Creating a budget for a sustainable lifestyle in the U.S. can feel like a monumental undertaking. But according to Anna Yen, CFA, money expert and author at MoneyLion, it involves balancing financial responsibilities with eco-friendly choices.
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Below, she dissects each aspect of a sustainable budget, so you can create your own.
Assess Your Current Spending
According to Yen, you should track your expenses by using apps like YNAB, Mint or Excel spreadsheets to categorize your spending in different categories, such as housing, food and transportation.
“Identify unsustainable habits and look for areas where you can reduce waste, such as energy use, single-use plastics or excessive driving,” she explained.
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Set Sustainable Goals
Your short-term goals should include reducing energy consumption, cutting food waste and switching to reusable products.
“Your long-term goals should include investing in renewable energy, buying electric vehicles and supporting local, sustainable businesses,” Yen said. “Statistics show that the average U.S. household wastes around 32% of purchased food annually. Similarly, switching to LED bulbs can save around $75 per year per household.”
Create Budget Categories
Yen advised allocating funds to align with your sustainability goals. Here’s an example:
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Housing expenses should be around 30% to 35% of your income. “Invest in smart thermostats, insulation or energy-efficient appliances. Solar panels can save around $10,000 to $30,000 over 20 years,” Yen said.
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Transportation should be around 10% to 15%. Look for public transportation. Save on gas and reduce emissions. “On average, an American spends around $2,000 to $4,000 annually on gas. Switch to electric vehicles, as EVs cost around $485 per year to charge versus $1,117 per year for gas,” Yen explained.
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Go for a plant-based diet. Yen noted that reducing meat consumption saves you $750 per year. You can support sustainable farming by buying from local or organic markets.
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Reduce water usage. Simple things like fixing leaks and installing low-flow fixtures can save $170 per year. “Try switching over to renewable energy sources, such as solar or wind power,” Yen said.
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Be responsible with your shopping. “Thrift stores and online platforms like Poshmark can save money and reduce waste,” said Yen. She recommended investing in durable, eco-friendly products. “Though they may cost more upfront, they save money in the long run.”
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Consider green investments like ESG funds or green bonds. These can help you build wealth while sticking to your principles.
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Build an emergency fund to save for unexpected expenses and avoid unsustainable debts. Having a savings buffer could help you avoid having to rely on less sustainable options to cover costs.
Reduce Waste and Save Money
Cut single-use plastics, and use reusable bags, bottles and containers.
“On average, Americans use 100 billion plastic bags annually,” Yen said. “Reduce food waste and create nutrient-rich soil.”
Take Advantage of Incentives
Yen also advised to take advantage of federal tax credits, which include up to $7,500 for EV purchases and 30% for solar panel installations.
“Depending on the state you live in, look for rebates for energy-efficient appliances, water-saving devices, etc.,” she added.
Monitor and Adjust
Creating your budget is half the work done, Yen explained, but it requires regular reviewing. Monitor your budget and adjust accordingly to ensure you’re meeting sustainable goals.
Here’s a sample budget based on what Yen discussed above, using an average income level of $60,000 annually.
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Transportation: 10% — $6,000
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Savings/Investments: 20% — $12,000
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Miscellaneous: 13% — $7,800
The Bottom Line
According to Yen, the key takeaways from her recommendations involve prioritizing energy efficiency, waste reduction and sustainable investments. She also encouraged leveraging tax credits and incentives to offset upfront costs.
But overall, making small lifestyle change,s like reducing food waste, using public transport, etc., are what will ultimately make a difference in your budget’s success.
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This article originally appeared on GOBankingRates.com: How To Create a Sustainable Budget Lifestyle