Budgeting has become both a taboo word and almost, one of status. Talking about your budget with your partner can be a painful topic, but the friend breezily mentioning it at brunch comes across as smart and sophisticated.
What does budgeting really mean? There are countless apps out there promising to find secret stashes of money if you budget, endless articles discussing various methods, and speakers promising that the reason why young people are in debt is because they spend too much on coffee without budgeting.
Budgeting all begins with tracking your expenses. While not necessarily fun, it is immensely important to know what goes in and what goes out. Luckily for us, it has never been easier.
If you regularly use your credit card, your institution tracks your spending. Some, like Bank of America, have even created some great charts that display how much you spend on each category, such as food, household, travel, etc. This is a great start, and requires minimal effort. Manually tracking each expense will be more accurate, but for a baseline, this is a great start.
You can also have text alerts set up on your credit card. This is great not only for tracking expenses, but for security purposes. You might be surprised at how often those alerts go off for expenses that are set up automatically, such as subscriptions. Sometimes we forget that money is still going out even if we are not swiping that card.
With student loan repayment looming on the horizon, it is important to know how much cash you have left over at the end of each month. Are you able to afford your payments? Do you know what your monthly payments will be in February? Has your spending changed dramatically during the pandemic? What expenses were cut down due to the lockdowns we experienced that may come roaring back?
Lifestyle creep does not just occur when income goes it. It can also sneak up when your expenses decrease, as many found happened during the pandemic. Think about the last few months. Were you struggling to find the money to put away into savings? This could be a signal of lifestyle creep due to COVID, which will only get worse as we return to eating out in restaurants, socializing with friends, and traveling.
The most important thing to remember is that budgeting should not be a scary word synonymous with constraints. You may find that you have more money left over at the end of the month than you had originally thought! Knowing and having control over your cash flow situation should be comforting because you are now prepared for the larger expenses, such as your student loans.