Young Adult Budgeting Guide – Find the Right Method for You

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Last Updated:Nov 05, 2024

Young Adult Budgeting Guide – Find the Right Method for You

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We live in a time when the cost of living is exceptionally high, and most of us live paycheck to paycheck. I don't know about you, but I don't find that kind of existence actually living life. So why not take matters into your own hands and ensure you spend money only on needs and wants? Budgeting for young adults can be done in many different ways. The key is to try a lot of them out and find out which one works for you, not the other way around.

In this article

1. Finding the right way to budget

There is no one-size-fits-all approach when it comes to budgeting, but there are some things we can all do that will help make budgeting work for us. We’ll now look at some ways to track your budget and then get into what you can do to ensure that your money is evenly distributed between things you need (food, rent, utilities) and things you want.

In our opinion, there are two ways you can go about tracking your budget: physical or digital. Both have pros and cons, and it is up to you to find what works for you.

Physical budget tracking

This can be anything from a notebook or a journal you dedicate to your budget tracking to a fancy planner designed to help you with budget tracking. Now, if you are anything like me, you are going to pick the fancy option that has done all the work for you, but if you do choose to DIY it, let's go over the basics of what a tracker needs:

Financial goals
Income
Savings
Daily spending (no more excuses that you don't know where your money is going)
Monthly budget

Digital budget tracking

If you prefer to have things on your devices instead, there are plenty of options for your budget tracking. This can be achieved with things like spreadsheets (you can make your own or use templates) or budget-tracking apps that can be installed on your mobile devices. Whatever you decide is the best for you, the digital tracker will need the basics, the same as the physical budget trackers.

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2. Chose a method for budgeting

Once you figure out what way of tracking your budgeting will work best for you, it's time to pick a method of budgeting that will help you accomplish what you need. Just because one method works for someone doesn't mean it will work for you, and when budgeting, it is essential that your plan and method fit your preferences so that you can benefit from having them.

Zero-based budgeting

Zero-based budgeting, or ZBB, works by making sure that all your money is always accounted for. This means that after splitting up your money between all your needs — bills, rent, car payments, etc., and your budget for wants like books, nights out with friends, etc., and savings, you end up with no more money to spend. This doesn't mean that if your bills are lower one month, you should spend that money elsewhere— it means you get to put in more savings.

Pay yourself first budgeting

As the name suggests, with pay yourself first budgeting, your focus is a little in reverse, where you pay into your savings and retirement first, and with the rest of the money from your income, you settle your bills and other expenses. This method of budgeting will prioritize savings, though you have to make sure it is not at the cost of your essential expenses like rent, bills, and insurance.

The envelope budget method

This budgeting method is very straightforward — you can do it with cash and digital "envelopes," although for the latter, you will need to research apps that will help you in that endeavor. With the envelope method, you take a few envelopes and label each for something specific like bills, rent, groceries, etc. Each month, you put money for that category in that envelope. If you don't spend it all in one month, you can either move it to savings or keep it for the next month and whatever leftovers you have can go to savings. Either way, you'll have extra money to go towards something like a vacation.

The 50/30/20 budget

This kind of budgeting may not be suitable for everyone. The premise is that you set aside 50% of your income for essentials like bills, housing, and food, 30% of your income for wants like books, hobbies, nights out with friends, takeout, and 20% of your income for savings. Now, obviously, this will have to be adjusted if your essentials take up more than 50% of your income, which is why I said that this method may not be fitting for everyone.

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3. Other ways to help you budget successfully

Now that you have chosen a way to track your spending and decided on a budgeting method, let's look at some other ways you can help yourself save or make more money. Here’s what you can do to supplement your savings.

Pick up a non-time-consuming side hustle

There are a lot of ways to make money these days, and while a lot of them take quite some time, some do not. Side hustles could include taking surveys or selling things you don't need from your apartment/house, like clothes or things you just don't use anymore. This way, you will get rid of unwanted things and make some money.

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Automate your savings

Once you settle on a budgeting method, you can make sure that a percentage of your income always goes into your savings. You can set up these kinds of payments with online banking. This means that the moment your salary gets to your bank account, a withdrawal will happen immediately and deposit into your savings account. When your savings are automated, you never get a chance to spend them on things you don't need to spend them on, and this way, they will be safe for when you need them for something good — like a down payment for your car or a vacation, or for something not so good — like dealing with an emergency plumbing issue.

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