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Last week, the state of Illinois finally passed what I would describe as a “Band-Aid” budget. While politicians largely celebrated this move and patted themselves on the back, their budget does very little to solve the gaping wound that is the state of financial chaos in which Illinois currently finds itself.
As I read the headlines and a few articles, I marveled at the difficulty the legislature faced in passing a budget. As you may or may not know, Illinois recently went an entire fiscal year without a budget. This standoff made previous budget delays (18 days in 1991, multiple delays of several weeks in the 2000s, and the bitter standoffs of recent years) look like small blips on the radar.
While Governor Rauner and Speaker Madigan set aside partisan gridlock long enough to pass a budget, public schools, state universities, and social service agencies are from celebrating. To the detriment of the citizens of Illinois, the finger pointing between Republicans and Democrats will surely resume and intensify in the next months.
Right around the time that Governor Rauner was delivering his press conference regarding the new budget, I sat down to review my planned budget for July 2016. Since September 2009, I have created a unique monthly budget using Gazelle Budget, the online software platform created Dave Ramsey’s team at Ramsey Solutions. That makes 71 unique budgets. It felt good to add yet another accomplishment to the mental list of ways in which I put the state of Illinois to shame.
MY FIRST BUDGET
As I often do when completing a budget, I took a look through the archives to see how Mrs. Superhero and I have come. My trek brought me back to September 2009, the month in which I created my very first budget.
In September 2009, I was a newly-employed, engaged bachelor, living independently for the first time in my life. Less than one week before the new public school year started, I accepted a job offer to teach music about 25 miles away from my university campus. With a week to prepare, I scrambled to locate housing, sign my contract, and prepare for a radical life change.
At the time, I had barely a tiny inkling of how to responsibly manage my money. I had recently read The Total Money Makeover in record speed, but I didn’t know the first thing about budgeting an “adult” paycheck. This was going to be the first time I had ever earned a paycheck which included a comma in the amount field!
After reading about Gazelle Budget (which is being replaced soon by EveryDollar), I purchased an 18 month membership, which included access to all three hours (ad free) of the Dave Ramsey Show podcast, for $89.95. Moments later, I created my first budget.
I began by projecting my total net income for the month, $2,357.29 in total. In that moment, I recall feeling pretty wealthy. I continued by inputting my desired charitable giving ($236 – 10%), rent ($400 – I rented a room in a two-bedroom condo from a friend-of-a-friend), food ($305 – for groceries and restaurants), and my debt obligations ($50 car payment and $200 credit card bill). From that point, I filled out the budget with an estimate of utilities, transportation (gas, car insurance, and routine maintenance), clothing (new work clothes and change for laundry), personal spending
(spending money blow money Starbucks fund, books, gifts, hair cut, toiletries, and the Gazelle Budget subscription), and savings (emergency fund and honeymoon fund).
As you can see above, my projections for spending (middle column) were not entirely accurate when compared with my actual spending (leftmost column) at the end of the month. In fact, despite projecting a zero-based budget, I spent more money than I earned in September 2009.
This was hardly a Superhero effort.
On the other hand, the percentages of my categorical spending mimicked responsible spending.
THE TROUBLE WITH PROJECTIONS
For the first full month of living on my own, I updated my budget on a daily basis. I kept a stack of receipts for all cash purchases and utilized internet banking to reconcile all other transactions. Yet despite my diligence, I was still brand-new to the process of budgeting.
As you can see below, I overspent considerably on food and personal spending; I had budgeted a combined $572.29, approximately 24% of my net income, but at the end of the month, I had spent a combined $761.58, approximately 32% of net income.
When I broke these spending figures down further, I discovered that I had spent $156.50 at restaurants and $80.77 at Starbucks.
20 TIPS FOR THE BACHELOR’S OR BACHELORETTE’S BUDGET
I chose to present the above figures for two primary reasons. First, I wanted to prove that it is possible to build and maintain a monthly budget as a single person. Second, I wanted to be fully transparent about my early mistakes.
Yes, creating a budget is not always easy. It isn’t the cool thing to do, especially as a young 20-something fresh out of college. Even at age 30, I can still recall the temptation to throw caution to the wind and live it up. Heck, I almost went out and leased a car!
