Broke Millennial

Broke Millennial shows those in their twenties and thirties how to manage their finances so that they can stop scraping by and instead begin to live more confidently when it comes to money.

You don’t have to be a NASA engineer to understand how to budget. The principles of budgeting and saving are pretty simple, after all. But why is it so difficult then?

We all hear the common health advice of “eat less, exercise more” when trying to lose weight. But putting it into practice is actually easier said than done. Your impulses tend to be difficult to resist, whether it’s overeating or overspending.

Stop trying to follow surface-level advice and instead focus on getting clear about why you struggle with money. To do this, you need to look at your past.

It all began years ago with your very first experiences with money. You might struggle to remember financial events in your childhood, but that’s right where you’ll find the deeper problems that make managing cash difficult for you.

Think about how your parents handled or talked about money. Did they openly discuss their earnings and spendings? Or was the subject off-limits?

Whatever it was, digging up those old memories will help you see what stands in your way of financial confidence. Start by journaling about the following questions:

What does your first memory of money make you feel? Which ways did you get money as a kid? What purchases did you make? How did the adults around you talk about money? What financial worries do you have today?

It might seem like your spending goes into many categories that are difficult to organize. But if you break it down, there are three things that your money generally goes to: Fixed costs, such as rent, which should make up 50% of your expenses. Financial goals, like saving for a new car. Aim for 20% of your budget for these. Flexible spending on everyday things, like food, which makes up the last 30% of your spending. This is the ideal, but you can modify it for your circumstances. Reaching this breakdown should always be your goal, however. You’ll need to readjust as you get raises, for example. Whatever way you do it, make sure that your breakdown is reasonable. Don’t put 60% of your earnings toward flexible expenses, for instance! To see this in practice, let’s say you live in New York and make $32,000 per year after taxes and automatic savings. That comes out to roughly $2,667 per month. Rent, utilities, and transportation together cost $1,350 a month. If you’ve got a monthly student loan payment of $250, that’s $1,600 a month for fixed costs, or about 60%.…