Going from a broke college student to a gainfully employed young adult can be a very dangerous financial situation. You’re finally earning a steady pay check and might even be making more money than you actually need to pay rent and the few bills you might have. It can be tempting to spend your paycheck in one go on eating out, going to the bar, at the mall and on new stuff for your new grownup life, wait for the next paycheck and repeat. That might get you by every month, but if you want to pay off your student loans, save for that trip around the world, and buy a house in your 20s, you need to be wise with your money and the easiest way to do that is to budget.

Josh and I have taken a honeymoon, paid off a student loan, bought an apartment full of new furniture and have recently signed a contract to purchase our first home—all in the 10 months we’ve been married and the year that Josh has been working full time, all thanks to a strategic monthly budget.

Before you start to plan your budget, you need to know what to plan for. Josh and I use a wonderful little website called Mint.com. Mint allows you to link your bank accounts, credit cards and loans to an account and will keep track of every transaction you make and will place them in a spending category.

Mint will keep track of every time you stop at Starbucks, every time you buy groceries, every time you fill up your tank, every time you get your nails done, and every purchase you make. This way you’ll be able to see where you’re spending your money and where you could be saving.

Once you know how you’re spending your money, you can plan accordingly and you can start to budget. Mint has a budgeting section that can be pretty useful, but I prefer to use an Excel spreadsheet (like this one). 

Start with what your monthly income and subtract the expenses you know you’ll have each month—like rent, utilities, cable and internet, your cell phone bill, groceries, gas, and your student loan payment.

Then you should budget for your savings—an emergency fund to be prepared for when your car breaks down or your pipes burst; a short term savings for things like trips you want to take or for Christmas presents; and a long term savings to prepare for things like buying a new car, saving for a down payment and preparing for the future. Set savings goals, like that backpacking trip, to help motivate you.

After you’ve taken care of all of your monthly expenses and your savings, you can add budgets for things that you want—like shopping, going to the movies or concert tickets, a new TV, going out to eat, or whatever you might want. Be sure to leave yourself some wiggle room in case you have to go over one of your necessary monthly budgets.

The last step is to STICK TO THE BUDGET! You might go over in your gas budget or your grocery budget, but you’ve prepared for that so it’s ok. At the end of the month, if you were under budget you can use that money to spend as you see fit, pay down any debt, or get a jump on your savings goals.

Keeping up with and sticking to a budget might not be the most fun, especially when all you want to do is stock your closet, but when you’re able to buy a house in your 20s you’ll be thankful that you did.

Good luck budgeting and good luck reaching your goals!

–Mrs. Dominico

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