How should you prioritize your spending? It’s not an easy question to answer, no matter what stage of life you’re in. That’s why we put together this flowchart to help you visualize ways to allocate your paycheck, depending on whether you’re a recent college grad, married without children, or a parent.
Keep in mind that these are just a few examples. Priorities vary from person to person, and you may want to spend differently in a few categories. Our scenarios cover the basics — it’s up to you to allocate your income based on what’s important to you.
For instance, if you want to give more to charity, but don’t have a lot of wiggle room in your budget, there are several approaches you could take. You might reduce your entertainment budget, or reduce overall spending to maximize the money you have left for charity.
Prioritizing your spending can be difficult, but you have to find what works for you and then stick to it! Take a look at our personal finance flowchart to get started.
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Help Your Retirement Account Grow
Saving for retirement should be a priority at every age and should begin as soon as possible. Be sure to take advantage of opportunities your employer may offer to maximize your savings. For instance, many companies will match a percentage of your personal contributions to your 401(k). With employer match, your 401(k) will add up much more quickly.
Make Saving Money a Priority
Our mock budget includes money going toward savings at every stage of your life. Why? The answer is fairly simple: You always want to have money to fall back on. As you get older and you have more responsibility, this becomes even more critical.
Our scenarios include both an emergency fund, which should contain at least three to six months of your living expenses, as well as savings for planned expenses, such as a vacation, wedding, or child’s education. Setting money aside each month for large planned or unplanned expenses can make them easier to manage and provide peace of mind.
Keep Your Checking Account Balanced
While you have a lot of money going toward many different expenses, as illustrated in our flowchart above, it’s important to make sure you’re tracking all of your spending and keeping your checking account balanced.
Be sure to keep sufficient funds in your checking account for automated bill payments, and if you share an account with a partner, make sure you communicate regularly to avoid accidentally overdrawing the account.