“When you’re young and single, that’s when you usually have the most flexibility with your budget. Take the opportunity to establish good budgeting habits that will carry you through your financial life,” said Rachael Burns, certified financial planner and founder of True Worth Financial Planning in Folsom, California.
Early in your career and spreading out your first paychecks, you can establish a budgeting baseline that you can follow for decades and continue to use when your life gets tough.
“Consider grouping your expenses into two categories — fixed expenses and flexible expenses,” says Natalie Taylor, a certified financial planner in Santa Barbara, Calif. “Fixed expenses are those that are the same (or roughly the same) each month and can be put on automatic payment – everything from your mortgage to your music subscriptions. These are expenses you’ve already committed to, and tracking them on a daily basis won’t really impact your budget. Flexible spending includes all of your day-to-day expenses – restaurants, gas, clothing, home supplies, personal care, etc. Flexible spending happens every time you deposit money, swipe a card, or click “buy” online. These are the expenses you have the most influence over, so this is where to focus if you’re trying to manage expenses.
You can still benefit from budgeting without having to go into too much detail when tracking how you spend your money.
“Keep your budget categories broad to make long-term tracking easier,” Taylor said. “For example, instead of having separate categories for restaurants, groceries, fast food, and coffee, use one category for food to capture all of these expenses. By having fewer categories, you will not only be able to categorize all your expenses faster, but you’ll also have more flexibility within each category to spend where you want.
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