I grew up in a pretty affluent suburb of Chicago. When I went to college, I realized that my upbringing was basically like growing up in a bubble. Families in the area had lake houses, country club memberships, and multiple cars per family. Things that are definitely not normal seemed normal in my eyes -- some classmates received brand new cars on their 15th birthdays (so that they could practice driving with their permits in their own cars, naturally), some families had private jets, live in nannies, and took multiple extravagant vacations a year.
My father is a doctor, so I definitely had a privileged upbringing. I never had to worry about receiving good healthcare, being fed, losing our house, or other less basic needs like having all the supplies I needed for school. We were lucky enough that my dad made enough money that my mom could also stay home full-time to raise my siblings and me. My siblings and I each had our own bedrooms, we lived in an area with excellent schools, we took vacations, and we got to explore different activities (sports, crafts, camps, etc.).
Despite how lucky I was, because of the town I grew up in, my siblings and I had a sense that we were poor. We did not have a lake house... all my clothes were not designer... I did not know how to ski or golf... I had never been to Europe. I grew up with so many wants. I told myself that when I got a full-time job, I would finally be able to get these things I could not have because we were "poor".
There is something scary, yet very exciting, about getting your own paycheck and being able to allocate money as you so desire. So right after starting work, I decided to live at home to cut down on most expenses. With my first couple paychecks, I bought a lot of things for myself and made a dent in my student loan. But my money was going fast -- I was quoted a salary when I was offered my job, but that is definitely not the amount of money I was taking home. It is not like the jobs I had as a teenager where the government took little from my paycheck. Now, I paid much more in taxes and social security. On top of that, I pay for things like health insurance, transit to and from work, and 401k contributions, all of which I did not worry about as a teenager. I had originally seen myself with a certain amount of money, specifically around the salary quoted to me, to spend each month on these wants I had. However, I quickly realized that my wants were so out of line. Having those things other families in my town had was not normal, and there was no way I could afford the things I saw my peers have growing up. This was my first shock, and it took a while to change the expectations I had for myself. I needed to accept and get used to how much money, the money I was actually bringing home, which was what I had per month to spend on non-necessities. And I needed to change my outlook on what living comfortably is.
So I decided I needed to set a budget for myself, which, by the way, is incredibly hard to do. You can find all sorts of recommendations online for suggested budgets. But budgets are not a one-size-fits-all thing. I decided that while I lived at home (where I did not run the risk of overspending one month and not being able to afford rent or something the next month), I would focus on gathering some data (the computer science nerd in me) about my monthly spending trends. This would at least give me a starting point -- I would know where I spent my money and the average amount I spent per expense category. I started using +Mint.com (I absolutely love this website... a couple of complaints... I'll write a post sometime going more in depth :) ).
It took a few months to gather data on my spending habits. But after these few months, at least I knew where my money was going. By this time though, it was the new year. I now was able to open an HSA account (the previous year I had to be declared as a dependent on my father's tax return -- thus I was unable to open an HSA account). I also decided to max out my 401k. The way I had been spending money over the last few months had to change again. My take home pay was smaller, so I needed to be more cautious with my spending and change my budget.
Two months later, in February, I moved out of my parents' house. Once again my budgeting needed to change because I had new expenses - rent, utilities, and food for example. I finally felt like I could use the recommended budgets you find online as a guideline because my expenses more closely matched the categories in these recommended budgets. With a little tweaking by using the data I had gathered on past spending habits, I was able to create a budget that worked for me.
My goals have completely changed from a year ago when I was just starting work. I am hoping that my budget will not need to drastically change for a while (I still want to continue tweaking so I can find ways to add to savings or my student loan payments though!). Life changes that change spending habits, and thus your budget, is uncomfortable. Not knowing my spending habits gives me the sense that I am not in control of my money, and that is a very stressful place to be in.
All in all, I learned that budgeting is not something you set once and forget about. Your budget will be constantly evolving as your life changes. And it can be hard to get used to a new budget as you need to change your spending habits. But I strongly believe that gathering data on your spending habits and starting to budget yourself is the first step towards financial health. It takes some time, but soon you will be a pro!
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