How to Budget Better & Save Money as a Young Adult

Managing your money as a young adult can feel overwhelming, especially as this is not taught in schools (although this is changing!). Building strong financial habits early can set the foundations for long-term stability and help you build towards a healthy financial future. With this in mind, this post will explore practical ways to create a strong budget and save money each month. Read on to find out more.

Start with a Realistic Budget

A budget is a great way to control your spending each month, but you need to be realistic. Calculate your total take-home monthly income and then divide this into different spending categories, starting with priorities like rent, bills, food, etc. The 50/30/20 rule is a great option for beginners, where 50% goes to essentials, 30% to non-essentials, and 20% to debt clearance/savings (you can adjust the percentages to suit your circumstances/goals). 

Build an Emergency Fund

Having a budget is useful for controlling your monthly spending, but this can be thrown off by an unexpected expense. Life can be unpredictable, which means that costs like car repairs, appliance replacements, or an unexpected trip can create a challenging situation that results in many turning to credit. An emergency fund allows you to cover unexpected costs without having to borrow and can provide peace of mind. You can build this up by regularly contributing a small percentage of your monthly income to a high-interest yet easy-access account. 

Use Budgeting Tools & Apps

These days, there are various budgeting tools and apps that can make it easier to keep track of spending. Apps like Snoop and Plum help you track spending in real time, automate savings, and keep on top of bills. Many struggle to stick to their budget and forget to put money into savings, so tools like this can be incredibly useful and make a big difference to your finances.

Plan for Essential Costs

You should always have a plan in place for your essential costs each month, especially if you live alone or are a student. These are the costs that you must always cover, such as rent, bills, insurance, and food. If you are learning to drive, factor in the cost of lessons and consider learner insurance that will cover you until you have passed your test. 

Managing your money for the first time as a young adult can be daunting, but it is also hugely important. By educating yourself and adopting positive habits at a young age, you will build a strong foundation and create a brighter financial future for yourself. Many young adults lack basic personal finance knowledge, so you want to make sure that you know how to budget and save each month to avoid falling into financial difficulties at a young age that hold you back.