Here in Chicago there are no shortage of ways to quickly blow a paycheck on both essentials and frivolities. After paying rent, a stop at the organic food market, your quarterly balayage, the gift for your bestie’s bridal shower and cocktails with the girls from work, do you find yourself with little or nothing left for savings? You may not yet be in full-on retirement planning mode, but it would probably (just kidding – we KNOW it would) be nice to have something left over to put away for a rainy day. Here’s how to create a budget and still live your best life.
Make a budget (leave room for the unexpected).
It’s not always fun to “get real” when it comes to how your money will be spent, but winging it or pretending you have means that you don’t, isn’t a practical way to get ahead. You could wind up with low or zero balances in your account, going into overdraft which comes at a hefty price, or racking up credit card bills. Make a list of the 10 most pressing monthly expenses in your life including the essentials like rent/mortgage, phone, utilities, loan payments, groceries and also the “extras” like your salon visits, and membership fees. Try to include an amount that is as close to accurate as possible.
Once you subtract the must-spends from your monthly income, you’ll have an idea of what you’ll have left for your social life, vacation planning, and savings. If you’re a whiz at spreadsheets, you can organize that way for free assuming you already have the software, otherwise there a lots of Apps out there that make it easy-peasy to plan and keep spending in-line. Try Fudget or Goodbudget Budget Planner, which have both free and paid versions.
Watch credit card spending.
The average US household has more than $15K in credit card debt. It doesn’t usually happen overnight, and it can be very difficult to get out of once you’re there. One credit card is really enough, perhaps two if you are a responsible credit card user and are looking to build your credit score for future events like purchasing a home or financing a vehicle.
Too many cards with unpaid balances reflect negatively on your credit score so if you don’t have any more cards than you can afford to pay the balances in their entirety on every month. The advantage of having more cards (if you’re good at managing them) is that you can earn cash back and rewards such as airlines miles, and cash back from certain purchase. Just remember, reward cards usually come with annual fees and have higher APRs, so paying off balances monthly is critical.
Practicality isn’t always as much fun as say, having a closet filled with shoes or bags, but in the end, those Jimmy Choo’s aren’t going to pay your student loans and definitely don’t make you a nicer person. Think before you buy impractical things and save the extra money, so at the end of the month you can reward yourself with a great night out, a good bottle of wine, or a few extra bucks in the vacation bank. You’ll only regret NOT having the shoes for a minute or two, but you could regret the purchase greatly if you don’t have enough to cover a “surprise” expense like a broken-down vehicle or a last minute overnight with your college friends that you so needed!
Take advantage of free and low cost events.
This city is chock-full of free and/or cheap stuff to do! Especially in the summertime… festivals, concerts, “Taste-Of-Some-Neighborhoods”, movies in the park, and oh yeah a 18 mile path along a ginormous lake, to name a few, can keep you busy for little to no cost at all.
In cooler months, there are still lots of fairs and festivals, but you can also check out the Goldstar App for lots of complimentary and heavily discounted theater, comedy and music events all around the city and suburbs. You’ll be super cultural and save a ton of money while impressing your friends with all you can do for a few bucks. Or you can even stay in and treat yourself to a snazzy at-home spa day – complete with essential oils, candles – the works!
The bottom line:
Only you know what your priorities are. Not everyone is planning for a wedding or buying a home, but it’s often the things we don’t plan for that wind up costing us because we didn’t hold some money aside for “emergencies” (even if the emergency is that you forgot your Mom’s birthday).
Save money for sunny and rainy days, spend money on feel-good things you value like your airbrush tan and your gym membership, and pay your bills in full and on time whenever possible, and you’ll be on your way to wherever or whatever your future heart might desire.