How to Budget As A 25-Year-Old

Budgeting. It’s not fun, it’s not easy, and once a budget is made, it’s even harder to stick to. If you’re reading this and you’re a young adult, don’t worry. There are even some older adults who don’t have their sh*t together. Still, if you’re a recent grad or under 25 years old, it’s essential to start off your professional life on the right foot. Part of that means… yes, budgeting.

Why Budget?

In a nutshell, budgeting is important because it ensures that you will always have enough money to reach your goals in life. It matters to make sure that you can afford rent this month, and it matters to make sure that you can afford to pay for your big vacation in two years. If you are not tracking your dollars, you are not in control of where your money goes. stockpile, budgeting

There is no budgeting class in college, so young adults are merely thrown into the world without this skill. It takes reading resources like this and looking at sites like NerdWallet and YNAB to get yourself up to speed on best practices. The fact that you are reading this puts you ahead of most!

General Guidelines For Budgeting

  1. Make The Commitment To Budgeting – Half of the budgeting is merely the act of committing to making one. The other half is learning the process. It takes time out of one’s schedule to create a budget, and it takes discipline to keep it. Giving it half a shot is not going to work. It needs to be something that you fully commit to, and only then will you get the results.
  2. Always Overestimate Expenses And Underestimate Income – This is generally a good rule of thumb when you are keeping a budget. Due to the inconsistencies of day to day life, you never know when there will be an emergency that requires an extra hundred that you didn’t plan to take out. Due to this, it’s a safe bet to overestimate your expenses so that if a charge comes out of left field, you are prepared for it. Additionally, if everything goes as planned, you will have some extra cash that you can allocate to savings, paying off debt, or buying a little treat for yourself.
  3. Track Every Expense Through Software Or A Spreadsheet – A lot of people feel like they can memorize all their expenses and feel there is no need to track everything. The truth is that even if this is the case, it is still incredibly helpful to follow everything on a spreadsheet, in part because you may want to do some data analysis using the software’s functions. For most people, it’s tough to memorize all of your expenses, and even harder to track that against your income. So most will benefit from tracking on a spreadsheet or software. 
  4. Review And Revise Your Budget – It’s nearly impossible to get your budget right the first time. In fact, it’s sometimes impossible to get it right the 10th time. That is why budgeting does not have a destination. It’s all about the process of getting ahead of your finances and being in control of them. If you set a $100 gas budget, but it becomes impossible to meet after a few months, raise that specific budget 20+ dollars and take away $20 from another category.  Maybe you are saving too much money, and you are not giving yourself enough for the basics you need to survive like groceries. Perhaps it’s time to save a little less and give yourself some room to breathe for the essentials. Again, no one is perfect. It’s just essential to keep track of your finances and always make an effort to stay within budget, even if it does not happen 100% of the time. 
  5. Check Out Examples – Sometimes it’s better to see examples of other people’s budgets to help visualize your own. You should look at a minimum of three cases. To get you started, here’s a sample for a 25-year-old girl, and one for a 24-year-old guy. Keep in mind that the way they do it does not have to be the way that you track your budget. It just comes down to what works for you and your financial situation. 

A Work In Progress

At the end of the day, there is no right way to create a budget. The act of putting one together and following it is where the real value comes into play. Keep reading resources like this, make the commitment to budget, and stick with it as best as you can, while revising along the way. Do that, and you will have financial independence before you know it. 



/meghan Gardler