Renters are a diverse group, ranging from college students looking at their first apartment to families of four who haven’t yet made the jump to home ownership. No matter who you are, it always pays to take a little extra time to budget your finances.
By budgeting your finances, you’ll identify “money pits” and discover new ways to live more comfortably within your means. While the flexibility of your budget depends highly upon your income, anyone can benefit from these simple budgeting tips for renters.
Start by calculating your current income versus your expenses.
As a renter looking to budget your finances, you’ll want to start with the obvious. Take 30 minutes to sit down and evaluate your current situation. Look at your monthly income after taxes and itemize your monthly expenses – rent, utilities, groceries, gas, insurance, and luxury purchases. By subtracting your monthly expenses from your monthly income, you’ll have a much deeper understanding of your finances. Seeing an itemized list of expenditures will also help determine ways to…
Reduce costs and unnecessary expenses.
Are you going out to eat a little too often? Do you subscribe to Netflix, Hulu, and cable, but find you’re just watching everything for free on YouTube? Are you leaving the lights on at night and keeping the thermostat cranked to 74° all year long?
These are all opportunities for you to save money! Instead of eating out once a week, cut it down to once a month. Look at any services you’re not using and cancel those subscriptions. Be vigilant about turning off your lights and try turning down the thermostat when you’re away from your apartment or even while you sleep at night (blankets are your friend). Try talking to your Internet service provider (ISP) or phone company to see about reducing your monthly bill. Ultimately, your goal here is to…
Develop good habits. Then, stick to them!
You’ll find it takes a lot of discipline at first, but you’ll also save a ton of money in the long run. Once you get into the practice of reducing needless expenses, you’ll quickly find that you’re saving more money than you might have expected. It’s okay to treat yourself every now and then – just save these treats for special occasions. Speaking of save, you should also…
Save a little extra money for emergencies and future needs.
As you budget your finances more effectively, you’ll start to notice a pretty decent number running up in your bank account. To reduce the temptation of an impulse shopping spree, open a separate high-yield savings account and keep a percentage of what you’re saving there. Set your own goals! A good starting point is three to ten percent of every paycheck (you can always change this amount later). Then, forget it’s even there. You’ll be glad you have it if there’s ever an emergency.
All in all, you’ll want to re-budget your finances every few months or anytime you experience a major life event (e.g. new job, pay increase, child, marriage). While a successful budget requires a little work and a lot of discipline, setting goals and sticking to good habits can guarantee success.
If you’re having trouble getting started on your budget, check out the FTC’s “Make a Budget” worksheet.