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Hello! I was told to join this forum and I guess the first thing on my mind is how I can learn to budget. I am a fairly young adult living on my own. Currently unemployed (for the time being. I just quit my job a few days ago), having about $2,000 in my Savings and a credit score that is close to 700 (thanks to a secured credit card, no inquiries, etc.). I have no idea how to budget though. I'm not sure why. Can anyone help me work something out?
Thanks.
You will need to cut spending to absolute bare bones with $2k in savings and no income.
What prompted you to quit with no new job and so little saved?
@Anonymous wrote:Hello! I was told to join this forum and I guess the first thing on my mind is how I can learn to budget. I am a fairly young adult living on my own. Currently unemployed (for the time being. I just quit my job a few days ago), having about $2,000 in my Savings and a credit score that is close to 700 (thanks to a secured credit card, no inquiries, etc.). I have no idea how to budget though. I'm not sure why. Can anyone help me work something out?
Thanks.
How much are your monthly Rent/Utilities?
I live pretty low key and could potentially shave my monthly expenses to 1300-1400 per month. Barebones. I would start looking for a job you want (or any job) just to avoid bleeding what little funds you have saved.
I did a period of no full time job, but did sidework to get some cash inflow. It allowed me to go much longer before needing to get back to full time.
@Anonymous wrote:Hello! I was told to join this forum and I guess the first thing on my mind is how I can learn to budget. I am a fairly young adult living on my own. Currently unemployed (for the time being. I just quit my job a few days ago), having about $2,000 in my Savings and a credit score that is close to 700 (thanks to a secured credit card, no inquiries, etc.). I have no idea how to budget though. I'm not sure why. Can anyone help me work something out?
Thanks.
Creating a budget is easier than it sounds. You take what you're bringing in and then itemize what you're spending/saving on in a given month. Subtract the itemizations from your income. If that number is positive, your budget is ok; if not, it needs work. Following that budget is an entirely different matter, and that's probably where most people fail.
As a simple example, say someone brings in $1,000/month and has the following expenses:
- $200 rent
- $100 utilities (including phone)
- $100 loan/debt repayment
- $100 savings
- $300 food
They still have $200/month for incidentals (clothing, entertainment, etc) or an additional $200 to put toward savings/debt repayment. This is a healthy budget, especially if the person is smart enough to put most/all of that extra $200 toward debt/savings rather than incidentals. Over time, they will pay off the loans and debt and then have even more to put towards savings/incidentals. It also means they have buffer space should one of their expenses go up (add a car payment for $100 or rent increases, for example).
When someone has $0 or less left after subtracting expenses, that's when they have to go back to their budget and figure out which of those numbers can do down. Maybe cancel TV service to reduce utilities, or reduce the food budget for a few months to pay off a debt. Without having the budget made in the first place, though, they wouldn't know where they stood and how much they need to cut to make their income work.
In your case, you have an income of $0 right now, which means you have to fall back on savings. If you want that savings to last a certain period of time (say 6 months), you divide the $2,000 by 6, meaning you have a $333 budget to work with each month right now. Look at your expenses and cut/stop any of them that you don't absolutely need so that you can get under $333/month. As you're already digging into savings, you should be in crisis mode as the clock is already ticking down to when you will have $0 available. Increase income ASAP or take drastic measures (move back home with your parents, sell your car, that sort of stuff).
@wascb14: The job was just really affecting my mental health so I felt it was time to go and look for a different line of work.
To clarify, I have ~$2,000 in savings and $1,000 in my checking, plus about $350 for a secured credit card.
@workin4abetterfico: $200 a month in rent because I am renting a room from my aunt.
@iced: thank you for laying that out. i appreciate it.