Finances are a big deal, and people often have troubles balancing their budget. I don’t really want to run into those types of problems too much so I am going to plan ahead on my finances with some forethought today.
Luckily, my finances are still mostly taken care of by my parents, because I am in college and they are happy to continue to provide for me. Unfortunately, in exactly seven months I will no longer be able to seek financial assistance from the university or my parents. (I had the government under that list, but then I realized that we’re semi-socialized and thus I could get government aid for many reasons.) So, I have seven months to get my stuff together, and I have already started on this path by consolidating my checking accounts into one checking account and my nearly empty brokerage accounts into just one, inexpensive online brokerage.
My plan might very well seem naďve to me in a year or so, but here it is anyway…
I’ve divided my expenses into several categories. My categories are Tithing/Charitable Giving; Housing; Food/Hygiene Supplies; Car/Travel; Clothing; Gifts/Dating/Extroversion Costs; Furniture/Household Supplies and Services; Savings; Spending Money. Perhaps I’ve forgotten something, but the general idea is there.
After I have all these categories set I plan to assign each category a percentage of my after-tax income. This seems like a cool idea to me, because it will help me know what type of car I can afford to drive, what sort of living arrangement I can afford to occupy, how often I get new clothes, etc. Here’s an example of how it might work…
10% -- Tithing / Charitable Giving
35% -- Housing
7.5% -- Food / Hygiene
15% -- Car / Travel
7.5% -- Clothing
5% -- Gifts / Dating / Etc.
5% -- Furniture / Household Expenses
10% -- Savings
5% -- Frivolous Spending
So, if I am making like $30K after taxes then I would need to pick a housing situation that will not cost me more than $10K per annum, which means an apartment or mortgage + property taxes of $833/month. This also means that my $30K / year will only allow me a car that costs $4.5K to drive each year, which needs to include insurance, gas, oil changes, yearly repairs, etc.
OK, I’m done. This is making me more and more afraid of my first few years out of college.
UPDATE -- 12/25/2003
I think that when I get married that some of the combined income should be set aside for each person to spend on their own. For instance... Every month I might get something like $30 or whatever and my wife would too. In that way, we can have some money that we can spend on whatever we'd like to spend it on. Also, it makes gift giving meaningful in a way, because there is still an individual's money. Whereas when two people just buy each other gifts using the combined funds, it's almost like... I'm spending money that you made on you, which has always really struck me as weird (whenever I'd use my parent's money to buy my dad something.) I guess it just seems more special to know that someone saved for a few weeks or months to get you a gift, because they've put lots of thought into it for that whole time. Or... Maybe I've just been romanticized too much by books and hollywood and there really is no difference.
Believe me, 30k doesn't last very long. I'm making a chunk more than that, and it still manages to disappear quite neatly. Though mainly we're saving up since Jaime's tuition is gonna be large and annoying soon.
I like the "extroversion account". Fun name.
Posted by: Jordan at September 2, 2003 10:55 PM