These days, digital banking has become the norm for young adults. With its ease of access and 24/7 availability, it’s no wonder more and more younger people are moving towards it.
But, without a local branch and a personal relationship with their bank manager, many may miss out on valuable budgeting advice.
Here’s why you need to have a good budgeting system to manage your finances, and how you can set one up.
Focus on your spending habits
With the invention of the smartphone and contactless payments, it’s never been easier to spend your hard-earned money instantly. Sometimes you can spend too much without even realising it.
To create a stronger budget, you need to sit down and analyse your spending. Keep track of your monthly expenses: every purchase, every night out, and any subscriptions you pay for.
You might soon realise that the streaming platform you pay for and rarely use is a waste of money.
Make a plan
Budgeting isn’t just about cutting out the non-essentials. You need to account for your regular payments, such as rent and utility bills. You know these will be fixed costs (for the most part), so you should always set them aside.
Throughout the calendar year, you’ll also have special events to consider. Christmas, birthdays and any holidays should also be part of your budget. Once you have all of these in mind, you can check them against your everyday spending to give yourself a clearer picture of your upcoming costs.
Set something aside for emergencies
You can’t predict what’s going to happen a day, week, or month from now. If you don’t budget correctly, you could find yourself in an emergency without the money to cover your living costs.
This could be anything from your boiler breaking down to a family emergency you need to travel for. Again, it’s impossible to foresee the financial impact of these circumstances, so the best thing you can do is set aside a specific amount each payday in case of emergencies. Many experts recommend saving somewhere between three and six months’ worth of living costs.
Separate your finances
We’ve spoken about setting money aside in this article a couple of times. The easiest and best way to do that is by opening a separate savings account.
This way, you can transfer a portion of your salary into a pot every payday and keep it out of your mind until you need it. This is where you must show some self-restraint, though. Some banks will allow you to set up savings accounts with certain restrictions – often, these can come with higher interest rates in return for locking away your funds for a set period of time.
Talk to us
Many young people may not consider a financial adviser as their first port of call when dealing with their finances. It’s understandable – it might seem like an extra cost to begin with, but what we can offer is sound advice and guidance that’s specific to your situation.
With rising costs and interest hikes becoming commonplace, it’s never been a better time to talk to a professional about your budgeting habits.
We believe that learning financial control from a younger age is paramount for a stable future. So, if you want advice on how to set a realistic budget, get in touch.