How to create a budget as a young adult

How To Create A Budget As A Young Adult

It has been said that money is the root of all problems. Though I don’t believe that to be true, I think it is important to be wise with money. Since I am moving out on my own this week, I have been thinking about my financial situation a lot more. This made me realize my need for a budget. I thought I would take to the blog to help any else who is trying to figure out how to create a budget as a young adult as well.

a guide to creating a budget as a young adult

As young adults, we have to navigate the best ways to track our money since it is the first time many of us are financially independent. This process includes a lot of trial and error. Even though there are many ways to create a budget as a young adult, there are a few basic things that need to happen first.

Identify Monthly Income

The first step to create a budget as a young adult is to identify my monthly income. You can’t track your money if you don’t have any. Some sources of income as a young adult may come from working, financial aid, or allowance from parents. To figure out your monthly income you will need to add up all sources of income. With income from work, make sure that you are calculating your net income (amount after taxes) to accurately calculate how much you will have to spend each month.

Track Your Spending

This step may not be necessary for everyone to create a budget as a young adult. If you already track your spending and know where your money is going, this step would be repetitive. If you have no idea where your money is going, this would be a great step for you. is a great free resource for this! You can securely link any (or all) of your debit and credit cards and the website will tell you what categories you are spending the most money in. Mint has some really amazing other features as well. I would be more than happy to write a full post about it! Let me know in the comments if you’re interested.

Identify Monthly Expenses

Some common monthly expenses to identify are rent, utilities, car payments, and car insurance. They can also include things like Netflix, Spotify, cable, phone bills, and internet. These are all expenses that are considered fixed. Each month, you know that you will have these and they will rarely change (utilities might be the exception if you do not have fixed costs and use more than other months).

It is also a good idea to identify other variable expenses that aren’t fixed but that you know you will be spending money on. This would include things such as gas, groceries, textbooks, eating out, or shopping sprees. Once you identify these expenses, you can determine how much you will allow yourself to spend in each categories. As we create a budget as a young adult we might see areas that we are spending too much money in. This is a major area you will be able to cut expenses in the future if you need to.

Determine Your Debt

As young adults we are bound to have debt. This debt could include student loans, car loans, credit card debt, ect. You need to first calculate how much debt you have in total. Some debt, such as student loans, you may not need to pay right away if you are still in school. It would be smart to create a master list of all your debts and the interest rates they include.

You can then decide how much you need to put towards your debts each month. This should be a priority in your expenses category because the longer you have debt in your name, the more you will owe in the long run.

Determine Savings Goals

To determine your savings goals, you can set an amount you want to reach in a certain amount of time and divide that amount by the time you decided on. The total of that calculation would be the amount you save each month until the goal is met. This is great for short term savings goals (less than a year) as long as the total of your expenses and savings goal does not exceed your monthly income. If the total exceeds your monthly income, you can change the amounts you set for your variable expenses.

My favorite way to save money is to add up your fixed expenses and your variable expenses then subtract that amount from the total monthly income. The amount that you get from this calculation is the amount you will be saving each month. This savings technique is ideal for longer periods of time as long as your monthly expenses are not changing often.

No matter how much you choose to save or which way you choose to save in, you should NEVER take money from your savings account. It is better to cut out Spotify and Netflix for a few months than to take away from your savings. If you are short on cash, you may need to reevaluate your budget.

Tracking Your Budget

Now that you have the numbers portion completed, you need to decide how you will track all of this information. As I said before, is a great free resource. You can plug each of your expenses into the “budget” section on the site and they will automatically keep track for you.

If you are less tech savvy, you could go with a simple note in your phone or notebook. All you have to do is list each expense and track as you spend. If you go to dinner and spend $15 you would write that in your “entertainment” section. Then, you would subtract it from the total you allotted for the month.

I hope that this crash course in budgeting has been useful for you. I do not claim to be a financial advisor or expert, but if you need more help creating a budget, feel free to contact me and I will do my best to help!





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  1. I love the tip on knowing your debt, in the past i used to be so scared of lookign at it, but after looking and knowing what it was, i was able to plan towards paying it off.

    1. As a student, looking at my debt was a huge fear of mine but its freeing to know what you have and keep track of it!

  2. I teach accounting and finance, one class which happens to be personal finance. Personal budgeting is one of the chief areas we cover and it is surprising how few people take these simple steps to improve their financial lives.

    1. I just took a personal finance class last semester and LOVED it!! It’s such a shame that more people don’t take it seriously.

  3. I Think my biggest hold back from savings is sticking to not touching it. I ALWAYS go back and pull out of it. AND I would love to hear a post about! The sure actually sounds very useful!

    1. The part I struggle with the most is also not touching it! Once you make it a habit it gets much easier but training yourself to get there is hard

  4. I have such a hard time coming up with a sticking to a budget. It’s so important, ESPECIALLY as a young adult, to learn how to save and spend wisely. Mint has definitely made things easier for me over time, so thank you for recommending it.

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