FINANCES // How To Budget And Save In Your 20’s
Your 20’s are a crucial time. This is a time where you attempt to navigate who you are, what you wanna do, and it becomes a defining decade of adulthood. 2/3 of lifetime wage growth happens during the first ten years of a career. ... Personality can change more during our 20s than at any other decade in life.
Your twenties are a time to explore, experiment, and get to know yourself even more. When you join the workforce, it's a completely different setting and a new experience you've never gone through before. Not only is this totally exciting, but it also opens the door to the first few stages of adulthood.
Being in your 20’s is also TERRIFYING. There will be times where you may feel vulnerable, lost, and even naked. You are put in situations that are no longer black and white, and you find yourself having to worry about “adult” issues such as money, rent, groceries, loans - FINANCES… I am not a financial advisor but I wanted to create this post to emphasize the importance of budgeting and saving as well as the value that each dollar has. As someone who is in the influencer/blogger sphere, I feel as though there is this push towards glorification and consumerism that isn’t realistic. I feel as though everyone has a unique situation and lifestyle and it is an extreme dishonour to compare our lives to that of others. However, it is a reoccurring theme that people define your 20’s as a time where you should “live your life to the fullest” and many will correlate that to spending a lot of money on things you cannot necessarily afford or on short term pleasure and it becomes this tug of war between “I need to save money for my future” and “you only live once” or “you’re only young once”. So how do you create financial freedom and stability? Not living paycheck to paycheck… Think about your future, and where you want to be - Your decisions now will impact your future.
Financial Literacy and Responsibility = Financial Freedom + Empowerment.
MOVING
It is likely that you will move once/multiple times in your 20’s. Whether it be for school, work, or leisure. Moving comes with a lot of initial costs and your first few months may be extremely difficult to parse as this may be something you have never done before. Moving in my 20’s taught me how to save and plan for my future in a new space. I just recently moved to Toronto and it has been a huge learning curve. Toronto is an especially costly city and I conveniently moved into one of the most expensive neighbourhoods in the city. With proper budgeting and planning, I am able to live a life that I want without being over-restricted or unrealistic. However, this did not come easily…
BUDGETING
BUDGETING - Basically saying you’re only going to spend “X” amount of money in different categories each month. This is extremely dependent on person to person and where you need to spend. I personally do not have a fixed amount of income as a model/businesswoman/creative so this makes budgeting a little more complex and confusing for me. Every month differs for me but when it comes to making your budget it is easiest to list out all of your expenses, as well as your income.
The way that I do it personally is, I will divide up all of my expenses into different months/categories and go from there. Excel spreadsheets are a great way to organize this and split it out into a bunch of different categories such as:
Rent
Groceries
Maintenance
Utilities
Transportation
Eating out
Entertainment
Clothing
etc.
How much am I spending? How much am I making? How much do I want to invest? How much money do I want to add to retirement?
KNOW WHERE YOU ARE AT!
-BE MINDFUL OF WHAT YOU ARE SPENDING -
“A budget tells us what we can't afford, but it doesn't keep us from buying it.”
50/30/20 rule :
50% - Essentials
Rent
Utilities
Transportation
Phone bills
30% - on Non-essentials
Dining out
Entertainment
Self-care
Have more fun here. Live your life - Don’t overdo it.
20% - Savings
Paying off debt
Saving
Retirement
Try working up your savings as a cushion!
PLEASE START YOUR RETIREMENT - Your future self will help you.
Tracking
I like using my credit card to get cashback and keep track of spending so that I continue to be mindful. However, be careful of spending outside of your bracket and paying off your credit in time. It really does depend on your mindset but I find that mindful spending makes it so that I would never go over my limit or have an overdue payment.
Credit card debt is not fun sisters! Please pay on time and confine your spending if it reaches past affordability.
There is also the age-old Cash Envelope System:
The Cash Envelope System is exactly what it sounds like. You put your cash into different envelopes based on the budget categories. You'll decide exactly what amounts go into each cash envelope based on your spending goals. For example, you might put $300 in the grocery budget and $150 in the fun budget. Once your coffee envelope is out of money… No more coffee for you sister. This prevents you from spending outside your means. I find a lot of the more “strict” rules are great at the beginning and then you can ease up.
Creating a set budget isn’t PERFECT but it will help you plan and track - One thing that I do to be more mindful of my spending is that I turn off tap & apple pay on my phone so that I have to make more of a mindful motion when I spend. This forces me to be more present when I am spending money. It also makes slightly bigger purchases feel more realistic and I am then aware.
SAVING TIPS
When it comes to saving money, we all have areas where we can negotiate, for the most part! Obviously, there are exceptions. Like in my case, I like shopping, I love fashion, but do I really NEED a brand new Prada bag? No, probably not? However, I did buy one as an investment and sold it for more when I needed to.
In order to make certain purchases, I have to make sure I justify in other areas. I do love treating myself and will usually make “splurge purchases” on things like food and health and I will instead sacrifice buying a brand new camera or clothing. This makes it so that I stay away from Conspicuous Consumption and stay grounded.
Conspicuous consumption is the purchase of goods or services for the specific purpose of displaying one's wealth. Conspicuous consumption is a means to show one's social status, especially when publicly displayed goods and services are too expensive for other members of a person's class.
RETHINK YOUR LUXURIES
it has helped me mentally to sit down, prioritize and really think about what I NEED to spend on, what I want to spend on, and where I can cut back. Like for example, I love my coffee every morning but I don’t NEED to go to Starbucks every morning. I know how to make coffee in an efficient way, and I also know that I can buy cold-brew in bulk. However, I will treat myself at least once a week to a store-bought cup of joe! This also makes it fun to reward yourself by not taking away something bigger in your future.
Set short-term / Long-term goals
You can invest in yourself in different ways. For me, my short-term goals typically revolve around travel, leisure, and life experiences and my long-term goals will be something like, I want to buy a house one day… I want to invest in real estate. When you have these ideas in your head at a young age, It is going to make a huge difference in how you respect and make money in your life.
It’s also good to keep in mind your needs and wants. Revaluate. and pivot. For example, I am 20 and I can suffice in a studio apartment, I do not need a two-bedroom or a loft. You may have to rough it a little bit now so that you can thrive harder later. Do you need a car right now? or can public transportation get you to where you need it?
I have also set up automatic withdrawals with my bank so that 20% of my income will AUTOMATICALLY go into my savings so that I don’t even have to think, touch it, see it, or even worry about it. Therefore it will be set aside for emergency and rainy day funds and even my beautiful future.
MINIMIZE TEMPTATIONS
Spending time with people who have poor spending habits, or pressure you to engage in conspicuous consumption and living outside of your means can be extremely detrimental to your future. Know your worth and fix your environment. I think it is very important to be careful with comparison and remove that. You don’t know what kind of money people have and where it is coming from. It is easy to see people live a certain way and want to imitate that but it’s important to take a step back and figure out what is important to you. And remember, you don’t know everyone’s situation and affordability. It is up to you to lead the life you want and don’t overthink your uniqueness! Embrace it.
Take a step back and master what you have! Not what you are making🤍
“Don’t save what is left after spending; spend what is left after saving”
Shift your mindset. Revaluate what is important to you and push for your dreams and a future you want to create. Money is not everything, but your future is🤍 Feel free to message me or email me for anymore tips, questions, or suggestions. I would love for us all to navigate these times together and come out better more successful versions of ourselves!
