- This topic has 132 replies, 4 voices, and was last updated 1 year, 2 months ago by Anonymousse.
TacoTuesdayJuly 22, 2022 at 8:00 pm #1112567
I’m not sure if this is the kind of advice you give here, but I figured I’d try.
I make $3200/month after taxes. Health insurance and retirement covered by my job.
Rent: $1300 for 650 sq ft., 1-bedroom apartment
Phone: $40 (I have a cheap Cricket Wireless plan.)
Car Insurance: $130
Renters Insurance: $15
Toiletries (Hair/Skin products, soap, toothpaste): $100
Water: $40 (I estimated high-end.)
Electricity: $70 (I estimated high-end.)
Expenses Total: $2645/month
Funds Remaining: $555, which means…
Fun (gifts, movies, clothes, beauty treatments, supplements, dates): $138/week
Do you think this is a realistic budget?
Are there any items I am missing?
I’d look for a shared apartment.
Does your after-tax factor in contributions made to a retirement account? It definitely should, you should start investing right now if you haven’t already.
And $250/month savings is a bit slim. I’d aim for 10% of your after-tax to build a good emergency fund. You’ll want to save 3-6 months worth of living expenses.
Finally, your rent is over 40% of take-home and will keep increasing. A roommate situation could get that back down to more like 30%.
You say retirement is covered by your job, okay, are you contributing at least as much as they match? Ideally more.
And if you already have 3-6 months living expenses saved in cash or Roth or something, that looks better for your planned $250/month savings, but my concern would be that money never really gets saved because stuff keeps coming up that you want or that costs more than you think.TacoTuesdayJuly 23, 2022 at 8:49 am #1112572
Yep, I’m putting $100/month into my retirement which my job matches.
By time I move out, and after deposits/fees/furniture/appliances/stocking my home, I project I will have 10K still in my savings.
For several reasons, I can’t do a roommate situation. There *is* a place that has rent for $1170, just more bad reviews than the $1300 places, but okay. Hopefully living there is okay…
Ok, I’m not trying to be a dick, but I think you need to be saving more than $200 a month for retirement. What do they do, a 3% match? If you make $70k, that’s $175 a month, so you should at least contribute that…
But if you’re 25, want to retire at 65, and let’s say you already have $5k in your retirement account, you would need to save about $780 a month in your 401k and you’d have 1.5M at age 65, which this online calculator came up with assuming you make about $70k now. And assuming social security still exists. So almost $10k a year, which is only half of the max you can contribute.
That’s retirement, and then your cash savings, you already have 3 months, which is great, but you will need to keep adding to that as things come up. And it is possible that layoffs are coming.
I would be concerned that your rent keeps going up, you don’t invest enough, and unexpected expenses eat into your savings. On paper it basically works, but I think you always need more than you expect.
For perspective, I started my first real job at 26, making like $40k. I contributed probably the minimum to get the match, but kept increasing it, and was maxing out the 401k each year by age 32 or something. I have been maxing it out every year since then. Right now my 401k is worth around $525k in total, and I’m 47 and would like to retire in 15 years. That’s nowhere near enough to retire the way I would want. It is just my 401k though, I do have other investments and savings, but just trying to illustrate how much you really need to invest and it’s so important to start now.TacoTuesdayJuly 23, 2022 at 10:46 am #1112575
That makes sense. But right now, I only make 41K after taxes though, and this is also my first real job at 25. I could put more in my retirement, but then that’s less money for my monthly expenses, so I think I’m stuck at my current amount for right now.TacoTuesdayJuly 23, 2022 at 10:50 am #1112576
Forgot to mention they do a 5% match.
Then I would really recommend you hop jobs for a good raise ASAP. $40k is great money if you’re living with others, but unfortunately with rising costs it’s not necessarily solid enough to be a comfortable solo living, depending on where you live.
See how you do with sticking to a budget, but if you start carrying credit card balances or dipping into your savings, that’s a sign you need a higher salary or a roommate.AnonymousseJuly 23, 2022 at 10:52 am #1112578
Is there a way with location/public transport you could cut costs? I think at 25, if you know you’re in a tight spot and need to start saving more, than you can focus on that and make this work. Not everything is forever, this is temporary. There are a million sites with tips on how to exist on a budget. I think a roommate, cheaper place in a closer location to work, etc could be helpful.TacoTuesdayJuly 23, 2022 at 11:02 am #1112580
I work from home! Unfortunately, even with that, I still think gas prices are going to be $250/month. As you know, gas prices are stupid crazy right now. It takes me $65 to fill up my tank, which happens about once a week with just errands and going out to a few social events a week. Ugh!
Where else could I save? Taking all suggestions! I should mention that I also often have down-time in my main job that I sometimes do tutoring on the side, which if consistently done, can bring in another 100-200 a month.