Hey guys! It’s Akeiva and welcome back to another episode of The Bemused and, if you’re new here, on this channel we talk all things personal finance for young adults like myself to help you live your best life, so if you’re into that kind of thing, hit that subscribe button below. So the other day we asked you guys on an Instagram poll if you wanted to see a breakdown of our budgets and, of course, all of you guys that answered the poll said yes. So, today, I’m going to be walking you through my personal budget with real numbers. There’s a ton of valuable information in this video, so make sure you watch all the way to the end. If hearing the word budget makes you want to roll up into a ball and cry or maybe you’re that friend that’s always asking your friends to borrow money – okay we can be real with each other.
We’re friends here – or if you have no idea how to even start a budget or maybe you have a budget but you have a really hard time sticking to it. Guess who this video’s for? That’s right! It’s just for you. So before we jump into my personal budget I want to cover two ground rules when it comes to budgeting. First, budgets are not one size fits all! There is no one correct way to budget. Everyone maps out their financial game plan differently, so don’t feel like you have to do it a specific way or the way that I’m showing you today. This is just an example and what I do to kind of give you just some ideas and some thoughts on how to create your own budget. Second rule is that budgets are not boring! They’re not boring at all! In fact, I find budgeting to be extremely empowering. My budget shows me how I can afford to achieve my goals and what I want out of life. it gives me a roadmap to making sure that I am financially independent and don’t have to depend on other people to live my life and it also helps me answer crucial questions.
As you guys know if you’ve seen our last video you know that I am in the process of moving and I’m looking for somewhere else to live. So a budget helps me answer the question “How much apartment can I afford? How much can I afford to spend on rent?” and to me that is very empowering. It takes the stress off of making bad decisions when it comes to rent in this example. So budgeting is extremely empowering and once you kind of get that mindset it’ll be so much easier for you to one just have the courage to even create your budget in the first place and second of all gives you the motivation to stick to it. So now let’s lay the framework and set the context for my budget specifically. So this budgeting method that I’m showing you is based on having a stable consistent income of some sort so if you’re a freelancer or an entrepreneur or someone that has sporadic income this budget method might not be the best for you and let me know if you guys want me to do a video on how to budget for inconsistent income.
Let me know in the comments below and we’ll definitely get that video up for you guys. Alright so we’ve laid the groundwork. Now let’s jump in to my budget. Today I’m going to be using Excel to build my budget and if Excel scares you or if you’ve never used Microsoft Excel before or it might be challenging for you I promise you is not that bad I promise I would not lie to you. I just find it to be the best and most effective way to lay out everything. So let’s jump into my budget. Okay guys so I am starting off with a clean blank Excel workbook and what I am going to do first because I’m going to list all of my categories here and all the dollar amounts in this column is just – personal preference – I’m just going to make it the accounting format so everything shows up like a dollar amount. The first thing I’m going to do is plug in my income and I am a salaried employee making $55,000 a year currently.
I’m gonna plug that in first. and if you are an hourly employee you get paid bi-weekly it’s a similar concept so if you get paid hourly of course you just multiply the amount of hours you work in a week times the rate that you’re paid and then if you’re paid bi-weekly like most hourly employees are then you just multiply that amount by four. Typically that’s how much money you’re going to get in a month and you’ll just put that in there. Now underneath now I’m going to find out how much that is on a monthly basis. so I’m just going to take this and divide it by twelve so this is how much money that I’m making every month.
Now from there I have to figure out what my actual take-home pay is what is coming home with me in my pocket that I can use to budget with and now this is where things get a little interesting. so basically I budget based off of after tithe tax and retirement contribution dollars and so all of that I am NOT even taking into consideration before I even start my budget and so all of that taken out means that I only come home with 57.9% of my paycheck the way that I currently have things set up and so that begs the question – “How do you know how much to budget for taxes?” so this you can find out.
