My Ds will be graduating in June and starting his career after some traveling this summer. His job will be with the same company and in the same city where he interned last summer.
Thankfully, ds is very fiscally responsible and reasonably aware of financial and investing issues. He opened an investment account when he turned 18, has funded a Roth IRA, etc. When he was home over Christmas break, I asked him if he had kept a budget during his internship last summer. For the ten weeks he interned he was paid a pro rata amount of what his full-time salary will be, so his income stream would have been an exact replication of what he’ll earn full-time. He said that he had not kept a budget, but he didn’t have a lot of expenses other than rent and some groceries. I know he didn’t spend all he made at all, and he had mentioned some goals (good! responsible) he wanted to achieve with what he saved the summer. He has taken a college course on personal finance. I think it would be prudent for him to have a more detailed budget once he begins his full-time job. However, I don’t want to be insulting, kwim?
Does anyone know of an app, program, system for budgeting that a young person might readily embrace? And a way to suggest using such a system in a way that doesn’t sound like we don’t trust his judgment? I don’t want to overstep my bounds, but I do think tracking expenses more specifically is helpful.
Dave Ramsey’s Everydollar.com for budgeting and his book “Total Money Makeover”. Your son may be able to skip the money problems people encounter and go straight to investing.
“The Total Money Makeover” is a great book. My H bought a copy for every associate at his firm as well as our own kids and friends.
Easy read with very specific goals. While a lot of it is how to get out of debt and STAY out of debt, it has very specific guidelines for an emergency fund, savings, how to budget, and how much and where to invest and why.
I love Beth Kobliner’s book Get a Financial Life: Personal Finance in Your Twenties and Thirties. I don’t think she’s updated it recently, but the core advice is timeless.
A few things that might be different from the summer budget:
Taxes for 2018 will be different. Very different.
Health insurance? If he's not staying on yours. Dental/vision insurance. Disability insurance
Long term savings (401k, stock options from company)
Short term savings for vacations or future purchases of furniture, car, household items like pots and pans that he might not have needed for the summer
He might want to join a club or gym
Student loans?
My niece took a first job in a city and lives in a closet. She had not a cent to spare. She’s now been there a couple of years, and has received a good raise and a bonus. She likes the location of her apt so doesn’t want to move, but now wants nicer stuff (new bed) so has adjusted her living budget to include other things.
We have actually facilitated Financial Peace at our church in the past, but I don’t remember the Everydollar.com component. Perhaps it is new? Ds is familiar with Dave Ramsey as he watched the videos at home with us when we were doing that course, but it’s probably been eight or nine years ago now! We are fans of Dave Ramsey, though we don’t follow his system to a T. We are very debt averse, and I think that’s rubbed off on Ds. Fortunately for him, he will have no college debt when he graduates. I had considered the Total Money Makeover (which I have not read) but wondered if it would seem too old-fashioned for Ds. I mean, he’s not going to do the envelope system with cash. But perhaps the every dollar.com modernizes that principle. I like the envelope system *principle," but it doesn’t seem very practical in today’s “swiping” society. Is there a cost to using the eveydollar.com?
I’ve heard good things about YNAB, but I also saw it was about $85 per year. I don’t mind gifting that to him IF he will use it. I don’t want to buy something that he won’t use. Maybe he’d try out their free trial period. I can’t get a sense of exactly how it works. I feel like the less time-consuming, the better. I’ll check out Mint as well.
@thumper1 - we have budgeted with varying level of detail over the years. We aren’t tracking super specifically these days. I just feel like it might give Ds a good sense of where he might be wasting money if he tracked closely for awhile. Just seeing on paper how much he was spending on dining out or entertainment or other areas where there is room for modifying behavior if one is aware of it and adjustments need to be made.
If he is “naturally frugal” in that he tends to spend significantly less than his income without actively trying to, then he may not need to actively budget his money, although it would be a good idea for him to review his actual money situation every so often so that he knows where he stands. Such a person may still need to think about how to allocate savings into various types of investments based on time horizon, and how much needs to be in the emergency fund based on risk of job loss and length of time it may take to find another job.
Many personal finance books and other aids are not intended for people like that, in that they assume that the reader or user, when not actively budgeting, will spend all of his/her income and more (resulting in increasing credit card debt) on frivolous luxuries or impulsive spending on things that can be gotten at lower cost if one spends more carefully.
William Berenstein, MD has a good $1 book on investing, “If You Can.” Bogleheads.org is a helpful website with lots of good videos, wikis and tips on how to succeed in investing in low cost broad index funds and more. Our S has been doing very well following the ideas on both since he was in college.
Everydollar is free so the price is right. Works like an easy spread sheet.
Easy to do since you can sync devices.
Good financial advice is never old fashioned.
I believe mint is free. Quickbooks is a onetime charge and a robust spreadsheet program that many bookkeepers and accountants use.
The cheap, low tech thing I did was just write down EVERYTHING I spent and give it a category. I did this all through law school. I was generally within $.10 of my total expenditures and knew where my money was going. Eventually I made lumpy categories: rent, food, gifts, entertainment, transportation, etc. It served my needs at the time and made me think twice about spending if I had to write it down.
I’ve really never done much personal budgetting per se—we just live below our income and always have.