Sorry for being whiny. I'm not such a stingy type but I gotta be when my budget is extremely tight now. Ok, that's it. Let's get back to the topic today: Living on a budget.
1. Define your budget
Personal budgeting is simply tracking and planning your cash flow by writing down the cash inflow and outflow every day/week/month.
- Keep track on what you spent. List all fixed cost and variable cost of each month. Try to go through every cost subject and see where you can reduce and eliminate the variable cost. For the fixed cost, you obviously cannot get rid of, but you can consider of lowering it. For example moving to an area where the rent is lower.
- Set aside the budget for each month into one card and just use within that amount. That helps a lot in taking control over your money spent.
- Use helping tools. There are tons of apps, softwares and all kinds of techy things that help with your personal budgeting. Actually I had tried it on and off so many times until I find the way that works for me: using my bare hands, a paper and a pen. You know, what works for others doesn't have to work for you. Try out things and figure out the best fit yourself.
2. Think carefully
Before buying something, make sure if you need it or just want it. And if you want it, do you really really really want it that you will stick to it for a least several years. If yes, go ahead! If not, think again!
3. Always keep a saving
You never know what happens in your life. One day something unexpected might happen and it's when you need to use your saving. So it's smart to be prepared!
4. Try no-spending days
I always thought I would never be able to do that. I always felt like buying things (at least some little things) even on days I didn't need to spend anything. That was a really bad habit of mine, and thanks to my recent difficult financial situation, I found out I actually can achieve no-spending days. Start with once a week then increase gradually!
5. Find a (free) hobby
Every one needs to entertain. Partying/going out/eating is so much fun. But living on a tight budget wouldn't let you do that so often. And if you are single and have to stay home every weekend , that would be such a brutal torture. I would suggest you to find a (free) hobby then. Well, actually there isn't completely free thing when you really dig into it at an advanced level. But anything can be twisted. Start with something simple and ready on hands, like working out, reading, drawing, blogging, etc.
6. It's fun to hunt for cheap stuff
Thrift stores, flea markets, Ebay, etc are really addictive. You may end up finding super awesome stuff with incredibly cheap prices. Plus it's really eco-friendly to recycle and reuse products.
7. Give away
This is no joke. Give away to know that you actually have more than millions of people out there. My home country is still developing and there are a lot of poor people there. I saw them almost every day and in the press there are always stories of people struggling to survive the poverty. So I understand that I'm still lucky to be able to work and feed myself, have a roof to sleep every night and have good food to eat every day. Donation and helping out people with just a tiny portion in your tight budget actually releases the stress of living frugally because your stress is actually just a piece of cake compared to others'.
8. Educate yourself
It's really important to acknowledge yourself with both theories and practical examples. CNN Money has a wonderful series of 23 lessons: a step by step guide to control your financial life.
You can also read from bloggers who write on personal financing such as Making Sense of Cents, Our Freaking Budget, Young Cheap Living, Bugeting in the Fun Stuff and a lot more out there.
Want to dig deeper into the budget topic? Denise from Ispasiyo had a series on topic of building a budget plan . She puts many deep thoughts into that. Go have a look!
Just one reminder: It's never too late to start learning how to live on a budget!
I used to spend A LOT of money on partying and drinking. Especially in here Finland, the alcohol tax is extremely high. The average cost for a glass of (awful) beer is 5-6€. That was crazy and it might be the part of my life I regretted the most. Anyway, since I was with my boyfriend, the urge of going out totally disappeared. And it came so naturally that I didn't party and drink at all. I realized that I saved a huge portion of my money. Now when I have extra money, I invest in my luck by buying lotto once a week or every two week. Compared to drinking, it doesn't cost that much (less than the price of a beer) yet I might get the chance to win one day. Fingers crossed!
Have you ever lived on a budget? What are your experiences? Would you like to add anything to the list?