The IRS publishes a publication called publication 15 I’ll just link it in the description below so you can actually see the page there and on page 46 there are these table these tax withholding tables that you can use to figure out how much money or what your employer is going to withhold from your check every single paycheck so that’s what I use. there are some calculators out there that I’m not really familiar with that much I just go to the source and calculate how much money is going to be taken out of my paycheck and so that is for federal withholding and then of course there’s also Social Security and Medicare taxes that come out and that is 6.2% for social security and 1.45% of your paycheck for Medicare respectively and that’s just across the board so after all of my taxes are taken into consideration including my state taxes.
There’s also state tax withholding tables you can just easily look up online to see how much is being taken out of your check. so after all of that is taken into consideration and then 10% for my tithe and right now I contribute 6% to my retirement plan I’m coming home like I said with 57.9% of my paycheck so I’m going to take this and multiply that by .579 and that is my monthly take-home pay so this is the number that I am using to budget with every single month and so first the way that I like to do things in terms of expenses is I think it’s best to start with your non-negotiables.
These are the things that are not changing from your budget regardless of what you do. These are the things are either the most the most important to you or just expenses that are going to be there that really aren’t going to go away so for me personally I start with my savings and I know that there is no way that I’m going to be saving less than $500 a month. that is non-negotiable. if the world was ending I still need to make sure that I need to save $500 a month like that’s not that’s not going to change and this is another tip if you have problems or trouble staying to your budget sticking to your budget having trouble saving money of any kind this is where this comes in for me. I’m just gonna label it savings for now but you can label it whatever you want. currently what my savings is going to – and that’s another thing you don’t just save for the point of saving you save for a purpose.
If you don’t know what you’re saving for then of course you’re not gonna stick to your budget. For me right now my current savings goal where that $500 goes every month is my emergency fund and why that’s so important is because my emergency fund allows me flexibility. My goal right now is to have six months worth of expenses saved up and so what that means is that if I ever lose my job, God forbid, or anything were to ever happen where I can’t have income coming in for a while that means I can still go about my business and nothing will change for at least six months. I can go about business as usual and that means I don’t have to you know scramble and if I can’t pay rent or I have to go live with my parents again.
So that’s what’s important to me is being financially independent and my emergency fund will allow me to do that and so that is my goal so I’m actually just, for purpose of this video, going to change this to financial independence fund but you can name it whatever you want whether your goal is to get out of your parents – of your parents house like that can be your goal. whatever your goal is put that there. so next I’m just gonna run through all of my other expenses that I have. my internet right now costs me $20 a month My bill’s $40 a month but once I have my roommate who’s moving in pretty soon so that’s gonna be split in half so $20. I have my car note that is to 217.82 I have my student loan payment that’s going to be $386 Now I haven’t started paying those loan payments just yet as I mentioned in a previous video however if I’m trying to figure out how much money I can afford to pay in rent now I need to take this into consideration because this is gonna start in January and of course in January I will be mid lease so definitely need to take those student loan payments into consideration and I talked in a previous video about how to find out what your student loan payments will be using the student loan repayment estimator which I will link again in the description box below for those of you who do have federal student loans and want to take your payment’s into account when setting up your budget so that’ll be linked below.
