20 Budgeting Hacks I Should Have Known in My 20s

Being in your 20s is an ideal time to start budgeting and planning for the future.

Why is that? Because it is a time when you are likely to have fewer responsibilities, expenses, and financial obligations and, therefore, more disposable income than at other life stages.

This is the age when you start to make your own money, have a ton of opportunities, gain financial independence, and really get to decide how your money will be spent. Investing time in your 20s to budget your income will be a game changer for your financial future. On top of that, it will help you build good financial habits that will better prepare you for the years to come.

Looking back, I now realize that budgeting in my 20s would have been incredibly beneficial for my financial future. Understanding the importance of budgeting and planning for financial success early in life would have helped me set myself up for greater financial freedom in my 30s. Although I wish I had started budgeting and tracking my finances in my 20s, it's never too late to start. No matter what your age is, budgeting can help you make the most of your finances.

With this understanding, I have taken the steps to develop a budget and plan for my financial future. I started by learning different budgeting methods and finding a system that fits my lifestyle.

Now, it's time for you to begin learning, as well.

Here are 20 budgeting hacks or tips I wish I had known in my 20s that will help you get on the right path to financial success.

1. Pay Yourself First ”Pay” yourself first. Income – Savings = Expenses Set aside a fixed amount for savings or an emergency fund first thing every pay period, and then allocate the rest of your money to investments. Use the remaining money for your expenses. While challenging at first, its long-term impact on your cash flow will be significant. ◉ Emergency Funds You should have enough money saved up to cover at least three to six months of expenses in case of an emergency. It all depends on how stable your work is and how long you think it will take to find another source of income if you lose your current one. Everything beyond this sum should be invested. Putting too much cash in savings may not be a good idea, since we all know that bank interest rates are now very low and that they will be eaten away by inflation. ◉ Investments Starting to invest at a young age is the most important financial lesson you can learn. If you don't invest your money, it will never grow. The two terms in personal finance that will make you wealthy are "compound interest," which is activated when you invest your money. Simply put, compound interest is interest on top of interest. So, the sooner you put money into an investment, the greater its potential growth. A good place to start for first-time investors is with managed funds like mutual funds, UITFs, and exchange-traded funds (ETFs). It's easy to reap the benefits of compound interest with these investing options.

If you feel ready to take the plunge into direct stock or forex investing, your first step is to find an online broker.

2. Automate Your Savings Set up automatic payments from your bank account to your savings account or investment account every month. Savings automation allows you to budget without giving it any thought. In the end, you'll be happy you did.
3. Download Cashback Apps You can get cashback on your purchases by using cashback apps or sites, whether you're buying clothes, getting groceries, or booking a hotel. Yet, that's not all the good news. There are cashback apps that also include other ways to save money, such as keeping track of prices, comparing prices at other stores, and automatically searching the web for coupons. Although the majority of cashback websites are connected with a wide range of retail stores and provide discounts on anything, some of the best cashback apps are known for connecting shoppers with great deals in a specific shopping category.

4. Get in the Coupon Game These days, it's considerably less of a hassle to use coupons.

You may still print and cut coupons if you want, but it's far more convenient to use a mobile app or a browser extension. You can often stack discounts with coupons, so it pays to look closely at each offer and collect as many as you can.

In addition, if you're a serious couponer, you should be aware of “Double Coupon Day”. There are supermarkets that provide double-value coupons on a certain day of the week. Nevertheless, just because you have a coupon doesn't mean you have to use it. Always use your best judgment to decide whether something is necessary or not.

5. Use Cash Instead of Credit Cards People who purchase using credit cards are ready to pay much more than cash buyers, according to studies. This indicates that we are more likely to spend more when using a credit card.

Psychologists have a term for this: "the pain of paying," and it explains why people avoid making payments. Making a purchase triggers pain processing areas in the brain. In fact, just the thought of making a purchase makes them beam with excitement.

