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Tips on How to Budget

Tips on How to Budget

Being a recent college grad, I’m just now learning how to budget my money. And let me tell you, it’s rough! Household-Budget1

Once I graduated, I accumulated tons of debt thanks to some major retail therapy. Then I traveled and racked up my credit card bill even more. I mean, it was just a never ending cycle of having a credit card I just could not pay off. 

After finally paying off all my debt (college loans not included!), I sat down with my parents to create a plan of action to begin budgeting the right way. This is a little different than from what you read online or in books, but it’s been working well for me and maybe can work well for you.

Keeping in my mind that [highlight]50% of your income after taxes should go towards your future[/highlight], this is how I break down every paycheck:

1) [typography font=”Cantarell” size=”13″ size_format=”px” color=”#ff6666″]10%[/typography] of income goes into my [typography font=”Cantarell” size=”13″ size_format=”px” color=”#ff6666″]vacation[/typography]  funds account.

Note: You can make this number 15- 20% if you want to include other things you’re saving up for like a new car, new bag, or computer.

2) [typography font=”Cantarell” size=”13″ size_format=”px” color=”#ff6666″]15%[/typography] of income goes to my [typography font=”Cantarell” size=”13″ size_format=”px” color=”#ff6666″]retirement [/typography] account.

Retirement sounds so far away from now at just 24 years old, but it’s never to early to start an account and begin accumulating. I’m not trying to work like a dog until I’m 70, so having this account will provide me cushion should I decide to retire early.

3)[typography font=”Cantarell” size=”13″ size_format=”px” color=”#ff6666″] 25%[/typography]  of income goes into my [typography font=”Cantarell” size=”13″ size_format=”px” color=”#ff6666″]savings[/typography]  account. Right now, I’m trying to put more than 25% in because I want to buy a condominium for myself and invest in my future, but 25% is a great starting point. If you make 30k after taxes, you should have at least $7,500 in your savings account. 

4) [typography font=”Cantarell” size=”13″ size_format=”px” color=”#ff6666″]50%[/typography] of your income goes to all of your [typography font=”Cantarell” size=”13″ size_format=”px” color=”#ff6666″]necessary expenses[/typography] . Things like rent, gas, cellphone bills, car payments, and groceries go under here. I don’t pay rent, but I have a car payment to make every month so I make sure to set aside money to pay that off right away. After you pay all your bills, you can see how much room you have to do fun things like go to a concert or eat out. 

5) Invest in a credit card that provides great points or cash back! But don’t get carried away and spend like a maniac (like I did), just so you could get points. Remember, you have to pay it back or you’ll be charged interest. [highlight]If you’re a student, you can find great credit cards with low-interest percentages.[/highlight] I’m a loyal Citi Bank girl, but it’s entirely up to you where you go! The great thing about points is that it can cover your plane tickets and/or hotels if you have enough. 

 

How do you budget your money? Leave tips below and share with us!

xo [typography font=”Cantarell” size=”14″ size_format=”px” color=”#ff6666″]NM[/typography]

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