Figuring Your Own Budget

Try turning the lights off when you leave, using low energy light bulbs, putting on a sweater instead of turning up the heat, and paying attention to the length of your showers. Basically, just channel your dad.

by Katherine Starrett

Budgeting will help you prevent overspending. Once you’ve figured out how much money you have per month after taxes (this is the amount that’s actually on your paycheck, assuming you get paid the same each month), you can come up with a budget. Your budget will have both flexible and inflexible parts.

The inflexible parts will be things like rent, payments on student loans, utilities, and insurance. Some more flexible things will be what you spend on food, clothes, entertainment and activities. You generally don’t want to spend any more than a third of your salary on rent. And you should also try to put money in your savings every month, preferably five percent of your paycheck, though more is always useful. This will be your emergency fund.

Utilities are somewhere between fixed and flexible expenses, if you use about the same amount of water, electricity and gas every month, the cost should remain the same. Depending on the climate, your gas and electric bills are likely to have seasonal spikes. You may be able to equalize your payments to the utility through an equalized payment plan that estimates your usage, so you pay the same amount each month over a year, then you settle up at the end of the year—either paying more or getting a credit for more or less usage. While you probably won’t have a choice of utility provider or rate, there are things you can do to minimize your bill. Try turning the lights off when you leave, using low energy light bulbs, putting on a sweater instead of turning up the heat, and paying attention to the length of your showers. Basically, just channel your dad.

Outside these fixed expenses, you can shop around for and control how much you spend on food, clothes, and miscellaneous items like housewares and small appliances. Consignment and thrift stores are great places to find affordable furniture and housewares. Check out the grocery stores in your area and see if there are significant price differences between similar staple items like rice, canned goods, fruit, and milk. Just doing these cursory checks can save you money. You don’t commit yourself to renting an apartment or buying a car without looking at other apartments or cars, so why should you commit yourself to shopping at one place without checking out the competition?

On that note, if you have a certain addiction—say you drink about ten venti caramel macchiatos a week—for the sake of your wallet (and your health) dial it back. Perhaps just indulge in one on Wednesdays or Fridays. This will not only save you money, but it will make you appreciate your favorite drink more and give you something to look forward to during the week.

Lastly, think about what you do in terms of entertainment and activities. Do you really think you’ll use that gym membership? Do you need Netflix, Amazon Prime, AND cable television? Is it absolutely necessary that you go out drinking with your coworkers every night? Take a moment at the end of the month to look at where all your money goes. You might find that it would be better off relocated to another place: a place called the future.

For more on this and tips for saving, check out The Temporal You and Five Tips for Saving Money.

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