Just Starting Out with Your Finances

Awhile back I wrote a post on adult world words. As I was collecting words that I found take on new meanings in this post college adult land (can we trademark a theme park?) , a friend of mine suggested debt. It wasn't initially what I had in mind with my post--I was looking for funny. But debt was and is a very true adult word, so it made the list.

Amanda Gravel (@amandagravel) posted a comment asking how to avoid that whole debt situation. I balked at the question initially, because I don't really feel 100% financially stable. (I wonder how many people really do after graduating from college.) But I recently found myself reading Kiplinger's Personal Finance (for a client) and I came across some great resources for us young folks trying to figure it out.

Budgeting
I have to admit here that I am not one of those people that balances my checkbook in paper. I don't have a spreadsheet of expenses. I have a general idea of the bottom-line and I try to be thrifty. Budgeting seemed like a luxury to me, working from paycheck to paycheck. But these are some good guidelines to keep your finances in shape.

These numbers are percentages of take-home pay (after taxes):
30% Housing
15% Food (both at home and take-out)
10% Utilities and other housing expenditures
10% Transportation
10% Debt repayment
10% Savings
5% Clothing
5% Entertainment
5% Misc. personal expenses


Now, I have a pretty refined sense of guilt that spills over into my finances. Budgeting for clothes and entertainment sounded a bit crazy to me--probably because I always feel like those purchases are guilty indulgences (and $30 at the movies is madness!). But it's honest and important to factor in the money you should be spending to keep yourself amused, and warm.


This is just a start for managing your finances. And if you're in college still, you're probably going to be spending more money on books than on debt repayment. However, you should try to outline a budget, if for no other reason than to get a sense of how you spend your money. You'd be surprised how quickly the morning Starbucks add up--and if you know how you're spending, you can plan creative ways to save (like buying a coffeemaker and putting the money you save towards next semester's books, or a night out).

I'm definitely not a financial expert, but I'm figuring this out as I go. So Amanda, and everyone out there, if you have any questions or ideas, leave 'em as a comment. We can try to figure this all out together.