Money Management Tips for Young Adults (Dolla Dolla Bills y’all)
Are you just getting into the responsibility world? Just started earning your own money? Well, congratulations you are an adult now. You are summoned financial stress!
Nothing seems lamer than worrying about money and calculating what you earn and how much you spend. We younger ones tend to use the expression #YOLO a lot!
But if we adopt the habit of money management early, then we have the greatest chance to a life of financial freedom. Which is the ultimate power of the universe.
Those who don’t manage their money will always work for those who do.
So here are some of the money management tips that we found useful and less dreadful. It is going to help bring mindful awareness to the process of spending, without sucking the joy of living.
Before we define the two most useful methods, we need to follow these common steps.
- Calculate your total earnings — break down into monthly income. (salary, freelance income, cost). After-Tax!!
- Track your spending- calculate the minimum amount of money you need
- Categorize your spending- ( food, transport, medical care, phone bills, entertainment)
- Set a goal- Define what you are saving for. ( investment, medical care, pay off a debt). Whatever your goals are, set a number and a timeline for it, and write it down you will have a better chance of achieving it.
50/30/20
This is the most straightforward and ridged monthly expense management technique that tells exactly how much to use for saving, living cost or entertainment each month. This is a simple method to manage money. All you need to do is balance your money across your needs, wants and saving goals.
50% for need- unavoidable cost. This are the payments for the essential things you need in your life.
30 % for wants- Things you choose to spend your money on.
20% for savings- Consistently put aside the 20% of your earning to achieve your goals.
Depending on your life structure you can change the percentage you use for this categories. For example you can choose to use 50% of your income for needs, 20% for wants, and 30% for savings. It all depends on your life goals.
Kakeibo
kakeibo (household family ledger) is a Japanese budgeting system. It offers a less rigid and simple way to manage your spending. It is done by journaling and documenting one’s income and spending. An old fashion pen and paper jot down. Just like journaling, we do it daily.
After following the above common steps. We further divide the categories into smaller groups including:
- General- These are the ‘needs’ or ‘necessities’. It includes the money spent on food supplies, transport, rent, phone bills, and others.
- Culture and Education- These are the necessities, but if you had to choose between the general and this one you would defiantly go with the general ones. Gym memberships, shopping, and others.
- Entertainment- Capture joy to enrich your life. Drinking, movies, books, and others.
- Others- This is the stuff that comes up out of nowhere the money we spend impulsively. Like ride money, going out, and a new burger place. Yes, we can also plan for this.
The main goal here is to save a certain amount of money and live off the rest, or live off the specified amount of money so you can save the rest.
At the end of each week, you check your balances against your goals. At the end of the month, you look back at where you ended up concerning your goals in each category and ask yourself where you can do better.
Bonus Tips
- Save the debt-money return. You have survived to live without it for God knows how long so you can manage saving it.
- Round up money you spend to bigger numbers and save the return.
- Have a shopping list when you go out shopping.
- When buying a new cloth make sure it goes well with the other outfits you already have. So you don’t have the urge to buy another cloth that goes with it.
- You can also use money management applications like money manager
