Mr J and I will soon be moving out of our current homes and in together (I’m not “Mrs.” yet). He’s 26, I’m 21. As of right now, we have it easy. I live with my parents, he lives with an uncle. Neither of us has to pay rent and we have just a few small bills (cell phones, car insurance), very little debt (car loan) and no credit cards.
Soon we’ll be paying rent, utilities, cable, and whatever else comes along. I’d like to make a realistic budget plan so that we’re not living paycheck to paycheck and stressing about money.
So how do the dopers manage money? Any tips, books, websites, etc. about how to create a budget?
Another thing, how do you know how much you can afford to spend on rent?
One good place to start is at CNNMoney.com. They have a Money 101 guide that starts with setting priorities and making a budget. Their budget calculator shows ideal percentages of income to spend in various areas. They indicate 30% for rent, which is in line with most other budget recommendations.
Since you’re starting from scratch, you will want to find out either from friends in similar situations or from the companies (cable, utilities, etc.) themselves what the likely monthly charges are going to be.
You say you have no credit cards, and that already puts you ahead of many people. If you start by living within your means, buying only what you can afford with the money that you have, you will be far less likely to end up in a bad financial situation. Be sure to budget for savings, too, so that you’ll have money for emergencies and also build up a fund that you can use for more expensive purchases.
You’re really smart to be thinking about this now. The more I learn about money management, the more I wish I had paid more attention to it when I was 21.
It’s a great read. Even if you’re not a big spender, or don’t plan on buying a home any time soon, it’s still got some great tips. My mom bought a copy for my brother and I, and I’ve let a few friends borrow it. We’ve all gotten good advice from it.
Here are a few pointers I have developed for myself
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[li]After you have solved this month’s budget, plan 3 or 4 months down the road, so you won’t be caught unprepared for major expenses.[/li][li]Leave a little bit of each pay check un-budgeted… there will always be unexpected expenses, and things that cost a bit more then you had planned.[/li][li]Leave the credit cards out of your reach if you feel compelled to use them for minor everyday purchases. Those few dollars here and there can add up fast. Of course, be sure that card is still available for emergencies.[/li][li]Save up for major purchases and buy them with cash, rather then charging them, and paying them off later.[/li][li]Keep a minimum balance in your savings account, say $1000, that you can dip into if things get “rough,” but be sure to put that money back when you get back on budget.[/li][li] A 401k will be your best friend in 40 years.[/li][/ul]
My father gave my the advice “Always pay yourself first.” It sounds good, but I still don’t know what it really means. I pay my rent first, so I don’t get evicted, then I pay bills so I don’t get late fees. So I guess I pay myself third.
One of the most important things, track your expenses. Balance your checkbook every couple of days at the minimun; I balance mine every single day. When I first moved out, I did the estimating method of budgeting (i.e. “oh, I think I have about $200 so I can buy this coat”) and all to frequently screwed up and paid waaaay too much in overdraft fees. Make sure you know where you money is going and how much you have left.