I will be the first to admit I enjoy living the typical millennial lifestyle. I buy $4 coffees from Starbucks and treat myself to charcuterie boards, however I buy my groceries at Aldi and most of my clothes from the TJ Maxx sale rack or J. Crew Factory… this my friends, is called balance.
I know it may seem like all I do is spend, spend, spend – but all of that spend is within my budget. I started managing my personal budget at the beginning of 2017 and for the first time in my life I am able to not only pay all my bills on time while also meeting the demands of my social life, but also have set aside a substantial amount of savings.
To develop my budget, I started by looking at what I had spent money on in the past year. I pulled my monthly credit card and debit card transaction histories from the year before and from this, analyzed my biggest spend categories. I found that most of my money was spent on house rent and utilities, Chipotle burritos, Starbucks coffees and God-only-knows-what from Target. Clearly I was using too much “fun-money” and I needed to set a realistic budget to keep myself from over-spending. I also knew I wanted to start not only managing my spend, but also building a savings.
I used what is known as the 50-30-20 rule, meaning that 50% of my income goes to essential living expenses, 30% of my income goes to “fun-money” aka flexible spending, and 20% goes to savings.
50% Living Expenses
*Transportation (Gas, Uber, Public Transportation)
*Car Payment & Car Insurance
*Cell Phone Bill
30% Flexible Spending
*Going Out (i.e., bars, sporting events, etc.)
By looking at my monthly transactions from the year before, I was able to estimate realistic amounts for each category. For example, totaling up every transaction from Whole Foods, Aldi, Giant, Wegmans, etc. I realized I spend x amount of dollars on groceries a month. This not only helped to set a realistic amount that I can plan to spend each month going forward, it also identified areas where I could cut back. For example, I noticed that months that I bought most of my groceries from Aldi – I spent less overall than months I was going to Whole Foods and Wegmans. I’m not slamming these stores at all – I love Whole Foods and Wegmans products – it’s just that I realized that by making better choices, I can maintain balance in my budget. Maybe instead of doing all of my shopping at one place or another, I could get the essentials at Aldi and more particular products at Whole Foods. This process brought light to my spend habits and helped identify ways I can make better choices. I realize I can’t buy $4 coffees and shop at high-end grocery and department stores – if I was doing this, I wouldn’t have balance.
With this budget, I am able to drink Starbucks, pay my bills and save for my future. For more information, the 50-30-20 rule is widely known so you can find several articles on how to maintain your budget using this rule. If you have any questions on how to start, etc – feel free to contact me!
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