A Girls' Guide to Budgeting for Women in Their 20s
The Foundation of Your Financial Success.
Hey there, ladies! Welcome back to For The Love Of The Funds, I’m Such A Lady series where we're all about embracing the chaos of adulting while making girl math make cents. Today, we're diving deep into the essential cornerstone of financial independence: budgeting. Because, let's face it, being a young woman in your 20s is like riding a rollercoaster of emotions and experiences, all while trying to figure out how to make the right financial decisions that will set us up for financial success.
As your financial friend, I get it. Trust me, I've been there and I am still there. I know how tempting it is to want to live a luxurious and young turnt lifestyle while enjoying my 20s But I also know the importance of laying down a solid foundation for my financial future. So, let's get into how we can have that perfect balance between living our best lives and making sure our bank accounts don't hate us later. I believe there are 3 top things we need to do as young women to build a solid financial foundation which are acknowledge our financial reality, cultivate the right mindset, and be consistent and disciplined. So let’s get into it.
Acknowledging Your Financial Reality:
The first step in harnessing the power of budgeting is acknowledging your current financial situation. Take a moment to assess where you are ” your income, your expenses, your debts, and your savings all of the above. This isn't about judgment or guilt; it's about gaining clarity and understanding. By facing your financial reality head-on, you're taking the first step toward building a better future and a better financial relationship with your money.
Your lifestyle shouldn't choose your income, your income should choose your lifestyle. Knowing your income, whether you're working a 9-to-5 job, an entrepreneur hustling with a side gig, or dabbling in investments, it's crucial to have a clear understanding of how much money you're bringing in each month. You may ask okay Taylor how do I do that? Here are a few options, I highly recommend you get a journal strictly for your finances where you can write out your budget for the year. Alternatively, you can use a budgeting app, such as Nerdwallet or Mint, to track your income and expenses if you are a tech-savvy girlie. I like pen and paper so I got a notebook! lol
Now, let’s break it down .
List Your Sources of Income:
1. Start by listing all your sources of revenue. For example, if you have a full-time job, write down your monthly salary before taxes. Let's say you earn $55,000 a year. To calculate your monthly income, divide your annual salary by 12 (because there are 12 months in a year). So, $55,000 divided by 12 equals $4,583.33 per month. This is your gross monthly income. If you have additional sources of income, such as a second job, freelance work, or investment dividends, be sure to include those as well.
Subtract Taxes and Deductions:
2. Next, subtract any taxes or deductions from your total income. This could include income tax, Social Security contributions, health insurance premiums, or retirement contributions. For simplicity, let's assume your total deductions amount to $500 per month. After subtracting this from your total income, you're left with $4,083.33 of disposable income.
Allocate Your Disposable Income:
3. Now, it's essential to allocate this disposable income wisely. Consider your financial goals and prioritize your spending accordingly. You might allocate a certain percentage to savings, such as 20%, to build an emergency fund or save for a specific goal. Let's say you decide to put $600 per month into savings. After allocating for savings, you have $3,483.33 remaining for your monthly expenses.
Break Down Your Expenses:
4. Finally, Break down your remaining income into categories such as housing, transportation, groceries, utilities, entertainment, and miscellaneous expenses. Assign a specific amount to each category based on your needs and priorities. For example, if your rent is $1,000 per month, transportation costs $200, groceries average $300, and utilities come to $100, you'll have $1,883.33 left for entertainment and miscellaneous expenses.
By breaking down your income and expenses in this way, you'll have a clear picture of where your money is going and how much you have available for different expenses. Tracking your expenses for just a month can reveal patterns and areas where you might be able to cut back, helping you stay on top of your finances and reach your financial goals. Whether you choose to track this in a journal, budgeting app, or software, the key is to stay organized and proactive in managing your finances.
Goal$ Digger: Cultivating the Right Mindset:
Let's talk mindset. Budgeting isn't just about dollars and cents; It's about believing in your ability to create the life you want, one smart financial decision at a time. Cultivate a mindset of abundance, where every dollar saved is a step closer to your goals. Remember, you're not depriving yourself of things; you're investing in your future self.
It took me such a long time to even cultivate the mindset of wealth and unlearn my financial traumas. I am still unlearning them as I entered my 20s, I realized I didn't want to carry those same anxieties into my adulthood from my childhood. It's been a journey of self-discovery and healing, learning to view money not as a source of stress, but as a tool for creating the life I want. And with each step forward, I'm reclaiming my financial confidence and building a brighter future for myself.
As yourself What do you want to achieve with your money? Whether it's saving up for that vacation, paying off student loans, or finally splurging on a designer handbag, having clear financial goals will help guide your budgeting decisions and keep you motivated along the way. To help you set and track your goals, consider using resources like the SMART criteria (Specific, Measurable, Achievable, Relevant, Time-bound) to ensure they're clear and achievable.
To illustrate, let's imagine you have a goal of saving $5,000 for a trip to Europe next summer. Rather than seeing your budget as a restriction, view it as a tool to help you achieve your dream. By cutting back on non-essential expenses like dining out and shopping, you can allocate more money toward your travel fund. With the right mindset, budgeting becomes a means to an end” a way to turn your dreams into reality.
With your goals in mind, it's time to get down to business and create some categories for your budget. Housing, transportation, groceries, entertainment you name it, we'll budget for it. And don't worry, we'll make sure to leave a little wiggle room for those unexpected expenses and spontaneous adventures. To help you stay organized, consider using budgeting templates or spreadsheets, which you can find for free online, or create yourself using software like Microsoft Excel or Google Sheets.
It's about taking control of your financial future. And as your financial friend, I'll be right here cheering you on every step of the way. From celebrating your wins to helping you navigate those inevitable setbacks, consider me your go-to gal for all things money-related.
Consistency and Discipline:
Finally, let's talk about consistency and discipline. Building a strong financial foundation requires commitment and perseverance. It means sticking to your budget day in and day out, even when it's hard. It means making intentional choices about how you spend and save your money, and staying true to your goals even in the face of temptation.
Think of your budget as a roadmap for your financial journey. Just like with any journey, there will be bumps along the way. There will be times when you're tempted to overspend or deviate from your plan. But it's during these moments that consistency and discipline are most important. Stay focused on your goals, and remember why you started this journey in the first place.
Something I've recently incorporated into my life is cutting down on eating out. It's not that I have completely cut out eating out and I strongly disagree with people who say you can’t eat out and budget. I just have created a budget and allocated a certain amount of money to it and am sticking to it. As I'm typing this, I'm getting ready to head out for brunch, so don’t judge me. The only reason I can do so is because I have built enough discipline to stick to my budget, WHICH WAS NOT EASY and I’m still learning, but I told myself once that money is spent, I'll be right in my kitchen.
Now that's GIRL Math that makes CENTS.
So, here's to you, Such a Lady the woman who dares to dream, who refuses to settle, who believes in her power to shape her own destiny. As we embark on this journey together, remember that you are capable of achieving financial independence and resilience. Together, we've got this! And remember, I'm always here to lend a helping hand (or a virtual shoulder to cry on) whenever you need it.
Let's make those financial dreams a reality, one budget at a time. Here's to building a future filled with abundance, success, and endless possibilities.
see y’all next sunday <3
