You’ve just woken up one sunny morning and realized that your young and carefree 'twenties' are suddenly behind you. You are now more conscious of career growth and development, financial goals, supporting family and friends, and lots more. 

Without a solid financial plan such as budgeting, you'll likely live paycheck to paycheck, which can become frustrating. You need to note that budgeting isn't about living a life without 'flexing'; rather, it's about prioritizing what matters most. 

From having clear saving goals and creating an emergency fund account to making good investments, this guide will explore seven essential tips for budgeting in your thirties. 

Key Takeaways

• Creating an effective budget starts by properly understanding how much you earn and what you spend your money on

• A good budget is one that is realistic and channelled specifically to your unique financial circumstances.

• The 50-30-20 budgeting rule includes 50% for needs, 30% for wants, and 20% towards savings or debt servicing.

•  Treat your savings as a percentage of your earnings, not as a fixed naira amount; that is, the higher your income, the more increase there should be in your savings.

• You can manage your finances wisely by using reliable savings accounts such as the Moniepoint Business and Personal Banking accounts. 

Tips for Budgeting in Your 30s

1. Properly Understand your Income and Expenses

Creating an effective budget starts by properly understanding how much you earn and what you spend your money on. See your income as the foundation of a solid financial plan; without properly analyzing it, that plan won't be stable. 

So, how do you know what your actual income really is? Start by outlining all your sources of income - your monthly salary, freelance gig earnings, side hustles, and any other payments received. 

On the other hand, tracking your expenses can be much trickier, and you can divide them into two categories. Firstly, divide them into fixed expenses, which include your school fees, rent, transportation, feeding, etc. The second category should be your variable expenses, such as eating out, entertainment, shopping, etc. 

You can easily track your expenses and create a budget using tools like Microsoft Excel Sheets, GoodBudget, YNAB (You Need a Budget), and lots more. Remember, the little expenses and financial decisions make all the difference in your financial efficiency.

2.  Set your Financial Goals 

What really are your financial goals? You have to get real and specific about them by asking yourself how and at what age you'd like to achieve them. You can simplify your financial goals by dividing them into three groups which are; 

• Short-term goals: These include goals that usually take less than a year to achieve. For instance, saving up to buy a new mobile device, paying off a small debt within six months, etc.)

• Medium-term goals: These types of goals typically take 1 to 3 years to achieve and can include things like saving for a wedding, building an emergency fund, etc.)

• Long-term goals: Here, your goals take a longer time to achieve, such as a decade, and some things that can fall into this group are buying a house, sponsoring your children's school fees, etc.)

Ensure that your goals are SMART (specific, measurable, achievable, relevant, and time-bound). 

For instance, if you want to save money to get a new gadget for N160,000, rather than just saying, 'I want to save money to get a new phone', write down what gadget you want to buy, the price, and when you want to get it. 

You can say, 'I want to buy a Tecno smartphone for N160,000, so I'll save N20,000 monthly for the next eight months. Also, try to save higher than the projected amount to accommodate potential inflation price increases. Your goals help you know how to allocate your funds specifically for particular needs.

3. Make a Realistic Budget

A good budget is one that is realistic and channelled specifically to your unique financial circumstances. As much as it's ideal to create an efficient budget, creating an overly strict budget that isn't realistic can leave you feeling frustrated and eventually failing. 

A good tip to remember is to organize your expenses into what you're actually spending versus what you want to spend. Your budget should allow you to see how your income and spending line up and know exactly where to cut down funds and where to allocate more funds. 

Some budgeting types you can consider when looking for one to suit your financial needs include;

I. The 50-30-20 Budget

Anyone can use this budgeting plan, and it involves breaking down your fixed and variable spending into needs and wants. For instance, as a business owner or nine-to-five worker who has to drive to work each day, your expenses on fueling your car or paying public transport fares are a need. 

On the other hand, a Netflix subscription for entertainment can be classified as a want. The first step to creating this budget type is dividing your net income (gross income minus taxes) into three spending groups. 

They include 50% for needs, 30% for wants, and 20% towards savings or debt servicing. 

II. Envelope Budget

This kind of budget is ideal for people who struggle to control their spending. It works by assigning an envelope to each expense category you have outlined. 

Then, you fill the envelopes with the amount of money you have budgeted for that category every month. Another way to do this is to set up various checking accounts and make payments with debit cards assigned to that spending category.

