As a young adult, you've probably experienced the pull between maintaining an active social life and saving for the future. On one side, you want to create memorable experiences with your friends and loved ones, but on the other, there are bills to pay and dreams to save for.
Young people are spending more money than ever on experiences from going out to paying to attend unique, curated events. According to Eventbrite, the average person spends around $81 on a single night out. That might not seem much in isolation, but add it up over time, and suddenly, it's a significant chunk of your hard-earned money.
Maintaining your social life without breaking the bank begins with smart budgeting and mindful spending.
Set Aside Money for Social Activities
One important rule for keeping a budget-friendly social life is to set aside a specific amount for your outings. How much you set aside depends on your circumstances, including your income, fixed expenses, and personal savings goals.
A good rule of thumb is to ensure that your social activities budget doesn't prevent you from meeting your essential needs or contributing to your savings. For instance, the 50/30/20 budget system categorizes expenses into three categories:
- Necessities (50%);
- Wants (30%);
- Savings and debt (20%).
However, you can adjust this as you need. For instance, if your necessities are less than 50% of your income, you can allocate the surplus to your wants or savings. If you're focusing on saving for a down payment on a house or paying off student loans, you might want to put that extra money toward your savings and debts.
Stick To Your Spending Limits
Once you've set your budget, the next crucial step is to stick to your spending limits. This can often be the most challenging part of budgeting, but it's also arguably the most important. By sticking to your spending limits, you ensure you're living within your means.
Here are a few tips solid budgeting tips:
- Keep track of your income and don’t spend more than you earn. Track your expenses to understand your spending habits and identify areas of potential overspending.
- Try to stick to your shopping list and avoid making purchases on a whim.
- Review and adjust your budget periodically as your income and expenses will change over time.
A budget is not a restriction but a tool that allows you to enjoy life without financial stress.
Save Up for Big Events
Life is filled with major social events that often come with hefty price tags. Think weddings, vacations, buying a home, or starting a family. These milestone moments are all part of life's journey, but they can also strain your finances if you don't plan ahead.
Here are some practical tips to help you save for these larger social expenditures:
- Have a clear goal in mind. Whether it's a destination wedding or a down payment on a house, knowing what you're saving for can keep you focused.
- Set up automatic transfers to your savings account so you're consistently saving without having to think about it.
- Increase your income. Take on a side job, sell unnecessary items, or ask for a raise at work.
Building your savings for big events doesn't mean sacrificing enjoyment today. It's about making mindful decisions that align your current activities with your future goals.
Use Budgeting Tools
Budgeting tools are handy as they help you keep track of your spending, create budgets that fit your needs, and even give you a heads-up when you're getting close to your limits.
Here are a few options that can cater to different budgeting needs:
- You Need A Budget (YNAB): This app uses the zero-sum budgeting approach, where every dollar has a specific job. This means that you plan and assign every dollar before spending it.
- Honeydue: This app helps couples manage finances together. Track spending, set budgets, and view all accounts in one place with your partner.
- Fudget: If you prefer a simple budgeting app, Fudget is worth considering. Easy to use, and budget creation and expense tracking are made simple.
To make these apps habitual in your budgeting routine, consider setting aside a regular time each day or week — like Sunday evenings or right after you get paid — to update and review your budget. You could set a reminder on your phone or calendar to prompt you to open up your spreadsheet or budgeting app.
Be Smart with Credit Cards
A TransUnion study revealed that 50% of Gen Zers in the U.S. have credit cards. This indicates that young adults are keen on using credit as a financial tool. The research included 33 million Gen Z consumers worldwide who are beginning to use various lending products, showing it's a global trend.
One major advantage of using credit cards is the opportunity to build credit. A strong credit history can open doors to important financial milestones, such as securing a mortgage or car loan at favorable interest rates. However, the flip side of this coin is the potential for going into debt. Credit cards make it easy to spend money you don't have, which can lead to mounting debt if you're not careful.
To enjoy credit card benefits without debt, consider the following tips:
- Pay your balance in full each month to avoid interest charges and keep your debt levels in check.
- Use your credit card within the confines of your budget.
- Regularly review your statements to spot unauthorized charges or errors and keep track of your spending.
Credit cards are a double-edged sword. Leverage their advantages but minimize the drawbacks with smart decisions.
Try to Dress for Less
Fashionable and functional clothing plays a significant role in social lives. However, keeping up with fashion trends or buying new clothes for different occasions can be expensive.
Here are some tips to help you save money on clothing and accessories:
- Invest in fewer, high-quality items as they can be more cost-effective in the long run due to their longevity.
- Rely on thrift stores, consignment shops, and online resale platforms that have more affordable gently used clothing.
- Plan ahead and buy items you need for the next year at end-of-season sales.
- Follow care instructions on your clothes, as it can extend their life cycle.
- Build up more funds by selling the clothes you no longer wear.
You'll find that with a little effort and creativity, it's possible to look stylish without breaking the bank.
Cut Other Costs Where You Can
Cutting expenses in other areas of your life can free up more funds for your social activities. For instance, you might decide to skip the daily gourmet coffee or bring lunch from home instead of eating out. Every bit you save on these regular expenses can add up, giving you extra cash to enjoy.
Here are some areas where you might find opportunities to save:
- Plan your weekly meals, make a shopping list, and stick to it to avoid impulse purchases.
- Review your subscriptions. If you're paying for multiple services, consider choosing one or two you use most.
- Avoid eating out and cook at home more often.
- Use public transportation, carpool, bike, or walk instead to save on commuting and parking costs.
- Turn off lights when you leave a room, unplug electronics when not in use, and be mindful of your water usage.
These tips aren’t necessarily a fix-all remedy to all your financial concerns, either. However, if you use these tips in conjunction with other mindful decisions, you may have extra cash to roll over every month.
Plan Gatherings around Discounts
To continue creating memories with friends and loved ones, be strategic and plan gatherings around discounts to save money. Look for places that offer special deals on certain days of the week, and don't forget to use any student discounts you're eligible for. Consider buying in bulk or getting group rates for events to cut costs. You'd be surprised how much you can save by simply being aware of discounts and planning accordingly.
Find Free Activities
Not every fun outing has to cost money. There are plenty of free or cheap activities you can enjoy with friends, such as:
- Enjoy the great outdoors by going for a hike or bike ride in a local park or trail.
- Visit museums that offer free admission on certain days of the week or month.
- Host a movie night at home.
- Invite friends over for a potluck dinner.
With a bit of creativity, you can have just as much fun without spending a lot of money.
Talk Openly about Money with Your Friends
Talking about money can sometimes feel taboo, but it's crucial to have open conversations about finances with your friends and family. It helps set expectations, prevents awkwardness and pressure to overspend, and promotes a healthy approach towards money management.
Additionally, you’ll get insights into others' money management, allowing you to learn from their experiences and adopt good financial habits.
In the long run, following these suggestions can lead to improved money management throughout your life. That means you can have a great time with friends and family without sacrificing your financial health!