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I have a confession. I've never tried Avocado Toast. The idea of guacamole on bread when there is a perfectly good chip right there is foreign to me.
Yet somehow, even though I'm not splurging on such excess, it is still hard to make ends meet.
For those of us who are working too many jobs for too little cash, burdened by student debt and bad opportunity, every last cent matters. The dread of wondering if this is the month when extra groceries or one too many stops at the gas station are going to mean overdraft charges.
Even when broke is your status quo, it is possible to break away from the abject misery of paycheck to paycheck living. Your greatest tool in that pursuit is a budget. No matter how intimidating it seems, it only takes a few steps to get moving toward a better financial horizon.
Step 1: Track that Shit
Obviously, the first step to any budget is figuring out what your expenses already are. This isn’t just health insurance and rent and utilities. You’ve got to track shoe purchases and breakfast burritos and the one coke that you justify to keep you going at the end of the 11 hour work day. Don’t just estimate those costs, they can be different than you expect.
The number one thing that gets missed in your average budget are big, once or twice a year expenses. Car upkeep, birthday gifts, and new winter gear happen every year but they always get left out of budgets. Instead, look back through the whole year and see when you'll need a little extra. That way, when Aunt Sharon reminds you that it is your turn to bring Thanksgiving Dinner for the whole clan, you’re ready.
Don't Forget: Overestimate Expenses
It is really easy to track your spending if you buy everything with a card, but if you use cash, it can be hard to know just where all that money went. Don’t worry, you can still budget, but your estimates need to follow one important rule: overestimate.
Round those numbers up — the bigger the number, the more you should round up. That might sound like insanity when you are scraping the barrel, but those extra few cents create a buffer in case your estimate is wrong. Even if you wind up spending less than your estimate, it can save you if a minor emergency crops up.
On the other side, when tracking your income, always round down. If you plan on receiving a little less than you do, you’ll always be ready for that week when you called out sick and don’t make the extra hour of overtime (or any money at all for those of us without benefits).
Step 2: Sacrifice Wisely
Once you know what money you have to work with, it is time to work the numbers so you stop running out of cash. That means setting limits on spending, which unfortunately means cutting out some of the good stuff.
Now I can never make it through a diet that cuts out cheese (all hail the dairy gods). Everyone has things that they simply can’t live without. If you live in a big city, those necessities might not be negotiable — things like exorbitantly high rents and parking just come with the location. The whole point of a budget it to make it easier to feel less poor than you are. That means that you've got to leave in enough space for the occasional small luxury. So, in choosing your sacrifices, choose wisely and look realistically at yourself. The budget that has no room for human error is one that is doomed to fail.
Don't Forget: Debt is the Enemy
For the 63%+ of Millennials with student loans, debt is a constant, looming burden. Of course, debt comes in all shapes and sizes: credit cards, car loans, and personal loans all take their toll as well. The real plague of debt is interest. Like Sysiphus you can make interest-only payments eternally without every paying it down. But, debt shouldn’t be something we carry with us forever, and pay-down should be an integral part of any budget.
The key to paying down debt is triage. Figure out which one is costing you the most (spoiler, unless you have crazy medical bills, student loans will be the worst culprit), and come up with a plan for paying them down. There are a lot of different methods for paying them down: small to large (by paying off small loans quickly you can put more money toward paying off big loans); big interest to little interest (because a 19% APR is going to rack up a lot faster than a 6% one); overall interest cost (paying down the one that accrues the most interest every month first).
Regardless of how you decide to pay down your loans, don’t skimp on this. Even five or ten dollars extra a month will save you hundreds in the long run, and can eventually lead to more money to work with even if you don't make more money.
Step 3: Save With Purpose
In the ideal world, there wouldn't be a need to every take out another loan. Obviously, emergencies happen, and when money is tight there often isn't an alternative. Saving a little every month can give you enough space to keep the little crises from becoming big ones.
When you are scraping by, the idea of saving is laughable. That’s why you need to re-think the purpose of savings. I'm not talking retirement fund here. I mean having a “my car just broke down and I can’t pay for repairs” fund, or an “I just got fired and might starve” fund. That way, if things go right and there are no emergencies, you'll have a “someday I’ll go on vacation” fund or a “stunning new leg tattoo” fund.
Set savings goals that motivate you. It’s a lot easier to not buy that new shirt or the bag of chips at the grocery store when you know that money is going to something tangible and real. I can do the math of exactly how many bags of chips I have to sacrifice before I get a new haircut — and the number is smaller than you might think. A note of caution — if you decide to blow savings on something fun, make sure that you don't completely erase that buffer. A good rule is to always leave as much in savings as you take out. That way karma can't catch you too unaware, and you'll be closer to the next big purchase already.
If You're Still Struggling: Automation is the Future
My dad helped me draft my first budget in kindergarten. He knew that money management was a skill that I'd need. Most of my friends have never had anyone walk them through a budget, which makes them seem scarier than they need to be.
Luckily, we live in the future and technology is here to save our oblivious asses. From apps like Wally and Goodbudget that walk you through the whole process to Level Money and Mint that focus more on tracking spending, there are apps that can make a budget easy and doable. Some require a lot of input and time — like a food tracker they need your input to understand what the numbers mean. Others, like Digit, only require initial setup before they can automatically transfer money to your savings.
No matter how tight your money is, a good budget can make life a lot more manageable. So, pull up that sad bank account and whip it into shape. Because when money is tight, a good budget can be the difference between having the cash for that avocado toast, and not.