Let's be honest: Paying bills is necessary, but not necessarily fun. Having extra money after paying them, though? Now, that's fun for people—for different reasons.
Some may spend that surplus on concert tickets, a night out, or some other splurge. Others may use it to get closer to a future goal, like paying off a debt or saving for a major purchase. The latter sounds more responsible than the former, but it's no guarantee to make you happier.
Ideally, you strike a balance between short-term and long-term goals. That's easier said than done, though—especially if you don't make a lot of money. However, being financially smart doesn't mean you'll always be flush with cash. What it really means is having a well-devised plan that anticipates your expenses.
Go With The Flow
Inevitably, your funds will act like tides: There will always be an ebb and flow, but with a little bit of work, you can predict it. And once you do that, you can design a budget that works for you. Here's how to do it.
First, take a frank look at your income—not only how much you get, but also when you get it. This review could be as simple as grabbing your paycheck; however, freelance or part-time work, as well as support from family, means the monthly amount varies for some people.
Then, figure out your monthly expenses—anything you regularly spend money on. You don't need to know every expense in advance; you just need a clear picture. If that picture makes you feel guilty, you may need to address it in your new budget. To do this, set aside money for "fun." That way, you can still enjoy your money—but if you avoid some unnecessary purchases, you'll clearly see the savings.
Once you've done all that, record the information in your budget (you can even use our budgeting worksheet to get started). Just be sure to leave some wiggle room; don't budget out the entirety of your paycheck. (You'll thank yourself when you spill coffee on your smartphone or face another unexpected expense.)
Expecting The Unexpected
When you approach your finances with a plan of attack, it's easier to ride the wave of your finances and assess when you need to change your spending habits.
If your income isn't stable, for instance, and you're anticipating a "low-tide" moment (like a hefty medical or dental bill coming in), lessen its impact by adjusting your monthly expenses while your accounts are still steady. You know what's coming, so don't get caught short.
Make adjustments, like planning to cook dinner instead of going out to eat several nights a week. Get used to these changes, and you'll confidently handle even the worst unexpected expenses—your laptop dies, a pipe bursts in your bathroom—because you'll know when you'll be back in good shape.
Take The Long View
Developing a long-term view of your financial future lets you stop guessing whether purchases will come back to hurt you. That's not to say that looking at your finances from this perspective is just about avoiding money problems—it will also help you prepare for extra-special, and often extra-expensive, purchases without breaking the bank.
You'll be able to identify those times when you can spend just a little bit more freely, not to mention take some of the edge off saving up. Not only will you be less anxious when you see that amount in your account dropping—when you splurge on yourself, you'll be able to do it guilt free.