How To Budget And Save in Your 20's | Tips and Tricks

[Music] hi hello how's it going it's alehna and welcome back so today I want to talk about something I feel like it's very important to talk about especially these kinds of conversations are so crucial with young women and I think this type of conversation needs to be normalized today I'm talking all about finances specifically how to budget and how to save I made a video all about financial tips for your 20s so you gonna watch that it'll be up here I figured I'd kind of dive in on a more specific issue within that which would

be budgeting and saving and the importance of it and how to do it as well as tips and tricks for a while I'm obviously not a financial adviser I did take a lot of business classes in school growing up for me and my family I would say money was definitely on the tighter side and I feel like from a young age then I saw the importance of budgeting and saving and the value that each dollar has as someone that exists in the influencers sphere I just feel like there's this heavy push for like over consumption

that is just not a healthy message to be pushed out like yeah it's fun to watch our summer haul of someone spending $1,000 on a bunch of fast fashion but I don't think it's super healthy to promote that way of living and obviously everyone's situations are different and just so many people can't even afford to think about doing that I feel like with being young especially in your 20s there's this narrative about needing like live your life to the fullest and a lot of people equate that with spending a lot of money on things that

you can't necessarily afford on short term pleasure and I feel like we're constantly pulled between these two sides of like let me save money for the future but like you only live once you're only young once so why not enjoy my youth in my freedom now I feel like financial freedom and stability is the ultimate way to like treat yo'self and to truly like appreciate yourself by making money and then spending it all living paycheck to paycheck it's at the cost of your own future and I think it's really important to think about your future

goals and where you want to be and how you want to be living and if you want to have a family and all those things and the decisions that you decide to make now financially really will affect you in the future a lot of times that means delaying some of that instant gratification look for just overall I feel like financial literacy and responsibility equates to freedom and empowerment and just really taking a hold of your life that's me rambling a little bit about the importance of being knowledgeable about your money about how you're spending it

where it's going excetera [Music] first off we're gonna talk about budgeting in case there's anyone out there who just has no idea what a financial budget is it's basically saying that you're only going to spend X amount of money in different categories each month obviously with everything in this video it's gonna be extremely dependent person-to-person on your situation on what you need to spend money on in my case I don't have a consistent income I technically work like project to project so it makes budgeting trickier because it's not like I'm making a certain amount each

month and then I can like fill in the little buckets with that every month differs it's gonna be different person to person so when it comes to making your budget its first and foremost super important to list out all of your expenses as well as all of your income that's kind of the first place to start the way that I recommend do it if you never made a budget is taking a look at the last three months of expenses as well as income and kind of going off of that so the way that I do

it personally is I use Mint which is an online website that basically helps you manage your money and know where it's going you link like your cards and your bank to it and it will basically divide up all your expenses into different months as well as different categories which is extremely helpful to know where your money is going in my opinion it doesn't do it perfectly and sometimes it's confusing like if I'm paying off a credit card bill or if I made like a venmo to a friend like it obviously doesn't take that into account

so what I do is I will go through a mint and then I will take all that information and I'll still make my own spreadsheet but mint honestly makes it like a hundred times easier because it basically like pre organizes all of your expenses for you so then when it comes to making that budgeting spreadsheet I basically split it out into a bunch of different categories like rent utilities transportation groceries eating out entertainment etc in order to make a budget for the future like I said you have to kind of look at your past expenses

so I think it's important to go through all your expenses and divide it in those categories and look like okay how much am i spending how much money am I making what debt might I have to pay off what might I want to add to retirement make sure you got up exactly but you're making exactly how much you're spending so you can know where you're at like I said I think it's easiest when you're starting out to basically just be very observant of what you're doing before you try to assign a set budget and number

to each category it helps to start off by keeping track on a weekly basis there's other really great resources out there like wine app is an app where you have to basically input all of your expenses as you spend money which forces you to be very mindful of where your money is going which i think is super helpful so once you're kind of aware of your expenses as well as like your incoming money it can kind of be a little intimidating to kind of figure out where to assign different amounts of money and I talked

about this in my last finance video but I feel like the 50 30 20 year old can help quite a bit I think it's a great rule if you're just not really sure where to start how to divide up your money visualize a little pie chart here so you're 50 yeah gasps you're 30 and then you got your 20 chunk so the 50% chunk of your income should be spent on things that are essential so think rent utilities transportation phone bill gas groceries etc that's where you should be budgeting 50 percent of your money so

30 percent should be sent on things that are not essential but bring you joy so think about dining out entertainment self-care so that area is where you get to have a little bit more fun you know live your life but make sure you're not overdoing it in that category because a lot of us I feel like will tend to expand that 30% a little bit larger for you know a new swimsuit or new clothes and then the 20% portion should be spent on saving paying off debt retirement planning I highly recommend starting an emergency fund

this is really important for saving for your future I mean clearly anything could happen we're at a pandemic right now ideally at least three months if you could work up to three months that's amazing and then try to work up to six months of savings and then twelve months of savings is just as a cushion to have in case just like things go wrong because they clearly do and it's good to be prepared I talked about this in the other video as well but please start your retirement now is the time the younger the better

your future self will thank you so much for doing it basically when it comes to building your tire mint it is calm founded so it's gonna grow over time so the sooner you start the better if you do not have a job that provides a 401k you can stir a Roth IRA on your own today and slowly start adding to that that's what I did when I was like 19 and so I've had my retirement just growing slowly it's getting there so when it comes to tracking your money within that rule I find it easiest

