Adulthood brings a whole new level of freedom that exceeds even undergrad. You’re completely on your own to make your own decisions with your time and money. If unchecked, this freedom can get out of control and land you without a dollar to your name. Learning how to budget is one of the most essential skills any adult needs to master quickly in order to live comfortably no matter where you live.
Whether you have a salary or hourly pay, you need to know how much you can expect to earn within a month or pay period. You also need to know the schedule of your employer’s payroll. Whether weekly, bi-weekly, bi-monthly, or monthly, your pay schedule will help you determine how to budget your money to satisfy your financial obligations.
There are tools online to help you do this. I used the Pay Check Calculator at paycheckcity.com to estimate what I could expect to make per pay period when I first got hired. You plug in your salary, pay schedule, and estimated tax withholdings and the calculator will give you a rough estimate of what to expect which I found to be pretty accurate.
Once you know what to expect to make a pay period you have to then account for all expenses: rent, car, insurance, utilities, cell phone, cable, internet, credit cards, student loans, etc. These will add up very quickly, and your pay schedule will help you to determine which bills get paid at which part of the month. Rent is always due at the first of the month, usually within the first 5-10 days before late fees are assessed. The rest of your bills you may be able to schedule later in the month. If you can’t change a bill’s due date, read the fine print and find out when they start charging late fees. If you pay after the printed due date, but within 14 days, you may be able to get away with a late payment with no penalty or loss of service.
Aside from all the obvious expenses listed above, food and liquor are the expenses that tend to sneak up on most people, leaving them to question what happened to all of their money. A quick lunch with coworkers, a coffee from Starbucks, a date, a baconator at Wendy’s to satisfy a craving will all add up very quickly over time. In order to successfully stay within a budget, it is IMPERATIVE, that you account for your food and drinking habits. Be honest with yourself and set aside that amount of money just like you would for a utility bill. This way you can ensure that after your bills are paid you will still be able to eat until your next payday.
If you do not or cannot cook there are plenty of products that you can buy that can take the skill out of a decent meal. For example you can buy pre-seasoned fish fillets and vegetables that can be steamed in the microwave and have a healthy meal within 30 minutes that will cost much less than going out to grab a meal elsewhere. TV dinners are also a good option to take to work for lunch rather than grabbing a $10 meal somewhere close by.
After you’ve accounted for your bills and food, you are left with money you can “blow.” You can even make “fun money” as a line item in your budget to limit your indulgence and save more money. Rainy days happen more often than we would like, and they can be very troublesome if we haven’t prepared for them. Remember those quarterly oil changes, quarterly rental insurance payments, a surprise Prince concert, etc. If possible, you want to be left with a couple hundred dollars of floating cash a month. Do your best to not get close to $0 even the day before a payday. You never know what may happen.
As cliche as “live within your means” may seem it is very important. Life is unpredictable, and bad things happen, but setting up a budget and following it as closely as possible will help you meet your obligations and enjoy life at the same time.