Managing your finances as a Millennial takes careful consideration. The first step to being in healthy financial situation is to control your spending. Once you’ve got your spending under control, you can begin to think about investing those gains and building on your progress.
But how do we control that spending to begin with?
We’re firm believers that setting up processes to manage what you do and what you spend is the best way forward.
When you have a process in place, you can monitor your outgoings and track whether your money is being spent wisely or poorly. You can also more easily stick to these behaviors and make them consistent within your behavior. Habits will define your spending.
Within this article I’m going to give you 4 example processes you can employ to help manage your finances.
Let’s get saving!
You have to create a budget!
The first step in any attempt to curb spending and improve finances is to know how much money you have and how much you want to spend and save.
Setting yourself this target provides you with a structure which you can plan around.
However, creating one budget and never reviewing it means that you will fail to update that budget where necessary. Your broader financial goals should be fluid; where you find you can save even more money, you should be open to adapting your budget to account for this.
This is why we recommend creating a process for preparing your monthly budget. You can run this process every month to determine your overarching financial goals. Because you’re running this process monthly, you can iterate and improve your monthly budgeting aims.
This helps you avoid setting unrealistic targets for yourself, which will damage your ability to save. Plus, it helps you create a balance between your saving and your desired lifestyle. Not everyone wants to live on lentils 10 meals a week in order to save.
You should also remember to track the different monthly budgets you’ve set yourself over time, so you can review your progress and better understand how to improve your budgeting.
Make Sure You Follow Your Budget
Now you have your monthly budget, you can focus on sticking to the goals and structures you’ve set yourself.
Unfortunately, adhering to these stated aims is often harder than simply drawing them up.
We can all say we’re going to live frugally, but actually doing it is a more difficult task. This is why we recommend creating a daily budget tracker.
Keep it super simple at first; you can add extra detail to it if you wish in future. The idea behind the daily budget approach is that you track the basic metrics you need to know to keep to your monthly goals. How much did you spend that day? Did you earn anything extra that day? What was your spending aim originally for that day? What is your variance from that goal? Why did you deviate?
By tracking your spending activity each day, you build up a bulk of data which you can analyze in the future.
If you track this properly day by day you should be able to see all your data compiled for each day’s spending. This can show you patterns. Maybe you’re underspending during the week, but overspending at the weekend? Attached to each deviance metric you should have recorded the reason why you spend over or under your budget that day. This can help show patterns within your own behavior which you can attempt to combat.
Plan Your Day to Help You Keep Spending in Line
You have your monthly goals, and now you also have your daily data to show you either why you’re failing to hit these goals, or where you can make further savings.
With the information you’ve gained in your daily budgeting data, you can look to iron out daily practices which hurt your budgeting aims. Building a simple daily routine checklist provides you with the opportunity to add extra structure to your days.
By creating order, your daily activities and habits are easier to control and account for. You can create it with a detailed series of steps you should be carrying out each day. As long as you leave space for this checklist to be adapted each day to fit the specific needs you have, and record your one-off daily activities, you’ll be able to build a big picture of what you do every day; how you spend your time dictates how you spend your money.
By using this process-driven approach to managing your daily life, you can stop poor habits from hurting your spending. Instead, you can make sure you are spending your days the way you want to be spending them, and not wasting money in the process.
Create Meal Plans to Keep Your Food Budget Under Control
The more you can add structure and order into your daily life, the more you can improve the detailed processes we often take for granted.
Planning your meals and your eating activity in advance is a great way to reduce your outgoings while also improving your health and quality of life.
Run your meal planning process on a weekly basis to keep it flexible and trackable. This is especially useful for someone who wants to monitor their diet as well as their finances – whether to lose weight or to bulk up!
Use Processes to Gain Control of Your Outgoings
Adding structure and order into your activities helps to define your activities.
Once these processes and daily workflows are documented, you can start to iterate and improve them.
By gathering data along the way, you can make informed decisions about your spending based on your actual behavior, rather than some imagined or idealized way you might behave in future.
With healthy finances, daily structure, and better eating strategies, you will find you’re in control of your outgoings more than ever before. You may also find that this kind of ordered life improves your performance in school or at work too!
Make processes the building blocks of becoming financially healthy, and don’t look back!