III. Pay-yourself-first Budget

This last type of budget involves allocating a specific amount of money for savings, another for bill payments, and channelling whatever is left to your wants.

IV. Zero-based Budget

This type of budget is ideal for people who earn a fixed monthly income and are organized in keeping records. The idea is for your income minus expenses to equal zero. What this means is that you assign every naira to a specific purpose, and every expense and saving is properly accounted for. 

4. Prioritize Savings

You've probably heard this saying for as long as time itself, 'Save for the rainy days'. While this is something almost everyone knows, it's important that it’s done deliberately and properly. 

As an individual in your 30s, many unforeseen circumstances and responsibilities can pop up in the future, and having savings can help cushion any financial discomfort. 

Additionally, you should treat your savings as a percentage of your earnings, not as a fixed naira amount; that is, the higher your income, the more increase there should be in your savings. 

There are effective banking account apps that include savings features, such as the Moniepoint Savings feature on Personal and Business banking apps. 

As a Moniepoint account holder, you can easily plan and allocate savings into three categories - Flexible, Fixed, and Locked Savings- and get up to 16% interest. 

Save with Moniepoint and enjoy up to 16% interest per annum!

5. Invest Wisely

Investing wisely is crucial to creating long-term wealth in your 30s. While it's advisable to save, you should also note that investment allows your money to grow and withstand inflation. The best time to start investing is now, and no amount is too little to begin with. 

Begin by enlightening yourself about the various types of investments available, and be careful to spread your investment across different assets so as to reduce risk and receive stable returns. Remember that you require patience to reap investment returns, as it is not a get-rich-quick scheme.

6. Reduce Unnecessary Expenses

Most times, as our income increases, we can get tempted to increase our lifestyle expenses. This, however, is not a healthy step in building a budget in your 30s. By pinpointing areas where you can free up money, you can allocate it towards savings, emergency funds, investments, and debt servicing. 

For instance, replacing little habits like buying takeouts that can unconsciously add up over time with cooking your meals at home can help you cut down expenses. Additionally, ensure that you thoroughly review what shopping you need to do by asking yourself if it's really needed. If it is, make a detailed list and stick to the purchase budget. 

7. Prioritize your Debt Payment

It's best to pay down debts as soon as possible, as accumulating or ignoring them will ultimately do more harm than good. Becoming debt-free allows you to focus on other areas of your life and allocate funds to them, such as savings and investments. 

Figuring out an effective method to pay off debts can be overwhelming, so let's look at some types of debt payoff methods you can consider;

• The Snowball method: involves paying off debts with the highest interest rate first while making small payments on other minimum debts. By doing so, you'll reduce the amount of interest you pay in the long run, thereby saving money.

• The Avalanche method: this method involves paying off the smallest debt first, then paying off the next smallest amount, and so on. With this method, you're able to tackle small wins and build momentum for the next ones ahead.

Common Budgeting Mistakes to Avoid

1. Failure to track your expenses

As you plan your budget, it's easy to lose track of expenses if you're not properly tracking your spending. Ensure you use tools like Microsoft Excel or other tracking tools like YNAB to stay on top of your expenses.

2. Not Setting up Emergency Funds

Life is full of uncertainties, and failure to prepare for them can leave you stranded in debt. Build an emergency fund as you earn money to cushion any unforeseen issues in the future.

3. Creating Unrealistic Budgets

As much as we all want to save as much as possible and spend an ant's portion, setting a realistic budget is essential. This will ultimately ensure that you don't dip into your savings out of frustration because your budget fails to meet expectations.

4. Not Regularly Reviewing Your Budget

Ensure that you review your budget constantly and adjust sections like your income, expenses, or goals, as this can cover up the change gaps that life comes with. Create time to review and make necessary changes where needed.

Take charge of your finances with a Moniepoint Personal Banking App today!

The Bottom Line

Setting a realistic and workable budget in your 30s can seem overwhelming, but it's one of the most effective ways to build financial security. By properly understanding your income and expenses, saving and investing wisely, and avoiding common mistakes, you can easily create a budget that suits your needs. 

Remember, as important as budgeting is, you should also manage your finances wisely by using savings accounts such as Moniepoint Business and Personal Banking accounts. Sign up now to enjoy the various benefits of financial security.