The "pain of paying" is lessened by using a credit card instead of cash since the money is less visible. This is due to the fact that when you pay with cash, you literally give over your money and see it go before your eyes.

If you pay with a credit card, though, you won't see the cash leave your hands since you either keep the card or just touch it to authorize the transaction.

It may be helpful to switch to a cash-only budget in order to better control your spending and reach your financial objectives.

All of your purchases from now on will have to be made with cold, hard cash. If this isn't feasible for your lifestyle, try switching to a cash-only budget for the types of expenses that always seem to blow your savings.

Many individuals have trouble budgeting for groceries, restaurants, clothing, cosmetics, and entertainment. If you find it difficult to reduce your monthly clothing expenses or your weekly restaurant spending, for instance, withdrawing a certain amount of cash each week might help you get a handle on these problems.

6. Stick With Water Cutting back on beverages like sodas and energy drinks is an easy way to trim your budget. If you want to save a lot of money, this is one of the simplest ways to do it. See how much you can save after only one month.
7. Pick the Store Brand While it's common knowledge that store brands and generic alternatives cost less than their pricier name-brand counterparts, you may be surprised at how much cheaper they are. Store brands often cost less and may save you up to 25%, according to Consumer Reports.

8. Buy in Bulk Buy in bulk for items that you know you will use often, like toilet paper, cleaning supplies, and laundry detergent. Doing this will not only save you money on individual items, but you can also take advantage of wholesale stores that offer discounts when you buy larger quantities.

When items are on sale, stock up on those that can be stored for a longer period of time in the freezer or pantry. This is a great way to save money, as you can stock up on these items and not have to worry about purchasing them at full price in the future. For more tips on how you can save on your grocery shopping, read this blog by The ABBA: “How to Budget Your Money During Inflation”

9. Avoid Impulse Buys If you're a shopaholic, you know how hard it can be to resist the urge to make a purchase.  Especially when it comes to impulsive buys, spenders at heart are pros at coming up with a good justification.

When we want to be more frugal, it's simple to rationalize a purchase by saying things like, "I need it right now" or "It's worth breaking my budget for."

Yet if we pause and ask ourselves, "Why do I really want to buy the item?", we may get insight into our spending triggers and the emotions that motivate us to make impulsive purchases. Try taking a pause.

Reacting with the power of pause is effective because it forces us to break out of our habitual patterns of spending and verify that the item we're considering buying is really within our means and contributes to our long-term objectives. To shop in such a way is to shop with purpose.

If you have a habit of making impulse buys, try making yourself wait a certain period of time before giving in.

For instance, write what you desire to buy on a piece of paper. Don't lose that list for another 30 days. After 30 days, if you're still interested in the product, you may buy it with nothing to worry about.

10. Apply the Half Payment Method Use the half payment plan if you need a little more cash until your next payday. Half-payment budgeting involves slicing your typical monthly bills in half.

If you are paid every two weeks, you should set aside half of your bill money a month before it's due. So, when it's time to pay your expenses, you won't have to scramble to come up with the whole amount from a single paycheck since you'll already have the money set aside.

You can get by on half because you put away the other half of your last paycheck. Paying bills twice a month in this manner is a quick, easy, and efficient method.