to put everything on my debit card or my credit card if I'm trying to gain points but again be careful low credit cards do not spend more money than you have and I feel like that has made it really easy for me to keep track of everything I'm spending my money on on the flip side if you really want to get a hold of your finances if you're on a tighter budget and you really can't afford to go over there's the age-old like cash envelope system like I saw my parents doing this growing up or

basically at the beginning of the month you draw out the money out of the bank exactly what you need for the month and you put it in different envelopes for that month so like you got your rent envelope you got your groceries envelope you got your gas envelope you got your in a team and envelope and you put in whatever you decide is an appropriate budget for that category and once you're like coffee envelope is out of money you you know no more Starbucks for you and it kind of forces you to make sure you're

spending within your means and not just being like oh I had a rough day I'm gonna get post mates again and spend more than I should instead of like eating a meal at home your envelope system isn't gonna be like ah you don't got money for it I feel like a lot of the tools that are a little bit more strict like I said are great at the beginning and then with time as you become more mindful with your money and where it's going you can kind of like Muhsin up find what works for you

but sometimes you just need like a shock at the beginning to really like get you into place for me creating a set budget with a set amount of money at the beginning of the month isn't like a perfect system for me like I've tried that and doesn't quite work so basically for myself at the end of every single month I fill out a spreadsheet of everything that I spent money on for that month and I break it down by section like I said one thing that I do that's a little bit different and forces me

to be more mindful of my money is that I will breakdown each section with like specific items so with my eating out section like all write down like I went to the sushi restaurant and I spent this much I went to in-and-out and I spend this much I spent this much on Jamba Juice and so I'll have like ten entries all for eating out for a month as well as like clothing like if I got any clothing that month like I'll write down like okay I got this specific swimsuit from this store I got this

shirt from here and it really just forces me to be much more aware of where my money's going because sometimes it can be easy to like get new art supplies in a book from Amazon and when it's all grouped together and shopping it's kind of a little bit harder to be keeping track of specifically where you're overspending so I found it helpful for certain categories to list it out by item if I'm gonna like cotton balls at CVS like I'm not gonna write that down but for slightly bigger purchases that are considered extra and things

I don't necessarily need I want to make sure I'm very aware and remind myself that I spent money on it so when it comes to saving money we all have areas for the most part that we can cut back on all these see there's exceptions even if they're little where you can cut back if you're determined to start saving like in my case like I like shopping like I wanted a new swimsuit for the summer and a lot of times like I'll want to update my camera gear but in order to justify us purchases I

have to make sure that I'm sacrificing in other areas so like if I'm gonna get a swimsuit for summer like I'm gonna make sure I'm not buying other clothes or then I'm not buying like beauty products or just things that are excessive that I don't need and that I'm being careful of what purchases I'm making as my like splurge purchases I think another important thing is rethinking your luxuries I feel like it's easy to justify you know a cup of coffee every day or getting postmates several times a week is like Oh smile I treat

myself moment but if you have big saving goals like a new camera or a car or even a home in the future you need to rethink what your luxuries are and redefine them that has really helped me mentally cuz it can be easy to just like I said feel like oh well I just want it like I've been working hard so I'm just gonna get it when in reality I know that by purchasing that it's gonna take away from something bigger that I'm gonna enjoy in the future or potentially something that is a greater investment

in my future so for a savoring I think it's really important to set yourself short-term girls and long-term goals you can invest in yourself in different ways like for some people a short-term goal might be buying something that's like more of a splurge or might be investing and traveling and kind of have the cultural experience so kind of depends across the board but when you start to set those goals and have them in your mind that looks like let's say I want to end by house one day down the road and invest in real estate

when you have that idea planted in your head as like an 18 year old 20 year old 25 year old etc it's gonna make a big difference in the way you view finances and the way you spend money day to day it's also good to keep in mind the differences between needs and once when it comes to actually saving your money I think a lot of times you can be like I need this bigger apartment I need more space and it's good to kind of like take a step back reevaluate like okay do I actually

though I'm young like I can live in a less nice apartment like I'd rather rough it now than when I'm like 35 or like oh do I need a car right now like no public transportation is cutting it for me and be extra to do it otherwise so I think it's good to ask yourself those things expression when it comes to bigger purchases or investments also within your finances you can set up automatic withdrawals with your bank which is really helpful when your income comes in you can say like okay 20% is going into savings

off the bat so you don't even see it you don't even touch it and therefore it's gonna be set aside for emergency fund your debt etc spending time with people who have really bad spending habits and you aren't in the same position or have the same goals as you can really make a difference in where your money is going and I think it's very important to be careful with comparison and try to remove that because you can see a friend spending $300 on a pair of boots and it's really easy to compare yourself to them

but you don't know where your money's coming from you don't know if they have like a credit card from their dad or if they themselves are in a ton of debt it's easy to see people live a certain way and wanting to imitate that I think it's important to take a step back and like you know focus on what's important for you when it comes down to it's all about mastering what you have not how much you're making I really love this quote from Warren Buffett he says don't save what's left after spending but spend

what's left after saving so when it comes to wanting to be better with your money save your money and just overall become more financially responsible a big part of it is just shifting your mindset and revalidate what's important to you and reevaluating the way that you see money and you spend money so overall I hope these tips are helpful when it comes to learning how to budget learning how to be much more mindful and responsible with your money as well as saving for your future and your yourself will be so happy that you do let

me know if you have any questions or if you have any tips that you think people should know please leave a description I will be hanging out down there chatting with you all as usual thanks so much for watching until next time love you [Music]