Budgeting $1000 Discretionary/Month
I live out in the midwest, so living expenses are relatively low. Here's my current budget
After tax pay: 2300
Rent: 1000
Utilities and Other fixed Expenses: 100
Cleaning lady: 150
Gym: 100
I have ~$1000 left for food, entertainment, shopping, and travel. How would you spend it?
The reason my fixed costs seem proportionally high is because the pay above is biweekly; my take home/month is actually ~4500. However, that other paycheck is saved, invested, and used to service debt.
How old are you and and where do you work
I'm 25 and I work in a flyover state. I'd like to remain vague about the details of what I do because I'm just looking for budgeting advice.
so you save 50% of your after tax pay and you're asking us how to spend the remainder?
bro, do whatever you want with it, you're ahead of your peers.
if you're looking for "hacks" on how to minimize costs, here are a couple:
in all seriousness, just do whatever you want, $1k/mo isn't a ton if you want to have a social life. I'm married so food for me is more important than entertainment, travel is what savings accounts are for (build it up, then book the trip and pay with cash), so I think about it a little differently than you.
I had a buddy years ago that was the opposite. single bro, looking for women all the time so he basically just bought lots of chicken breast and veggies, ate the same thing for lunch & dinner (eggs for breakfast), then spent the rest of his cash on women (dates, tequila shots, plan B, etc.).
hope this helps
Thanks man - appreciate your comments.
Not looking to benchmark myself against peers or anything - just wanting to make sure my money is spent on things I actually care about (should care about?). First job out of college was IB, and I bought so much random shit I didn't need to try to be happy.
I get out more now, so I think I'll probably be spending more on tequila shots and plan B.
How did it work out for your buddy?
I'm like 70% sure he's not a dad, and he still pulls quite often.
strippers and cocaine or models and bottles
/thread
Guessing you live alone? I used to live in a low COL area as well until a few years ago - only other thing I could tell you would be if you wanted to make it easier to maintain a social life and still save money, wouldn't be a bad idea to get a roommate. If that is in fact a studio apartment, I couldn't imagine that a nice 2BR for the market would be more than 1700-1800, which would still mean you're saving more money in rent and you have a built in social life with your roommates friends and someone to go to out with/be a wing(person). The tradeoff of having your own place is more important for some than others, but it sounds like you're still young enough where sharing common areas with someone won't be a burden for you yet.
Given the state of the economy, I would strongly advice trying to save up at least 1 year of your salary. A few friends of mine (target, ex-bb bankers), had a few times in their lives where they can't really find a job for a period of time (i.e. 6-12 months) and had to live off their savings.
Is this a serious question??? You have a whole other paycheck saved for investments and you are asking how spend the remaining 1000 from a your first bi-weekly paycheck?
Dude, your 25 do whatever you want with it. Have fun and enjoy life. You are only in your 20s once. What's with this generation of kids not knowing how to have fun so they ask random people on a message board...
Dude, you're...
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...
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You need to elaborate on some important details such as: - Age - marital status - kids - How much do you actually spend of the $1000 on these items? Have you taken the time to actually track expenses for a couple of weeks, writing down in a small tablet every charge you make for the day, then tally the amount up at the end of the week?
It sounds as though you must be young and unencumbered, coupled with a pretty nice salary. I have learned there are essentially 2 types of people: savers and spenders. Try to be a saver. Pay yourself before anyone else.
I would make certain I had at least 9 - 12 months of expenses stashed in an interest-bearing savings account in the event you lose your job, they go out of biz, etc. Next, I would max out any employer-sponsored retirement account where they match your contributions. Afterwards, I would consider maxing our a ROTH for you (currently $5500/yr after tax dollars you may put in this year), make sure you have enough insurance to cover any unforeseen accidents that could reduce your pay for a period of time.
If you are younger than 50, you may put aside up to $24,000/year into retirement accounts ($18500 in a 401k and 5500 in a ROTH). That is in addition to any funds you may place into a brokerage account, which I would do last.
If you still have money to spend, I might consider a brokerage account, depending on your comfort level with the markets. It not comfortable, there is never any harm in stashing more money into an interest-bearing savings account for large purchases down the road (down-payment on a home, new auto, marriage, etc.).
Your budget seems a little sparse. Perhaps that truly is the extent of your expenses. I might consider getting a little more granular for a period of time to really understand precisely where all of your money goes. It may surprise you if you're not diligent about keeping up with the small stuff.