11. Create a Budget Having a budget is very important when it comes to managing your money, and that can't be overemphasized. Achieving financial freedom and mastery requires developing this as one of your strong financial habits. If the thought of creating a standard monthly budget is daunting, you can begin with a more manageable goal. To do this, create a new budget for each payment you receive. This is convenient if you are getting paid monthly, bimonthly, or weekly. When trying to find methods to decrease costs and save money, it's important to first take note of your current income and regular expenses. This will help you in making a more feasible and effective budget that moves you closer to your financial objectives. To begin with a budget, you can divide your monthly costs into thirds, like in the 50/30/20 rule. ◉ Needs (50%): groceries, house rent, utilities, transportation ◉ Wants (30%): clothes, entertainment, restaurant ◉ Savings/Investments/Debts (20%): savings contributions, sinking funds, retirement funds, insurance, stocks investment, credit card debt You can always adjust the percentages to suit your needs and preferences. For instance, if you are living in a high-cost location, it would make sense to prioritize meeting your basic needs (60%) over satisfying your desires (20%) before putting money away for the future (20%).
💡
You’ve Asked, We’ve Answered What makes for a zero-based budget? A zero-based budget is one that allocates all of your income towards expenses and savings goals. Every bit of your money has a purpose and is accounted for, with the goal being to not have any leftover at the end of the month. This will prevent you from wasting your extra cash on unnecessary purchases. How often should you create a budget? To make sure you're financially sound, you should create a budget on a regular basis. It is recommended that budgeting be done at least once a month and preferably more often. How many categories should you have in your budget? When it comes to budgeting, there is no set number of categories that you should have. It really depends on how detailed you want it to be and what your financial goals are. For instance, if you have multiple savings goals, such as saving for retirement and vacation, then you may want to create separate categories for each one. On the other hand, if you simply want to keep track of your income and expenses in a general way, then you can get away with just having three or four main categories, such as income, necessary expenses, optional expenses, and savings. Having too many categories can lead to an overly complicated system that can be difficult to maintain, while having too few categories can make it hard to track your spending and manage your finances. The key is to find a balance that works for you.

You can discover a lot of helpful budgeting resources online.

Here are some of those ways to better manage your finances: ◉ Use a system of "envelopes" to allocate money You may use any kind of envelope to store your cash. To help you organize your finances, divide your money into categories that can be represented by envelopes, such as transportation, food, bills, miscellaneous, savings, and investments. For instance: For office lunches, you have a budget of $15 per day. Put that amount in each of the five envelopes or pool it into one envelope for $75. Your spending will be restricted to what is in your budget and what is in the envelope. ◉ Use a notebook to budget You can do this with any notebook or in conjunction with a budgeting tool. Create three columns in your spreadsheet: one for each category in your budget, one for the allotted amount, and one for the actual amount spent. ◉ Use a printed budget template Online, you can find a variety of free budget templates that you can customize to fit your needs. Using budgeting templates will cut down on the time you spend on budgeting tasks to only fill in the blanks.

12. Develop a Spending Plan Create a budget calendar to help you get a better handle on your finances and keep track of how much you spend. You can mark on it when you get paid, need to add to your savings, buy stocks, pay your bills, have a spa day, go grocery shopping, or buy your toiletries and other supplies. On your budget calendar, you should see what's coming up in the next few months so you can plan accordingly. It can help you stay on top of bill payments, encourage you to save money, and stop you from spending money on a whim. It is best to keep a record of how you will spend your money every six months. This will guide you in spending your money wisely.
13. Save Using Sinking Funds Using a "sinking fund" is saving money for a future expense you anticipate. Save a little amount each month in one or more categories of expenses for use at a later period. In other words, you'll be setting aside a certain sum of money every month for a given length of time before really spending it. Here are some examples of sinking fund buckets to consider adding to your budget.
• Birthday party
• Trip or Vacation
• Car
• Wedding
• School Tuition
• Christmas Presents
• New Home Appliance
• Home Repair or Renovation

The amount you'll need to put away depends on what you want to accomplish. Get an idea of how much the cost will be, then plan ahead by dividing the entire cost by the number of days, weeks, or months before the money is really needed.


14. Plan Your Meals The cost of food is the biggest challenge for many in terms of budgeting. Fast food is a convenience that may add up rapidly, particularly given that the prices keep rising. You almost always save money by cooking when compared to the cost of buying the food outright. ◉ Make a Meal Plan Before going to the grocery store, make a meal plan. A meal plan is a list of the meals you intend to eat throughout the next week. You have the option to plan all of your meals for the week (breakfast, lunch, and snacks) or just your dinners. If you like, you can even choose which meals you want to take out with you. Here are some suggestions to help you cut costs and follow your food plan:
• Before visiting the grocery store, look through your pantry, freezer, and refrigerator for menu inspiration. Most likely, you already have everything you need to cook a simple meal. Using what you already have prevents food waste.
• Plan your meals based on the grocery store flyers. Check the weekly supermarket flyers to see what products are on sale. This will allow you to save money.
• Simplify meals. You'll be less likely to get takeout after work if you create easy, tasty dinners.

