Money. The sole defining factor of a 20-something’s life. Sallie Mae wants it all as do 20 other predators. Pay day = bill day. Gone are the student pay days where you’d head straight to Forever 21 for a new, Friday night outfit and the liquor store for some
swagger elixir vodka. Pay day means figuring out just how much money to throw at the appropriate people to satisfy them until you get your next green fix.
I think the toughest thing for any 20-something to learn is how to budget. I know it’s something I still struggle with despite having parents who taught me the value of money at a very young age. College attempts to show you a budget during that terrifying exit loan counseling you have to go through before graduating. But we all know that meeting is essentially the last straw that sends you to your doctor demanding a Xanax prescription. You’re coming off a massive last semester senior year bender and realizing life is about to hit you faster than that bus hit Regina. So essentially all that exit loan “counseling” goes in one ear and out the other.
Then you get your first job. You realize that pay checks can actually hit 3 or 4 digits consistently every two weeks. You’re feeling like a baller for those first 6 months. Blowing money faster than Rick Ross ever did in his music videos. Buying shots for strangers. Purchasing clothes from a real store, not
a sweat shop hodge podge Forever 21. Researching not only your first apartment, but the time share you’re going to buy in to for 24/7 vacation access.
Then disaster strikes. You are now required to pay your student loans. You realize the apartment you signed your life away for is 5x more expensive than when you signed the lease. They must be upping rent on you right? That bridge you drive under every day looks like a nice, affordable place to live. Those organic groceries you buy? Well a little pesticide never hurt anybody. Top shelf liquor and craft beer seem like liquid gold. You’ve started to research what body parts you can sell and still live a somewhat long life without. This is when you realize that that financial aid person said something about a budget. But all you remember is the harsh beam of fluorescent light driving knives through your poor hungover brain. Not to fear dewey eyed 20-something! You too can learn how to budget!
Here are a few things that helped me to truly understand what the heck I should to do to avoid becoming another poverty statistic:
1. Figure out your fixed costs. These are expenses that you are going to have no matter what every single month. These include:
- Cell Phone Bill
- Student Loan Payment
- Rent / Housing Payment
- Cable / Internet
- Electric (you should be able to ballpark a winter cost and a summer cost)
- Car Payment
- Netflix / Hulu Plus / Amazon Prime / Xbox Live (if you’re baller enough to afford such luxuries)
- And anything else that will be a constant reoccuring set amount bill in your life
2. Figure out your variable costs
- Gas: By now you should know about how much gas you use each week for work
- Groceries: What are you averaging each week on food? I’m going to do a blog about grocery shopping soon to help anyone struggling.
- Eating out / Entertainment: Most of us go out at least once or twice a week. If you’re a true 20-something this is typically at the same places and conveniently on a night with some type of food / drink special.
- Flex Spend: How much “spare change” do you want each week for emergencies?
For me, figuring out these 2 amounts drives my entire financial plan. You also should account for how much you want to put into a savings account. I try to throw $50 every two weeks into my savings account. It’s not a lot but it’s starting to create a decent rainy day fund.
Also, hopefully you took your work up on that offer to just automatically take a percentage of your paycheck away from you and into a 401k. If you have not done so, get on that because you’re going to need every penny when you eventually hit retirement age. (LOL like we’ll ever escape the cube life)
I have a spreadsheet made in Excel with all my fixed / variable costs. I also have a notebook where I have future expenses I am anticipating. For instance, I am going to be moving this summer and I’m also trying to take a vacation. So I have amounts that I need to have saved by certain dates to obtain those goals.
If you’re interested in a good book to help learn a little more about finances, my mom gave me Suze Orman’s The Money Book for the Young, Fabulous, and Broke. It’s a super easy book to read and really helps you understand how to figure out financial planning.
I am in no way, shape, or form good with finances. But compared to others my age, I think I have a good grasp on what I should be doing. It’s just a question of doing it. So in addition to taking 21 days to become a before work work-out person, I think I’m going to try and find ways to cut back on spending. For the next 21 days, I will not buy coffee out. There’s absolutely NO NEED for me to buy coffee out. I even have a coffee maker at home. The $3 a day I spend on coffee, I’m going to put into my savings account.
As with working out before work, I’ll keep you posted on my in house coffee goal too!