As young adults, we can’t deny that things get more difficult as we grow older. We realize that bills are expensive and that we’re the ones who have to pay for groceries, electricity, water, internet, and cellphone bills.

But more importantly, we also start spending more money on ourselves and the things that make us happy like clothes, gadgets, vacations, and dinners out with friends. After all, it can get really tiring if we’re just working hard all the time and we don’t get to reap the fruits of our labor.

However, we also have to be careful that we’re still spending our money responsibly while also enjoying what we earn. That’s why I’m here to give you some tips on improving your relationship with money.

Track Your Expenses

The first thing that you need to do is to track your expenses. You can’t solve a problem unless you are able to identify where they are. When you track your expenses, you would be able to know how much money you are spending on everything that you buy.

This is the best way to prevent you from getting bill shock at the end of the month. A lot of the time, especially if we have credit cards, we just keep swiping and swiping without taking note of how much we’re actually spending.

Cut Back on Expenses

After tracking your expenses, the next logical step is to cut back on your expenses.

One of the easiest ways to save more money at the end of the month is to lessen how much you’re spending. That’s why tracking your expenses is important. It gives you a good idea of which parts of your expenses you can cut back on or limit.

For example, do you really need to be eating out thrice per week? Do you need your daily cup of coffee from Starbucks? Can you really afford to have Spotify, Netflix, and Amazon Prime Video subscriptions? Does your monthly cell phone plan have to be that high?

Revisit your expenses and see which spending habits you can cut. 

Increase Your Income

Aside from limiting your expenses, another way to increase your savings would be to increase your income. Of course, the more money you have coming into your life, then the more freedom you have with your money.

However, a lot of people are merely content with just getting by on their salaries from their daily jobs. This is fine if you happen to work for a company that pays very well, but for the most part, it’s always better to have a side hustle. This is also called diversifying your income. Essentially, if you have multiple streams of income, then you are making it easier for yourself to budget your money. Also, if one stream of income gets cut, then you have others to fall back on. 

Because of the internet, there are many different kinds of side hustles that you can try out online. You can do graphic design, photo-editing, writing, voice-over work, and content creation to name a few. You can even do an online business if you like. Just use whatever skills you have and try to turn them into a source of income. Monetize what you’re good at.

Practice Income – Savings = Expenses

A lot of the time, when people get their monthly income, the first thing that they do is to budget their money for spending. This chunk of your salary goes to phone bills while this will go to groceries and this will go to electricity bills, and so on.

That’s the wrong way to go about it.

The first thing that you always want to do with your monthly income is to pay yourself first. And by paying yourself, we’re talking about savings. You should automatically take a chunk of your monthly income and pour it into savings. Whatever money gets left behind is then devoted to paying off bills.

A good goal is to have 50% of your monthly income towards your savings or investments. Then, the rest of your income should go to sustaining yourself. Although, it’s a case-to-case basis for everyone. Others can only afford to save as much as 20% of their monthly income, and that’s fine. Just do what works for you.

Pay Off Your Debts

Lastly, pay off your debts. It’s a lot easier to get rich and achieve financial freedom if you don’t have any debts to worry about. Of course, this might be difficult for those who are drowning in debt, but it’s always possible to overcome it. You just need to practice all the previously listed steps and make sure that you develop a game plan that will allow you to overcome your debt in the future. 

Charm de Leon is the content creator behind Ready2Adult PH, an online platform where she talks about personal finance, entrepreneurship, and adulting how-tos. Visit her website and subscribe to her YouTube channel.