The best way to begin a life of frugal living is to understand what you’re bringing in each month and how much of that money is going where and to what. Since we’re working with numbers, there’s little room for confusion and only as much wiggle-room as you allow. You’d be surprised to see that small changes to how we look at spending and ultimately what we’re spending on, make a big impact on our capacity to save- even if that just means bringing lunch from home or swapping those 6$ lattes for regular coffee (or even better- sticking to free coffee from the office and avoiding coffee-spending altogether).  No matter who we are or how much we’re making, spending consciously and saving can benefit us all.

Rule #1: Get Budgeting Help and Make a Plan

Betterment and Mint are great apps to help you audit your spending so you can stay more conscious about where your money is going and they also help to notify you when and where you’re over-spending. LearnVest also has a program called the One Number Strategy which helps you realistically achieve any financial plan, which is great for paying off debt or planning for a trip. I’m also a big fan of the blog The Penny Hoarder. Staying on top of your spending now will make for much less stress later on and adjustments to your financial awareness will begin to benefit you immediately.

Rule #2: The 50/20/30 Rule

-50% of your monthly budget should go to the absolute essentials (meaning: rent, food aka groceries, transportation)

-20% should go towards your future (meaning: goals, retirement savings, emergency savings)

-30% should go towards lifestyle expenses like shopping, coffee, entertainment, etc.

Rule #3: Don’t Over-Spend on Rent

Your rent shouldn’t cost more than 30% of what you take home each month. Most of us rationalize over-spacing on rent because we figure it’s worth the amount of time we spend in our homes. It isn’t! You’ll be much happier, not to mention better off financially, if you consider this greatly while looking for a space to call home. If budgeting and saving are where you’re at, now isn’t the time to be shelling out big bucks on rent. There’s always going to be time for that overly expensive living situation when you’re earning more (which you will, eventually!) and worrying less.

Rule #4: Keep it Balanced

A good financial plan focuses on balance of spending.  If you know you have a large expense coming up (buying someone a gift or going on a trip), give yourself a month or two (or more, if need be) to start saving on the things you can cut back on, this way you won’t take a huge hit when you need to shell out for that looming expense).  Also: saving for a rainy day goes a long way. You never know when an unexpectant bill might creep up and you don’t want to be set back when it happens.  Assume the inevitable and if you get extra income (money as a gift or from a supplemental job) put it aside just in case. It will more than likely come in handy.

Rule #5: Cut Yourself Some Slack

If you’re new to budgeting and find yourself 6 months in, having saved an impressive amount, feel free to treat yourself. Buy that jacket you’ve been eyeing or take that ridiculously-priced workout class. Just don’t over do it, remember: it’s all about BALANCE!

By Raquel Silver