Whether you switch to public transportation, shop generic, or get a roommate, these decisions will have the largest positive impact on your budget. Over the course of a year in New York City, that roommate could be worth over 3000 of your delicious lattes.

4)    Ease Into It

Start by making your budget ambitions conservative and attainable. It’s unlikely you will go from putting $0 into your savings account each month to $1,000. Even if you do, it’s unlikely to be fun or sustainable. A key to an effective budget is its longevity. Learn to love the empowerment you have over your money -- start slow and savor the wins.