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Adulting 101: Budgeting

Since it feels like we’ve covered just about every topic there is in the way of getting a job, let’s switch gears.

You just landed your dream job. It has good pay, not a terrible commute, the work is interesting and your boss is fantastic. Suddenly you have all this money to spend, and so for the first few weeks you blow through it. $60 on a new jacket? No problem. $99.99 for a 3-month subscription to the Bacon of the Month club? Gotta have it. $150 for a guitar? Well, you always wanted to learn how to play, so why not now?

Flash forward two or three months, your apartment (because you needed a place to store it all) is almost overflowing with things you don’t use. You’re on the phone with Mom and/or Dad trying to figure out a way to scrape up rent money, while also explaining that, yes, it was completely necessary to buy another set of towels with your monogram on them because the tenants in 2A kept eyeing your other set weirdly and you’re afraid they’ll go missing. Suddenly, Mom and/or Dad stops you mid-sentence and asks “well, was it in your budget?”

The world stops for a second as you try to remember where all your money went throughout the month. Having an actual budget never really seemed necessary, because mobile banking made it easy to see how much money you had. But you hadn’t checked it lately, because you felt you’d done a pretty good job simply tracking it in your head.

So, you stammer out a “yeah,” and an excuse as to why your paycheck had been smaller than you’d expected. Your parent agrees to send a little money (just this once), and you rush inside to find a way to keep better track of your finances.

Budgeting, though it may seem uninteresting to some, is a pretty useful skill to have as an adult. Making and tracking a budget can help an individual pay off debt or save money, and it can also help to reduce over-spending on unnecessary items and free up a little money for emergencies.

So, how does one make a budget exactly?

The first step is to figure out what kind of time-frame you would like to budget for. Weekly? Monthly? Annually? Then calculate the total amount of income for that time-frame (after taxes). Once the amount of income is determined, it is necessary to calculate the cost of required expenses for the time-frame. Required expenses would be rent (if you have an apartment), utility bills, groceries and gas (if you plan to regularly commute). This would also include student loan payments, insurance and credit card bills.

If you’ve still got money left over, that’s great! It’s time to figure out what to do with the rest of it. Add in a few luxuries like private internet, Netflix/cable, or maybe an HBO subscription. Figure out if you’d like to save for anything special, determine a reasonable time frame and figure out how much money you need to put away for that.

Then calculate however much is left, and divide that into categories based on what you like to purchase.

At the end of your budgeted period, it is important to go back and check to see how your actual expenses stacked up to what you projected. Then adjust your budget for the next period.

A few resources that may help:

http://www.paycheckcity.com/calculator/hourly/ (can help you determine Net Pay on a paycheck)

http://www.schwabmoneywise.com/public/moneywise/calculators_tools/budgeting_tools/monthly_budget_planner (this is a handy budget calculator)

About LeAnn Endsley

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