You can start by stepping back and going over your bank statements, or have an app categorize them for you. Divide them up into sections such as fast food, bank fees, bills, etc. When you actually take a look at what you spend and have an actual dollar amount on things, it will open your eyes. After you have seen where you spend your money, it would be best to set a budget.
To set a budget, you need to compare how much you are spending and how much you actually make. Set money aside to take care of yourself and your well-being first. This will include expenses like your bills (food, utilities, rent) and putting money aside in a retirement fund. From there make sure you give yourself an allowance because, well, living frugally is not fun.
After you have set some money aside for your well being, your fun money fund, and your savings, you need to make sure that you are thinking about your debt to income ratio. Take a look at all what you owe everyone and how much time and money it will take to pay them back. A majority of these expenses are going to be credit card companies and student/bank loans. The sooner you pay it off the better it will look in your bank account and also on your credit report. Don’t pretend that credit isn't something that affects you, it affects everyone. So don't cancel all your credit cards once you pay them off, keep them open. An open line of unused credit looks good if you are looking to buy a house or a car in the near future. Saving for the down payment and the interest will be a lot better.
Some of you are thinking that the Fun Money Fund (FMF) is a little ridiculous, but it is necessary! You want to make saving easier so that you will keep doing it. You have lived off an allowance before for things that aren't a necessity (most of the time it was no more than twenty dollars here and there) and you can do it as an adult. Want your FMF to grow? Pay off more of your debt and you will have a little wiggle room. Seventy five percent of that monthly payment to unnecessary bills and services could be going to other areas that need to be paid off, and the other twenty five percent of it can go into your FMF!
You may be thinking, where can I get the extra money from to pay the rest of my bills? The answer is in cutting back spending in your daily habits. Here are some common money mistakes people make everyday. See if any of them sound familiar:
01. You keep putting off paying off your credit card debt
02. You don't have a savings account for emergencies
03. You go grocery shopping when you're hungry
04. You enjoy frequent shopping for retail therapy
05. You don't maintain an allowance for fun spending
06. You don't define the difference between want vs. need
07. You never read fine print
08. You're always trying to keep up with trends and fashions
09. You'd consider going into debt for a wedding
10. You prefer to buy a meal instead of preparing it
11. You haven't made a plan before taking out a student loan
12. You don't think you need to have a budget
13. You haven't been paying attention to your credit score
14. You buy items based on the price and not the quality
15. You spend more than you make
16. You want to get a larger house and mortgage than you need
17. You are dependent on one source of income
18. You’re not saving for retirement
19. You replace things that aren't broken
20. You're not paying attention to your debt to income ratio