Great job on landing a well-paying position. Great job on getting onto a board and asking for ideas about budgeting. There are myriad sites out there for helping you learn to budget. One isn't superior over the other. Depending on your age, I would simply say that you're doing the right thing. Learning how to budget is literally one of the bedrocks upon which a sound financial future is built. And without one, a lot of people are dead in the water.
Your budget doesn't have to be perfect starting out. You just need to start one. You will refine it over the years and get better at it as you go. The biggest mistake you could make is to give up on the process. Good luck. You're doing the right thing.
All on food. Ax the maid and $1150 on food actually.
I'm not talking restaurants every night. I mean high quality fruits, vegetables, seeds, nuts, berries and the like. And then as much good protein as you can afford (seafood etc.).
Optimal brain function comes with good nutrition.
"When health is absent, wisdom cannot reveal itself, art cannot manifest, strength cannot fight, wealth becomes useless, and intelligence cannot be applied." - Herophilus
How much money do you currently put aside for retirement? How much do you have in an Emergency fund? Do you max out your retirement accounts?
If the answer to these questions is yes, then it becomes a matter of what is important to you. You're asking the boards how to spend the money, but you haven't said anything about your interests. If you like going out every weekend, spending time with friends doing things around town, I'd budget the lions share of your mad money to food/entertainment.
If your preference is to travel to exotic locales, I'd take the lions share and stuff it into a savings account, all the while, planning for my next excursion.
There is not right or wrong answer to your question. It is you and you alone who can say what is most important.
Good luck. Biggest hurdle for most people with regards to budgeting is to actually begin doing it, an to stay on track. Again, I would suggest you have a pen and small pad of paper with you for a couple of months, tracking literally every penny you spend. I went through this exercise about 10 years ago and I was a little surprised at myself. And I am what most people would consider an extreme saver.
Numbers are after I maxed out what I need to take advantage of employer match for retirement accounts. Emergency fund is sitting at 9 months expenses. I'm not looking to max out retirement accounts beyond what my employer is matching.
Historically, I've felt most fulfilled after I get through a good gym session after a productive day at work. Outside of work, I like to catch up with friends and family over a nice lunch or dinner, but that usually involves flying back to my hometown for weekend/holiday.
I've been trying to make friends in the area, but there seems to be little going on outside of bars and clubs. I went out this weekend and met some locals, but the time wasn't very enjoyable or productive. I got some contact info from both men and women, but no one that I'd want to really get to know any better. I felt like all I got for my money was some empty calories, some empty conversations, a missed workout and a hangover the next day. At least I tried?
I'm 25 and single, and I feel dull as fuck. I guess that's not a money/budgeting problem though. It's probably because I'm a huge nerd that's been raised to be super uptight about what's good and responsible and what's not. While that doesn't preclude me from participating in bacchanalian activities or pretending that I'm enjoying myself, booze with strangers is probably not the best use of my time or money. That said, maybe I'm just not going out enough or doing it properly?
Thanks for the advice on tracking expenses. I'll sign up for something and make sure I do stay under that 1000/month.
You pay $1,000 in rent and $100 for the gym? Wow. A 1BR in my area is $1,900 and the gym membership is $17.99!
Since we're all just throwing our thoughts in here, I'll add mine.
It sounds like where you live sucks. I moved from a small shit town to a big expensive one. Back in the cheap one I was about a year from buying a house, living in it and renting it out to some homies. After the move, I find myself struggling a lot more money-wise. I've got a sweet deal renting, but all the houses around me go for 4+mil.
It's crazy how much CoL goes up when you move, I got a 20% bump in salary, but after the move my fun money went down by about $800/mo. Rent, taxes, going out more (bars and other misc trips) now that I met cool people hit pretty hard, though it's not like I'd give it back for a second.
Looking back, I realize I just had a more myopic view of what expenses I'd face. Set your sights higher up, being king of flyover state where you have to work to spend money isn't a good reflection of what you're going to have to deal with later. You might lose your job just before the car breaks down etc, and it hurts when you have to open that piggy bank and watch the numbers go the wrong way. You may meet the girl of your dreams and want to move into a new house, then a million dollar kid will be on the way soon after- you don't want money to be the problem.
It may seem wasteful with the crazy ratio of your cashflow now, but it's really not. Your costs just haven't caught up yet.
this is a true or joke?
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