However, I still recall one of the most powerful motivators for a 20-something single: the desire to prove one’s independence. Creating a budget is one of the best ways to set out to accomplish this goal and appear to be an adult. If you don’t manage your money responsibly, you will surely appear to be a child to you parents and extended family.
To win with money as a bachelor or bachelorette, follow these 20 tips.
1. Share costs with a roommate.
In my case, I avoided spending $1,000 per month for a one-bedroom apartment and spent $400 to rent a home in a two-bedroom condo. By sharing costs in this manner, I avoided spending 40% of my net income on housing costs.
Housing is by far the biggest budget buster for the average bachelor or bachelorette. Spending within this category can be a difference-maker.
2. Gather an accurate picture of your monthly debt obligations.
When you are just starting out, you will feel the temptation to delay examining your debts, particularly if your student loans are still in deferment. Avoiding your debts will not make them go away, so gather this information, including total principal, interest rates, minimum payments, and loan terms for each debt. If you’re unsure or unclear about any debts, contact the appropriate customer service department right away. Also, you should check your credit report; remember, this can be done free of charge once per year with each of the major credit reporting bureaus.
3. Prepare your own meals and cook at home as much as possible.
As a single young adult, preparing your own meals will accomplish two goals: you will save money, and you will not gain weight eating low nutrition/high calorie fast food. As an added bonus, you will be able to host your dates for dinner and impress them with your fine culinary skills. They’ll expect Ramen, and you’ll blow them away with shrimp creole!
Ladies, don’t forget, the way to a man’s heart is through his stomach.
4. Maintain a college lifestyle, at least in terms of spending.
When your first paycheck rolls in, you will immediately experience the temptation to buy everything in sight. If you establish an unreasonable level of spending out of the gate, you will set yourself up for failure. As much as possible, continue to live a college lifestyle (i.e. behave as if you are poor), within reason, of course.
5. Do not go out and buy a new (or new to you) vehicle.
You need to get used to living on a budget first in order to determine what you can or cannot afford in a new vehicle. Don’t allow pride and vanity to influence your decision-making process. If your current vehicle gets you from point A to B, it’s a keeper – at least for a few months.
6. Invest in a decent coffee maker with a timer function and brew your own coffee at home.
I learned this the hard way when at the end of my first budgeted month I had spent $80.77 on coffee on my way to work. I had a decent Mr. Coffee coffeemaker, but it didn’t have a timer feature. If I happened to be running late to work in the morning, I resorted to a quick Starbucks stop, which cost me significant money without adding any perceived value (neither happiness-wise nor nutritionally speaking).
7. Stay in.
Fortunately, I did a good job of this. My wife-to-be and I enjoyed cooking dinner at my condo and watching reruns of The Office. I know that many single people will feel the temptation and be pulled into the expensive night life scene, but do so within reason. Invite friends or your significant other back to your place, where food and drinks are cheap.
8. Find affordable dates with Groupon and Restaurant.com . I’m not even sure if Groupon and Restaurant.com existed back when I was a bachelor, but taking advantage of them today is a key part of our dining out experience. With either platform, you can purchase certificates for what is usually a fraction of the value, which allows you to realize significant savings and still enjoy a night out. The most common Restaurant.com offer is $10 for a $25 gift certificate. Check out the Restaurant.com offerings in your area by following the link and entering your zip code.
9. Build an emergency fund as quickly as possible.
As a young single person, building an emergency fund is the definition of adulting. Without an emergency fund, you will face unexpected expenses and be forced to swipe your credit card. Or worse yet, you may have to beg your parents for a loan or a gift.
10. Begin charitable giving right away.
While I have always given 10% to charity and missions organizations, I know this isn’t for everyone. If you’re not a natural giver, start small. Even $1 or $10 per month will benefit worthwhile organizations. If you’re not into structured giving, pay it forward and purchase the coffee or meal for the driver of the vehicle behind you in the drive-thru.
I strongly believe that regular, consistent giving is a key to winning with money. The act of giving teaches you that money is not an asset to be horded, stockpiled, wasted, or worshipped, but a tool to help yourself and others.
