Student life is great. You go to college, meet new people, make friends, get a good education, and graduate with high hopes for the future. One moment you are partying and hanging out with your friends; the next, you find yourself overwhelmed with taxes and bills. Suddenly, the world weighs down on you, everything begins to feel more expensive, and you feel like taking a second job to make ends meet. You then start to question yourself: Will I be able to pay my real estate loan? Can I still afford a meal in my favorite restaurant? Am I doing this right? How come everyone else seems to know what they’re doing while I sit here confused with all these papers?
First off, you’ve got this. You aren’t the only one struggling with the sudden change of pace. This is a new environment for you, different from the laid back day to day life you led just a few years ago. Many others like yourself are also treading slowly. As young professionals, we get to a point where we feel empowered by our newfound spending power. We begin to spend more and more, or simply fail to account for bills and other finances. Sometimes our salary would be enough to cover our expenses, but that’s not exactly a sustainable plan. Don’t let the being overwhelmed by new stimulus block your view from an important priority: proper financing. So how do you manage your finances, especially at a time when everything seems to cost something?
1. Track Your Spending
If you haven’t tracked your expenses yet, now is the best time to do so. Money comes and goes so much in our day-to-day lives that tracking how our money moves might seem too much of a chore to do. No matter how much of a hassle it might sound like, it’s one of the things that will truly benefit you in the long run.
Several apps allow easy tracking of spending. These apps can categorize your expenses for easy analysis. Try it for a week or two, then take a look at your spending patterns. You’ll notice that you have patterns and trends when it comes to spending, like what you suddenly splurged on, or how often you eat at that expensive restaurant. Take note of this because this will be very useful when it comes to putting your financial situation under control.
2. Stop Spending Without a Plan
If there’s a piece of advice to take home, it’s stop spending without a plan. Many tend to be impulsive buyers because buying gives them a feeling of gratification. However, this shouldn’t mean that you should be spending indiscriminately. It goes without saying that it will simply lead to financial ruin.
So how do you prevent yourself from spending without a plan? While emergencies will inevitably happen, you can still control your finances by avoiding the things that make you spend. That means no window shopping or no online window shopping. That also means less fancy meals from your favorite restaurant. Look at your spending habits and see which ones cost you more than you should. You don’t have to completely stop spending on that, especially if it makes you happy, but you need to know when to balance momentary satisfaction with long-term financial stability.
3. Budget Your Money by Sticking to Cash
Look, we all promise ourselves to be stringent with money, but it’s not that easy. However, one way to make sure you don’t spend way over your budget is to have only enough for your necessities. This, of course, requires you to be aware of your spending habits, which is why this step comes last. However, once you know how much you spend, then you can skip the credit card and go straight to cash.
Going cash-only prevents you from creating debt by using your credit card on things you don’t really need. It also forces you to spend money wisely because you’d only have enough money for what you need. While it may sound extreme, it’s actually a really simple but effective way of controlling your cash flow. The rest of your money will be safe, and if any emergency ever comes up, you would have some money to use to address that emergency.
Controlling your financial situation may sound like a difficult task, and it is—at the start. Once you’ve created a rhythm and familiarized yourself with your habits and mannerisms, you’ll recognize when you’re going out of bounds or not. It’s better to start small than shocking yourself with something drastic. Starting small also lets you start sooner because you have less to adjust to. And the sooner you create that sense of control over your finances, the sooner you’ll feel that heavy burden of bills and taxes off your shoulders.