How to Budget in Your 20s (and Still Have Fun!)
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Date: February 01, 2023
Category:
News; Education; Financial Flexibility and Freedom
Managing money in your twenties can feel like a constant balancing act. When you first become financially independent, you have to learn how to juggle paying for bills, saving for future goalsandspending on the things you want and the activities you love!
By the time the month is over, you may find yourself wondering where your money went. We've all been there!
The key to getting your finances on track is to create a budget and stick to it. Budgeting is easier than you might think, and it definitely doesn't have to limit your fun. A budget is simply a spending plan that gives you more flexibility to enjoy your money —and less to worry about!
What's the best way to budget in your twenties? We have a few tips to help you get started:
#1: Get the big picture
First things first: it's important to know where you stand with your finances.
- Start with your monthly income. How much money are you bringing home each month after taxes? If your income changes from month to month, find the average of several months' worth of paychecks.
- Next, track your monthly expenses. How much are you spending each month? Gather up your bills, receipts and account statements. Check out Wright-Patt Credit Union's (WPCU) freeMoney Managementservice to track your spending digitally!
- Break down your expenses into categories, such as living expenses, transportation, debt payments, health and wellness, subscriptions, and entertainment.
#2: Find a plan that works for you
Now that you know how your money is coming in and going out each month, you can create a spending plan to fit your lifestyle and goals.
- Spend 50% of your after-tax pay on needs —like housing, utilities, health care expenses, minimum debt payments, and other essentials.
- Use 30% to pay for wants — such as clothing, entertainment, social outings, vacations, and dining out.
- Set aside 20% for financial goals — like building your savings or paying off debt.
The 50/30/20 budget works for many twenty-year old's because it's not too strict or structured. Plus, you can always adjust the percentages for your needs and goals.
#3: Automate, automate, automate!
Once you have a budget in place, make it easier to manage your money by automating as much as possible.
- “Pay yourself first" by scheduling automatic recurring transfers into yoursavings accounton a weekly, bi-weekly or monthly basis. WPCU'sMobile and Online Bankingmakes it easy!
- Automate bill payments online or set up reminders to avoid missing important due dates. Check outWPCU's Online Bill Pay!
- Take advantage of your employer's retirement plan if one is offered. Most companies offer automatic payroll deductions, so you don't even have to think about saving!
Bonus Budgeting Tip: Leave Room for Fun Spending!
Remember, the purpose of a budget isn't to drain all fun from your lifestyle. While you may need to cut back in certain areas to reach a savings or debt payoff goal, restricting your spendingtoomuch can actually do more harm than good!
Including some guilt-free “fun money" in your budget lets you stick to your goals without feeling deprived. It will give you the flexibility you need to stay motivated and keep up the great work!
Master Budgeting Basics with WPCU!
Whether you're new to budgeting or just want to feel more confident in your money management skills, WPCU is here for you!
We make it easy with resources to help youspend and manage your money wiselyevery day, includingbudgeting worksheetsandspreadsheets,spending tips,and digital tools likeMoney Management. We also offer financial education workshops and seminars throughout the year — be sure to check out ourupcoming events.
Get started today! Visit our onlineEducation Centeror stop by your localMember Centerand talk to a Financial Coach about how to create or fine-tune your budget.
