OK, so you’ve got some steady income coming in.  That’s great, but what should you do with that money?   How should you use it to your greatest advantage?  You need to institute a budget that allows you to pay the bills, put some money away, and still have some fun.  You don’t want a budget that makes you track every penny of every transaction you make, or requires you to sacrifice too much.  A budget like that will fail nearly every time.   Here’s how you can go about creating one to fit your life.

    I would start off with 3 basic classifications of where your money can go.  These are bills, savings, and spending. 

    A bills account includes everything that you can’t go without.  I include car insurance, cell phone bill, gas, food, repair bills, toothpaste, etc.   Bills are basically “no fun” purchases. 

    Savings is just like it sounds.  Money that is going to be put away and left untouched for future goals.  Whether you want to tuck some money away for college, a future house, or a new car, it should go in savings.  The savings account can also be divided into different time frames or goals.  You can have both a long-term savings for things far down the road and a short-term savings for things that you want within a year or so.   I include investments  in savings also,  and I transfer a little of my income to  my TdAmeritrade account.  There are a million different ways to go about saving, but as long as you are doing it, you are doing much better that most young people already!

    A spending account is the chunk of your income that you can do as you please with.  Knowing that the bills are paid for and that you have saved some of your hard-earned greenbacks, it’s time to have some fun!  If you don’t include some recreation in your budget, you will get bored, lose focus of the long-term picture and struggle to stick with it.  I like to withdrawal my spending money as cash, so I can see easily how much I have.  If I’m out of cash for the week, I won’t be going out for ice cream.  For larger purchases that aren’t considered necessary (like an Xbox 360 :)  , just cut back slightly on your spending for a little while and build up the cash to buy it.  Have as much fun as you can with this money, as that is what it’s for!

    Now, for the fun part.  You will need to decide what percentages of your income will be allotted to each account.  Run some calculations and figure up what works best for you.  I do something like 50% bills, 30% savings, and 20% spending, but it depends.  If I am only bringing in $100 that week, it’s going to be hard to pay for my expenses with $50.  You’ll find out what works best for you. 

    If you still don’t have internet banking, now is the time to get it.  It is so much easier to be in control with online banking and bill-paying.   Well, I believe that is about all.  This is a simple budget that works great for young people and is easily adaptable to fit different needs.