11. Strive to create a zero-based budget every month.
Remember, you will fail at this at first. Over and over and over. However, I found comfort in a Dave Ramsey quote during my initial months of struggle with my budget:
Adults devise a plan and stick to it. Children do what feels good. -Dave Ramsey
12. Accept that your budget projections will rarely be perfect.
On a related note, embrace your budget mistakes as they occur. Be willing to adjust your budget several times during the first several months.
13. Share your budget with a friend who is wise with his or her finances.
Accountability is helpful for everyone. It is part of the reason why I write this blog. A good budget is not inflexible.
14. Tell yourself every day that instant-gratification isn’t all that gratifying.
A few days ago, I read that the average person only waits 5 seconds for a web page to open before becoming irritated and moving on. Clearly, we live in a culture which embraces speed and instant results over patience.
You will need to learn to delay your desires in order to maintain a successful budget. Make a plan and stick to it.
15. Don’t worry about investing money right out of the gate.
In the personal finance blogging community, the suggestion to delay investing for retirement is utter blasphemy! However, I believe that there are better uses for your first months of pay. Make sure your budget is in order, build an emergency fund, and take time to research your investment options. When the time comes to invest, look into low-cost options through Betterment and Motif Investing. You will be glad that you waited.
16. Identify your values and be sure that your budget follows them.
If you’re not sure where to start with values-based budgeting, check out my two part series on budgeting with values in mind:
Values and Budgeting – Part One
Values and Budgeting – Part Two
17. Once you’ve identified your values, create written goals that you wish to accomplish.
Writing V-SMART Goals is the best way to accomplish your goals.
18. Be transparent with your friends and family about your budget.
It is OK to explain that you are striving to manage your spending responsibly. In fact, if you keep your budget goals a secret, it will be more difficult to stick to your budget, as co-workers will invite you out for happy hour drinks and apps every Friday. Just be up front and honest.
19. As follow-up to number 18, be willing to say “no.”
If you want to live on a budget and win with money, you will likely hurt people’s feelings from time to time.
20. Avoid making any purchases on impulse.
If you are considering a sizeable purchase, write it down and check back again in thirty days. See my recent piece, The Thirty Day List, for a step-by-step process on delaying purchases.
Note: This piece contains affiliate links. FinanceSuperhero only recommends products designed to save readers money.
Readers, what budget tips do you have for singles?
Mr Crazy Kicks saysJuly 7, 2016 at 10:55 AM
I always had roommates until I got married. That’s a huge relief on expenses. On the bonus side I have made some of my best friends being roommates.
Hero saysJuly 7, 2016 at 7:33 PM
Friendship is definitely an added bonus of having roommates, Mr. Crazy Kicks. Unfortunately, my roommate and I had a business-only friendship, but I’m still thankful to have landed in such a good situation when starting out on my own.
Brian Lund saysJuly 7, 2016 at 12:05 PM
What a fantastic resource. Thanks for sharing the personal details. Makes it so much more relatable! I especially like #18. It’s really hard to save money on eating out, if your friends, colleagues, family etc. are constantly inviting you to go and you have a hard time telling them no. But if you’ve told them what you’re trying to accomplish, it becomes easier to say “remember how I was telling you about xyz…” when they extend the invitation.
Hero saysJuly 7, 2016 at 7:32 PM
I appreciate the feedback, Brian. #18 might be the hardest of the tips to implement, but in many ways, it is also the most critical.
The Green Swan saysJuly 7, 2016 at 6:26 PM
Great tips, FS! I began tracking my expenses in 2007 and got a good grip on my lifestyle and true cost of living. I began formally budgeting / forecasting in 2010 and have done fairly well with it. It’s definitely helped accelerate my road to FI.
Hero saysJuly 7, 2016 at 7:30 PM
I would have thought you started tracking your expenses in the womb, GS! 🙂
TheMoneyMine saysJuly 7, 2016 at 6:57 PM
I think I did the opposite of most of these when I was single 😀 But I did have an emergency fund very early on and I did cook at home often.
I couldn’t do a budget (and I still don’t really do), but I knew exactly how much I could spend every month.