To this day, reducing your food expenses may still be challenging.

If you're looking for a way to cut down on your weekly food costs, a meal planner app might be the solution. It compiles a weekly menu plan and provides you with delicious new recipes to try. This can help you quit eating out and avoid food waste.

15. Reduce Your Utility Bills Utilities are something we use on a regular basis, and consider them essential to our standard of life. To keep warm in the winter, have access to clean water, and keep the lights on, we need energy. You shouldn't get rid of these since you need them. Rather, you may reduce your utility bills by simply being more cautious about your use habits. Taking small steps like switching off unnecessary lights and appliances when not in use, reducing the time spent in a hot shower or bath, and unplugging chargers can all help to cut down on energy use.
16. Install a Budgeting App on Your Phone Keeping to a budget might be a lot simpler if you have a user-friendly budgeting app on your phone. It's a convenient way to keep track of your spending in real-time and monitor your finances from any location. These applications also make it easy to see how much money is left over in each spending category, which may be useful for keeping a lid on costs. Try looking for a budgeting app that can connect to your bank account in read-only mode so that it can assist you in creating a budget that is reflective of your typical spending patterns. It should enable you to set monthly spending goals, and see your spending broken down by category. It would also be great if it could send you spending reminders to help you stay on track.
17. Splurge Wisely It's okay to treat ourselves every once in a while. It's not that we want to be reckless with our money, but rather that we hope this will serve as a spur to action as we work toward our financial objectives. ◉ Splurge on activities with family or friends that may turn into priceless memories ◉ Splurge on things that add value to what you do ◉ Splurge on your passion ◉ Splurge on items that will increase in value over time. ◉ Splurge on your health
18. Negotiate Some Monthly Expenses Just asking doesn't harm, and you may be surprised to learn that you are eligible for a discount. Rates on credit cards? The cost of your cell phone service? Utilities? Yes. You can probably get the prices down if you just ask. If you don't want to negotiate your bills yourself, you can find apps online that can do it for you.

19. Split or Cancel Subscriptions Review all of your subscriptions and decide which ones you can do without. Maybe you might downgrade to the ad-supported free version for the time being. Maybe you can split the cost of some streaming services with your pals. If you're having trouble making ends meet in the days leading up to payday, canceling certain services may be a simple solution.
20. Try No-Spend Days

Do you think you could go for a day without spending any money? If you're trying to save money, try introducing a "no spending day" into your schedule once a month. When you are ready, try incorporating a day of no spending into your weekly routine. You can save cash with this strategy, but it has more far-reaching benefits, too. The point is to make it clear how frequently you really spend money every day. Make use of this knowledge to save costs and increase your savings.

Conclusion

I hope all of these budgeting hacks will help you make it to payday without stressing out!

Regardless if you’re in your 20s, 30s, or beyond, by tracking your daily spending and ensuring you make conscious decisions to avoid overspending, you can make a big difference in how far your hard-earned money stretches. Ultimately, by creating and sticking to a budget, you'll be better prepared to handle unexpected expenses that may arise and increase your savings for the future. This way, you'll have greater financial stability and peace of mind.

But Wait!!!

What if your paycheck is delayed? What if, by mistake, you were underpaid? That can possibly ruin your budget, right?

If you’re an employee, you can help prevent that from happening to you and your co-workers.

If you’re in the HR or Payroll Department, there is a better way to make sure that your people will receive their hard-earned money completely on time, with less hassle on your side.

Discover this better way by watching this short video.