So some other fixed expenses my phone bill’s $50 a month I’m currently still on a family plan and so I just pay my share for my line which is $50 a month and let’s see if any other non-negotiable thing well my gas typically runs me about $60 a month and this is another thing don’t feel like your budget has to be right the first time because things are definitely gonna change a little bit. when I first set up my budget I had budgeted $50 for gas and I quickly realized after a couple months that I needed to be adjusted so now it’s $60 a month and that’s been pretty consistent even with the rising gas prices so yeah don’t feel like you have to get it right the first time you don’t ever get anything completely right the first time so now let’s go on to some discretionary expenses so I am going to plug in for groceries I’m gonna put $100 a month and honestly I barely I don’t think I’ve ever spent my full hundred dollars every month like not that I don’t eat but I eat very inexpensively if that makes sense I don’t eat out really really ever like rarely so I basically cook all of my meals at home and so that’s really all that I’m spending my money on I’m not no crazy fancy cook like I’m fine with some basic you know pasta and some beans and vegetables some rice and you know basic stuff so $100 will do then I have to How could I forget about my car insurance? so right now I am paying my car insurance – I pay my car insurance premium every six months because it saves you money you have that, you know, six-month discount for paying it upfront as supposed to paying it every month and so right now my last premium was right around $900 so I just make sure that I’m saving $150 every month so that I’m able to just pay that premium when it comes up I actually just got my new premium for my premium that starts in a couple weeks and it’s actually a lot less than nine hundred dollars so that is a nice pleasant surprise and some extra money that I will use for a very important purchase which I will do a video on very soon when I purchased said item.
So that’s my car insurance I’m gonna continue accruing that just to be on the conservative side and then I have my discretionary spending this is the money that I can literally spend on whatever I want I’m not a very needy individual so a hundred dollars a month will do and then I’m going to have a travel budget in here and I’m just going to put $85 in there for now and this travel budget essentially allows me to see my family go visit Meshack when I need to so that’s what I’m gonna budget so I can at least you know see my friends and family at least once a month and that’s typically how much it costs me for roundtrip every time I go to New York so that’s what I’m gonna leave in there for now so now and I’m also going to add a line item I’m just gonna call it my Uh-oh because you know stuff happens.
Sometimes you get a little trigger-happy and you know things you go a little over budget or there’s an expense that it’s kind of unexpected but you don’t necessarily want to take it out of your emergency fund you still want to have a little bit of cushion for me I like to have a little bit of a cushion there so I’m going to plug in$150 a month and you know if nothing ever happens this is also money that I can use to save towards short term things or maybe just things that you know I just straight-up want that or maybe a little bit more expensive so that’s what I do there and then we’re gonna put a placeholder for rent and I’m just going for right now to plug in $850 so let’s see where that leaves us – actually – want my things to look fancy so let’s make sure that our budget is balanced so we have this we have this We’re under about $15 so I’m just going to say that we are going to make this 135 $34 – whatever so that means that I cannot afford to spend more than $1,700 on rent.
This is the golden answer that I was looking for. So when my roommate and I are going to see apartments we know that we are not looking at anything that it’s going to cost us more than $1,700 a month inclusive of utilities so this is my budget in its completed form like I said I prioritize the things that are important to me which are my savings goals all of my non-negotiable expenses and I’ve left a little bit of cushion in there so while you’re meeting your savings goals or whatever goals you have you have a little bit of wiggle room so you’re not just in this straitjacket and leave no room for error so that’s also really important. At the end of the day I’ve answered my question as to how much rent I can afford and, you know, life is good all is good my goals are gonna be met and it’s really just a great empowering process so the most important thing to remember when it comes to creating and sticking to your budget is to remember your “why””.
Why are you doing this why are you devoting your hard-earned money to this specific purpose now once you remember that and any time you want to make an impulse buy or something that does not align with your budget just think about what you’re sacrificing think about that important goal that you’re sacrificing in that moment and that will help you stick to your budget now if you guys want to see how I actually track my cash flow from day to day or month to month and reconcile my budget at the end of each month let me know in the comments and we will do a follow-up video on how I actually track my day-to-day expenses and see how I am doing compared to my budget so thank you guys so much for watching if you enjoyed this video and you think it’ll be helpful to someone else make sure you share this video send it to whoever needs to watch this video and you know who they are also we have some really awesome content coming up starting next week so make sure you guys stay tuned make sure you subscribe don’t forget to subscribe and turn on notifications so that you never miss a beat.
There’s a lot of transition, a lot of cool things happening, so make sure you guys are along for the ride. Thanks again for watching and we will see you guys next week. Bye!.