If I knew I had gone out a little more than usual, it meant that I wouldn’t travel as much. If I had to buy new furniture, I would slow down on bars & clubs for the month. I had created a ‘mental credit limit’.
This has somehow worked for me and it has helped me fight lifestyle inflation.
You have lots of goods points and I think implementing just a few of them would provide great financial gains.
Hero saysJuly 7, 2016 at 7:35 PM
Thanks for sharing your personal experience, Money Mine. I’m just wondering – do you use Personal Capital or any other tools to take a broad look at your monthly spending? Are you pretty consistent from month to month, making it easy to just pay attention to the expenses that are out of the ordinary.
Aaron @IncomeHoncho saysJuly 8, 2016 at 10:30 AM
Excellent tips! I agree about the car. Even if you HAVE to buy a car, never buy a brand new one because it’s just not worth it in the long run. I bought mine used for about 5 years now and it’s all paid off and I’m planning to keep it.
[email protected] Smarter Decisions saysJuly 8, 2016 at 4:58 PM
I really like the idea of a zero-based budget. And the whole eating out, getting coffee is where you can really save an incredible amount. I am worried for kids who go to college now and think it is normal to get fancy coffee each day (or even twice!) And the way they have “food courts” set up at college also gives the “restaurant feel” when years ago it was much more like a cafeteria…
Hero saysJuly 8, 2016 at 9:52 PM
Colleges seem to be getting their acts together and making dining halls much better. I distinctly recall returning to my alma mater a few years after graduation and realizing that the food had improved by leaps and bounds. Most students don’t have a good reason to blow their money on $6 coffee and meals out, in my opinion.
ZJ Thorne saysJuly 8, 2016 at 9:42 PM
I was once really lucky to find a room in a lady’s basement that was the same as sharing my living space with others. It came with its own issues, but I loved a bathroom of my own.
Figuring out how to budget when you are new to earning and paying for all things is definitely a learning curve. I like these tips.
Hero saysJuly 8, 2016 at 9:53 PM
Ah, having your own bathroom must have been great. I grew up in a house with only one bathroom; now my wife and I have three, and I don’t think I could ever go back!
Ray Ray saysJuly 9, 2016 at 3:12 PM
Great list FS! Ahhh those were the days… the days when I had some much extra cash (earning a lot less!) with not a care in to world about day care fees or mortgage repayments. Don’t get me wrong, I love my life and my wife and kids to death! but sometimes I like to look back on these days and smile about how foot loose and fancy free I was with not a care in the world.
Hero saysJuly 10, 2016 at 1:32 PM
I hear you, Ray Ray! Responsibilities are a blessing and a curse!
Finance Solver saysJuly 9, 2016 at 10:21 PM
I really like the fact that these tips focus on starting at the bottom like buying a used car, staying in, and maintaining a college lifestyle. Even with the surge in income post-grad, no one should start out by getting into the spending mode. I’ve spent the past two days getting groceries that will probably last meet 2 weeks. Bill came out to be around $100, way less than how much I would spend eating out!
Hero saysJuly 10, 2016 at 1:34 PM
And the best part about your grocery trip is that the food you purchased is almost assuredly more healthy than what you would have purchased dining out, Finance Solver. Investing in your physical and financial health all at once is a great move.
Dollar Engineer saysJuly 10, 2016 at 10:16 AM
I think number 5 is one too many people completely ignore. Three of my friends bought brand new cars right after getting their first job post-graduation. I think it’s crazy.
Hero saysJuly 10, 2016 at 1:29 PM
That’s a great example of living it up a bit too much, Dollar Engineer. Think of what all of those car payments could have yielded in investment returns!
Dollar Engineer saysJuly 10, 2016 at 8:25 PM
Exactly! Opportunity cost is something often not even thought of by most people.
Millennial Moola saysJuly 11, 2016 at 2:59 PM
If you’re a guy, live with a bunch of guys in a dumpy house with a minimum of three other roommates. You’ll pay a pittance for utilities and your rent will be rock bottom too.
Hero saysJuly 11, 2016 at 10:37 PM
Sometimes I feel badly that I missed out on this rite of passage. 🙂
Todd Wimpy saysJuly 14, 2016 at 12:46 AM
Thanks, it was a good read.