It's clearly a budget. It's got a lot of numbers in it.
In my role as an annoying father, I regularly talk to my sons about financial matters and this post summaries a recent discussion on budgeting. It's the last thing on their minds, but I wouldn't be a good dad if I didn't prepare them for the financial shock that is independent living. One reasonable budget plan for a young person is called the "60% solution" and its percentages are based on gross income.
Depending on their career path after university, young people could be making good money. However, even those in medical professions don't always have the greatest financial situation. Young doctors or physicians may well want to check out LeverageRX for advice on loans, mortgages, and more to set them on the right path to financial success. These days, everyone is struggling with finances. Be it managing the expenses, paying loans, medical bills, saving up for retirement, and more, youngsters do not realize where their money is going.
But then, the Internet also puts this generation at a greater advantage. Along with managing their studies, they could earn additional income through a number of ways. Besides the usual part-time job, they can gain from a multitude of online gigs -- title loan affiliate programs, freelancing for content marketing companies and much more. The idea is to explore all possibilities and opportunities out there.
Having explained that, let's return to our main discussion on how to plan the budget. The plan is simple and can be summarized as follows:
- 60% to committed expenses
I think of this category as fixed expenses (e.g. housing, food, insurance, phone) and taxes. A typical Renter will spend most of their income on rent and utilities, hence why this section is so big.
- 10% to retirement.
I might argue for 15%, but 10% is a good place to start when you are young. The earlier you start saving for retirement, the better your retiremnt will be, even if it feels a long way off.
- 10% to short-term savings
Life often presents us with unexpected bills, which I call "knowable unknowables". This category includes things like a transmission failure on a relatively new car.
- 10% to long-term savings/debt money
You know over time you will need to replace your car, upgrade your house, and pay off debt.
- 10% for personal enjoyment
The stuff that makes life fun. You can stretch this one a little bit, but not too much. After all, there's no point in going through the years saving all of your money only to not have enjoyed your life!
This approach is discussed in detail at a number of web sites, like:
Here is a video with Sharon Epperson that summarizes the approach.