Manage your finances in the US: Helpful budgeting tips

Jun 21, 2024

Money Simplified

Being an international student or worker living in the US can have its challenges, especially when it comes to managing your budget.

Managing your finances in the US can sometimes be tough, especially when your idea of the cost of living and other expenses still needs to be improved. The thought of budgeting, keeping track of costs, saving strategies, and more will be important while you’re in the US. If you want to learn more, this article will help you by providing you with the best tips to manage your budget and allow you to live with financial stability.

Overview of US Banking

Before we delve further into the budgeting tips, we first need to understand the US financial system. In the US, you can encounter various types of banks, including regional, and national banks, fintechs, and credit unions. Within those financial institutions, you can open a checking account, which you can use for paying bills, shopping, and more. Another option is opening a savings account where you can save your money and keep it over time for future use.

Nowadays, online banking has become more prominent, as fintech companies, such as Adro, are established to help you create a checking account by using only your phone. You can create your account before moving to the US, which means when you arrive, you already have an account ready to use for your financial transactions.

Choosing the Right Bank and Account

When opening your first account, here are some reminders that you should keep in mind:

  • Keep in Mind Fees: Choose accounts with low, ranging between $5 and $15 per month or no monthly fees. Check also for additional charges like ATM fees, overdraft fees, and minimum balance requirements.
  • Consider Interest Rates: Compare interest rates offered by different banks, especially for savings accounts. This allows you to maximize your earnings.
  • Accessibility: Ensure the bank has a convenient network of ATMs and branches, or reliable online and mobile banking services if you prefer going digital.

Setting Up Your Budget

While you’re in the US, budgeting is an important way to keep your finances in check, keep track of your money, avoid overspending, and save for future investments. This will serve as our guide on how to properly spend your money wisely.

Step-by-Step Guide to Making Your Budget

  1. Keep Track of Your Income and Expenses: List down all your sources of income. If you’re done, list your expenses and break them down into different categories, like bills, groceries, rent, transportation, and more.
  2. Categorize Your Expenses: You can categorize your expenses into two ways:some text
    • Fixed and Variable: Fixed expenses are expenses where the price stays the same, like rent, a gym membership or car payments. Variable ones are expenses where it changes monthly, like groceries.
    • Needs vs. Wants: Needs are your essential items, like food and clothing. Wants are the things that are not a necessity but you can enjoy if you have, like a very expensive computer or jewelry.
  3. Spend Wisely: You have to decide how much money you need to allocate in every category. Be sure your expenses never exceed your income.
  4. Track All Your Spending: Create a spreadsheet, download a budgeting app, or write in a notebook to keep records of all your expenses. You can then review at the end of the month and evaluate where you’ve spent the most so you can adjust.
  5. Save Up for Future Goals: Remember to set aside some of your money so you can build an emergency fund. Moreover, you can also save for bigger goals, like traveling, higher education, or buying a car.

Helpful Tips for Reducing Living Costs

Living in the US can take a toll on your wallet if you’re not able to spend your money wisely. Here are some tips you should consider:

Affordable Places to Stay

Finding the ideal place to live can be one of the most challenging to do and possibly the most expensive investment you’ll make, but there are workarounds. Look for a shared apartment space or someone willing enough to split the rent and bills. If you’re a student, consider staying at University dorms, they can be much cheaper than renting an apartment.

Public Transportation

Owning a car can be quite expensive, especially when you factor in high fuel prices, insurance, maintenance charges, and parking fees in some cities are incredibly high, like San Diego and Miami where parking fees cost $200 and $150 respectively. 

Using public transportation, if available, is always the more affordable option to get you around your area. Your best bet is to take the bus whenever you’re going around the city, with an average price of a one-way bus ticket of $1.79, including transfers to other buses.

Smart Shopping

Groceries can pile up quickly, so be sure to plan your meals and make a shopping list to avoid being an impulsive buyer. You can also look for sales, use discount coupons, and consider buying in bulk for items you use frequently. Not only that, cooking at home is usually much cheaper (and healthier) than eating out.

For example, cheaper grocery stores like Aldi are known for their cost-cutting strategies, like promoting DIY bagging and weekly sales are some of the ideal grocery shopping destinations you should consider. Expensive groceries like Whole Foods offer more fresh and premium quality products, but the compromise you need to be willing to accept is that prices are much higher.

Saving on Utilities and Bills

To save some money on your utilities and bills, you can start with saving electricity by minimizing air conditioning in the summer and putting on a sweater instead of turning up the heat in the winter. For your water bills, consider taking shorter showers and fixing possible air leaks are some of the ways to keep your bills as low as possible.

Entertainment on a Budget

If you’re looking for some fun while not breaking the bank, look for free events happening around your campus or in your community, like cultural festivals, movie showings, and concerts. You can also visit parks, museums, and libraries if that’s what you prefer. But if you like staying indoors, consider using streaming services instead of cable. Some streaming platforms even offer discounts for students or free trials.

How to Handle Debts

In the US, learning how to avoid or manage possible debts can be a great way to keep your finances stable and avoid excessive penalties. Here’s how you can properly handle your debts.

Common Types of Debt

  • Student Loans: These loans are for educational expenses only. Most of the time, they have lower interest rates and more flexible repayment options compared to other loans.
  • Credit Cards: Convenient for your everyday purchases, but it’s easy to accumulate high-interest debt if you don’t pay off the balance in full each month.
  • Personal Loans: Used for various purposes, like consolidating debt or making a big purchase, such as buying a car if auto financing isn’t available. They typically have fixed interest rates and repayment terms.

Tips for Managing Debt Payments

  • Create a Debt Repayment Plan: List all your current debts, including the amount, interest rates, and minimum monthly payments. Prioritize paying off high-interest debts first (like credit cards, always pay in full) while making minimum payments on others.
  • Snowball Method vs. Avalanche Method: The snowball method focuses on paying off the smallest debts first, while the avalanche method focuses on debts with the highest interest rates first to save more money over time.
  • Set a Budget: Apply your debt repayment plan to your monthly budget. This allows you to allocate extra funds towards debt repayment whenever possible.

And there you have it, these are some of the most helpful tips for managing your finances in the US. Living in the US can have its fair share of challenges, especially when it comes to budgeting, but follow these tips and it can greatly help you in the long run. Proper budgeting allows you to live without worries, and have the financial freedom to do what you please while staying within your income.

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