Budgeting is a key money management tool that we need in order to make sure our finances are in order.
It’s true that the older you are, the more important it is that you have a proper budget to work from. After all, you’ll have rent or the mortgage to cover, along with bills, the weekly food shop, and other regular outgoings to account for. Plus, we’re experiencing a cost-of-living crisis, so keeping on top of bills is more important than ever.
However, knowing how to budget when you’re younger is a valuable skill to have. Here, we look at why getting to grips with your finances early on is important, along with some ways that you can pick up this skill.
Why budget from a young age?
Having a firm grasp of our money is important at any age. But learning how to plan out your money as a young adult gives you the opportunity to develop good saving skills. You can work out how much you make at your weekend job, for example, and plan out what you spend each month. From there, you might decide to put a set amount into a savings account.
As a teen, you might want to put some money aside for things like holidays or days out with friends. Alternatively, if you’re thinking of going to university, you might decide to start saving so that you have a financial safety net ready in case you need it. By incorporating some savings into your budget, you’re starting in a good place.
As well as keeping us on top of our finances from month to month and getting into the practice of saving up, learning to budget early can be beneficial for our mental wellbeing. Money worries and our mental health are linked, so by getting into good habits early, it’s possible to start as you mean to go on.
Another reason to start budgeting early is to get your credit score in good shape as soon as you can. You might be a young adult who is trying to get your first car loan. Or maybe you’re trying to get on the property ladder and want to save for a deposit? By getting into the habit of planning for these major outgoings, you’re organising your finances in a way that could be good for your credit score later down the line.
How to budget
Here are some ways to budget:
- Assess your finances
Look at how much income you get right now. You might have a part-time job between studies. You might have a side hustle that’s making money. Whatever money you’re bringing in, this is the amount you have to work with.
Then, look at what you spend your money on each month. You’ll be covering things like your phone bill, for instance. Once you know what your monthly finances look like, you can work out how much money you have to set aside for everything.
- Start saving
As part of your budget, decide how much you want to put into your savings each month. This might change, depending on how much money you make, but if you can regularly put something into the pot, you’re more likely to be financially well-placed for in the future.
- Use your resources
Whether you download an app or use the notes section on your phone, make sure you develop a system to help you keep track of your budget through the month.