In many cases, financial health starts with creating a budget. You might not even be saving up for anything in particular, but there is good reason to know where your money is coming from, and where it’s going. How else do you know if you’re living within your means, and in accordance with your goals?
Creating a budget is one thing, but sticking to it is a whole other pair of shoes. That’s why it’s important to find a method that suits you and your lifestyle.
Successful budgeting also means being realistic about other ‘wants’ you typically spend money on, such as the hairdresser, a gym membership, or going out for dinner with friends. These expenditures may be just as much part of your budget as your housing costs.
Once you have an idea of your spending patterns, you can tackle your savings. That’s easier done with a goal in mind. For example, are you building your rainy day fund, saving for a vacation, or putting away funds for retirement.
Your Budgeting Psychology
Psychology is a big part of budgeting.
For one, the word itself is uncomfortable for some. Living on a budget might make you feel like you’re not quite keeping up with friends, relatives, colleagues. But there’s another way to look at it. A budget simply means tracking your money: What comes in, and what goes out. There’s nothing wrong with that, and everyone should do it.
At times, you may be saving up for a big expense, and shift your spending pattern accordingly. When you’re operating like business as usual, perhaps you put away the same amount every month to shore up a longer-term nest egg.
Whatever the case, making your financial choices work for you is key. For some that’s taking a certain dollar amount out of every paycheck before you even start to budget. For other’s, it’s putting all unused funds at the end of the month into a high-yield savings account. Yet others find success putting cash into envelopes (and then in a safe place).
Don’t be afraid to try and find out what works for you. SoFi can help get started with your budget — and even better, it’s free!
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