Hi YAf! I am really excited for this week’s blog post, because I feel like this is a topic that is sooo important, and always pertinent no matter where you are in your life. Since a lot of us are still navigating post grad jobs, the job market in general, and experiencing real bills now (loans, phone, apartment, a car payment, etc.), I wanted to write about how I navigate this and some tricks that have helped me!

Taking a look at all current expenses

When you are trying to budget, it is crucial to understand and get an exact number of what comes in, and what comes out. Calculate your biweekly paycheck amount times two, to get the amount that you are paid every month. We need to see how much total money you get deposited into your bank so we know how much we are working with. After that, we can divide our money and start to budget. For example, if I get paid $2800 every other week, I multiply that times 2 and get $5600. That is the amount that I get paid on a monthly basis. 

Base expenses

I like to think of Money as being separated into 2 things: Base, and Desire. The base money is what you need in order to cover the monthly expenses and bills that you have, and the desired money is what you get to spend on what you ‘desire’, after you pay all your mandates, and it is imperative you need to have a good understanding of what that number is. Whether it is on paper, or in your notes app, you should write down every base expense you have, what the cost is, and add them all up at the end. Lets say you have $2200 a month in rent, $250 in utilities and wifi, and $300 a month in student loan payments. That means that your base expenses are $2750. Once you have the TOTAL amount that you need to spend your base expenses, then we move on to the 2nd part.

Desired expenses

Now that we calculated the total amount of money we get paid every month ($5600), and the amount of money we have to pay towards our base expenses ($2750), now we can look at our desired expenses, which is the amount of money that you have left over. Subtracting $5600-$2750=$2850, gives us our monthly desired expenses, and that allows us to spend our money however we so choose. Now if you are like me, I like to take from my desired expenses and make sure that I am saving money for the future. It is crucial to save for many reasons, but one of the main reasons why I do it is because I like to have a soft ‘pillow’ of protection. Sometimes a car breaks down, a house needs a repair, you get an injury and incur a medical cost, etc. You need to have protection money for any unpredictable financial costs that arise. How much money you put towards that is completely your choice, but a good rule of thumb for me is 20%. So, per our example that we have been using, 20% of 2850 is $570, so that is how much I like to put in my savings every month. Once we take that out of our budget, $2280 is what is left over for us to spend however we choose.

Disclaimer

Obviously the financial example that I gave might be inflated in comparison to your personal budget. I was making $50,000 a year when I first got my post-grad job, so money was a little tighter than this example. I sort of came up with an amount, so please do not take my example as thinking that that is where you should also be. The important thing to understand is that you know how to take your own budget, apply the teachings in this blog, and learn about how to use money. I truly believe money is a game, and although you could go down the rabbit hole of learning how to make money while you sleep, investing and profiting, etc., Sometimes it is just as important to get the basics down so that you are in a good financial standing no matter where you are. I really hope this lesson helped, please let me know if there is any other topic that I should write about!

“The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.” – Proverbs 21:5