Demetrius Harrison is a tech fanatic and personal finance expert, having 3+ years of personal money management and living experience.
Do People Still Budget?
I know that budgeting sounds of the past- something people just don't do anymore. Have you ever made one? Better yet- did you stick to the budget? The only reason I entertain the concept of personal finances at 21-years-old is that I am completely self-sufficient. If I weren't, I wouldn't mind including myself in the 2 in 5 who have never had a budget.
I understand that 2 in 3 Americans aren't confident about their finances, and 45% feel their relationship with money is stressful. I'll take this into account as I understand budgeting is often a boring subject, but there are many ways financial planning can transform your future and improve your life.
How To Revolutionize Your Finances
Before understanding how to budget, it's important to understand why we budget - besides to save money.
I like to credit budgeting to the "what ifs" in life... and retirement. Say you're traveling alone in the wee hours of the night and your tire pops. Who you gonna call? Hopefully, your bank so you can make a transfer to pay for a tow truck. In other words, you can never save too much.
The benefits of budgeting are voluminous, if not infinite. For example, with a budget:
- 62% feel in control,
- 55% feel confident, and
- 52% feel secure.
Creating a budget is among the easiest things to do, and the basics of good money management can double your likelihood of making progress toward your goals and the lifestyle you want.
Before making my next point, it's important you know that Millennials now make up the largest slice of America's adult population.
Today, Millennials and GenXers are less invested in equities than Boomers - and may find their retirement portfolios to be significantly underfunded. Retirement is beginning to sound as much of a fictitious concept as budgeting, and most Americans are in suffering financially. Some supporting statistics:
- More than 1 in 3 spend more than they save,
- 2 in 3 easily overspend when using a credit card,
- Only 48% of Americans are saving at least 5% of their income,
- 40% of Americans don't know how their retirement investments are allocated,
- 75% aren't sure how much they should be saving, and
- Only 36% of Americans feel their relationship with money is positive.
Despite these numbers, the concept of retirement is obtainable. Less than 2 in 3 Americans are confident they can retire, but only 15% have a written retirement. Achieving retirement is a matter of education and actionable living. Ask yourself- what are your financial goals?
How Can I Make Financial Goals?
Financial planning works best with a goal-oriented mindset. When creating your goals, simply set a life direction. By following the goals set for yourself, you can put yourself on track to the future you've always imagined for yourself - in your personal life and with regard to your career.
- What career would make me jump out of bed each day?
- How do I want to spend my time?
- What do I want to spend more time with?
- What would make me excited to learn?
In 2019, Americans' top financial goals were to:
- Save more money: 36%
- Pay off debt: 23%
- Stick to a budget: 18%
- Increase their income: 15%
Navigate Life's Transitions - Paying For College:
- 97% of parents plan to pay at least some of their child's tuition.
- On average, American parents plan to pay 70% of their child's total tuition costs.
- BUT, most parents are only on track to cover just 29% of that goal.
Spend Your Money In Ways That Can Improve Your Life:
- Make purchases that reduce the stress from your hectic lifestyle and
- Free up time for things that bring you joy.
Invest Your Money Wisely
In the words of Jim Rohn, author of The Art of Exceptional Living, "Time is more valuable than money." Of course, money can't buy you happiness; but on this planet, money can definitely buy you more time.
Investing in tech, especially artificial intelligence gadgets - can not only buy you a better lifestyle but also free your time. For example:
- iRobot Roomba is a mini, floor robot that can automatically roam your home, scanning for debris and garbage to vacuum along its way. iRobot Braava can do the same for mopping, and you can control both machines from your phone.
- AppBot Riley travels around your home using motion detectors, infrared lights, and a built-in microphone to detect security threats that a traditional wall-alarm system may not see. This can provide peace of mind more than anything - especially for those living alone.
- Alfawise Magnetic can help save you the burden of cleaning your windows, freeing your Sunday mornings for other activities. This gadget clings to windows using suction to clean beyond your reach.
- Worx Landroid is a robot that can mow your lawn every day and automatically returns to its charger. This is great for those who are allergic to pollen or are just flat out lazy. Landroid is also smart enough to skip mowing on rainy days to avoid damage.
- Dolphin Nautilus is essential for any pool owner, automatically vacuuming and scrubbing your pool to ensure every inch is clean and ready for your next swim.
This isn't all, though. There are also a variety of apps that can improve your life, and some can increase your finances. For example, apps like Wag! and Rover can help you not only pamper your pet, but also earn a buck. The difference between the two? Wag! offers dog walking, daycare, overnight pet sitting, and drop-in visits for your dog or cat while you're away. Wag! is also free to sign up for as a walker. On the other hand, Rover requires you to pay for - and pass - a non-refundable background check before accepting any jobs. Not limited to caring for only dogs, Rover offers care for cats, and small animals as well - including dog walking, house sitting, and mobile dog grooming services.
I'm sure you've also heard of TaskRabbit, or maybe even Thumbtack, apps that can help you find odd jobs, or even let you hire someone to take on almost any chore. Jobs get as intense as assembling furniture and as casual as making deliveries. Similarly, the information I found on https://www.finivi.com/how-to-plan-for-the-life-you-want/ mentioned HelloTech an app that can boost your life - providing installation services and 24/7 tech support for smart home devices, entertainment equipment, home offices, and more. Decking your home out with smart tech is a smart investment in strife for reducing your amount of disposable purchases. Furthermore, smart tech's ability to be voice-operated can free up a tremendous amount of your time for more productive tasks.
The list goes on- I will leave a link to the graphic including more apps and technology that can improve your life at the bottom of this article.
Now, let's move on to actual budgeting tips.
The Easiest Way To Budget
The ancient 50/30/20 budget rule still works. However, you'll need to figure out your income post-tax. An easy way to do this is to divide your paycheck amount/direct-deposit amount by the number of hours you worked in that pay period.
Say your paycheck was $1,000 for two weeks and 80-hours total. It's likely you make 12.5 per hour after taxes are taken out of your allowance.
After you know the amount of money you make post-tax deductions, play around a bit on a notepad. Begin deducting your routine expenses from your bi-weekly paychecks. For example, if you know rent is every month on the 1st, begin automatically deducting this amount from your paycheck before receiving it or spending any. Automatically set this amount aside upon being deposited into your account.
Furthermore, follow the 50/30/20 rule previously mentioned to properly proportion your expenses. You'll need to use 50% of your budget for things you need - including food, shelter, and clothing - 30% for things you want, and 20% for debt or savings.
I recommend saving more than 20% if you can - especially if you are of a young age. The one thing we can't reverse is time; and the more time you spend saving, the more you will have later in life.
To close, here are a few tips I have learned from living alone :
- Never go to the grocery store without a list - and if you do, shop with cash.
- Eat less, move more.
- Spend as if you don't know the next time you will refuel your account.
- Shop secondhand, & reuse within your household as often as remembered.
- Walk more and drive less- reducing your gas expenses.
- Try spending only on necessities for a month - rent, food, routine bills.
- Cut Netflix and trade for free streaming websites. Small bills add up.
- Buy from the dollar aisle: toothbrushes, household supply items, school items.
- Remember to follow the budget you worked hard to make.
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© 2020 Demetrius Harrison