A lot of good apps help you see where your money went, but you probably need to focus on not spending compared to looking at your app at the end of the month to realize you wasted a ton of money, but it’s still good to document your expenses by category with one of these free apps.
First, I would put every dime I have to my savings account to create an emergency fund, for me that’s $10,000, do not touch this money unless it’s an emergency! No, a car or buying an investment property is not an emergency.
Secondly, fund a traditional or Roth ira or both depending on your income tax plan(traditional is tax deductible, so that might help you avoid owing the IRS but the Roth grows tax free) I put roughly 25% of my net income to my Traditional IRA and Roth IRA collectively after they are fully funded for the year I buy vanguard index funds with the rest. I like Robinhood and the Stash app for these types of investments.
I try to live off of only 25% of my net income, this may not be possible for you depending on the cost of living where you live. I have made the choice to live in a low cost home in a part of the country where the cost of living is very cheap, but that’s not for everyone.
I try to save another 25% of my net income for real estate investing, I use 100% of the profit from that to fund more real estate investments.
The last 25% is for trying to have a decent quality of life. Spend it on what makes you happy. For me I try to go on a couple vacations every year(without breaking the bank). Whatever money is left over from this I hold onto for bigger purchases like maybe a car upgrade in a few years or you could use half of this to become more aggressive on your debt payments.
It’s important to fund your savings account and investments first. If you don’t you will find yourself spending that money and you will not stay disciplined with your investing. If you get married continue this strategy with one income while using 75-100% of the second income to pay off debt and invest. The most common two things to destroy a budget is a car loan and groceries/eating out. Most households easily spend well over a thousand dollars monthly on these two things. Pay cash for a used car, and keep the groceries around $25-35/week per person. It’s not too difficult to do if you get smart about what you buy and how you eat. Grow a small garden or hit up a farmers market and buy your protein right, Drink water, etc.
It doesn’t take much knowledge or education to do any of this it’s all very simple and common sense but most people have lost the ability to be disciplined and hold themselves accountable. The urge to impress others is way too strong for most people. And the more money you make the harder It becomes to stay disciplined.
Sorry for writing a book but I’m passionate about being frugal!
