| by Kenneth Chase | 6 comments

How Much can I Afford for Rent? | Budget with me 2018

Hey guys! It’s Akeiva and welcome back to
another episode of The Bemused and, if you’re new here, on this channel we talk
all things personal finance for young adults like myself to help you live your
best life, so if you’re into that kind of thing, hit that subscribe button below. So
the other day we asked you guys on an Instagram poll if you wanted to see a
breakdown of our budgets and, of course, all of you guys that answered the poll
said yes. So, today, I’m going to be walking you through my personal budget
with real numbers. There’s a ton of valuable information in this video, so
make sure you watch all the way to the end.
If hearing the word budget makes you want to roll up into a ball and cry or
maybe you’re that friend that’s always asking your friends to borrow money – okay
we can be real with each other. We’re friends here – or if you have no idea how
to even start a budget or maybe you have a budget but you have a really hard time
sticking to it. Guess who this video’s for? That’s right! It’s just for you. So before we jump into my personal budget I
want to cover two ground rules when it comes to budgeting. First, budgets are not
one size fits all! There is no one correct way to budget. Everyone maps out
their financial game plan differently, so don’t feel like you have to do it a
specific way or the way that I’m showing you today. This is just an example and
what I do to kind of give you just some ideas and some thoughts on how to create
your own budget. Second rule is that budgets are not boring! They’re not
boring at all! In fact, I find budgeting to be extremely empowering. My budget
shows me how I can afford to achieve my goals and what I want out of life.
it gives me a roadmap to making sure that I am financially independent and
don’t have to depend on other people to live my life and it also helps me answer
crucial questions. As you guys know if you’ve seen our last video you know that
I am in the process of moving and I’m looking for somewhere else to live. So a
budget helps me answer the question “How much apartment can I afford? How much can
I afford to spend on rent?” and to me that is very empowering. It takes the stress
off of making bad decisions when it comes to rent in this example. So
budgeting is extremely empowering and once you kind of get that mindset it’ll
be so much easier for you to one just have the courage to even create
your budget in the first place and second of all gives you the motivation
to stick to it. So now let’s lay the framework and set
the context for my budget specifically. So this budgeting method that I’m
showing you is based on having a stable consistent income of some sort so if
you’re a freelancer or an entrepreneur or someone that has sporadic income this
budget method might not be the best for you and let me know if you guys want me
to do a video on how to budget for inconsistent income. Let me know in the
comments below and we’ll definitely get that video up for you guys. Alright so
we’ve laid the groundwork. Now let’s jump in to my budget. Today I’m going to be
using Excel to build my budget and if Excel scares you or if you’ve
never used Microsoft Excel before or it might be challenging for you I promise
you is not that bad I promise I would not lie to you.
I just find it to be the best and most effective way to lay out everything. So
let’s jump into my budget. Okay guys so I am starting off with a clean blank Excel
workbook and what I am going to do first because I’m going to list all of my
categories here and all the dollar amounts in this column is just – personal
preference – I’m just going to make it the accounting format so everything shows up
like a dollar amount. The first thing I’m going to do is plug in my income and I
am a salaried employee making $55,000 a year currently. I’m gonna plug that in
first. and if you are an hourly employee you
get paid bi-weekly it’s a similar concept so if you get paid hourly of
course you just multiply the amount of hours you work in a week times the rate
that you’re paid and then if you’re paid bi-weekly like most hourly employees are
then you just multiply that amount by four. Typically that’s how much money
you’re going to get in a month and you’ll just put that in there. Now
underneath now I’m going to find out how much that is on a monthly basis.
so I’m just going to take this and divide it by twelve so this is how much
money that I’m making every month. Now from there I have to figure out what my
actual take-home pay is what is coming home with me in my pocket that I can use
to budget with and now this is where things get a little interesting. so
basically I budget based off of after tithe tax and retirement contribution
dollars and so all of that I am NOT even taking into consideration before I even
start my budget and so all of that taken out means that I only come home with
57.9% of my paycheck the way that I currently have
things set up and so that begs the question – “How do you know how much to
budget for taxes?” so this you can find out. the IRS publishes a publication
called publication 15 I’ll just link it in the description below so you
can actually see the page there and on page 46 there are these table these tax
withholding tables that you can use to figure out how much money or what your
employer is going to withhold from your check every single paycheck so that’s
what I use. there are some calculators out there that I’m not really familiar
with that much I just go to the source and calculate how much money is going to
be taken out of my paycheck and so that is for federal
withholding and then of course there’s also Social Security and Medicare taxes
that come out and that is 6.2% for social security and 1.45% of your paycheck for Medicare respectively and that’s
just across the board so after all of my taxes are taken into consideration
including my state taxes. There’s also state tax withholding tables you can just
easily look up online to see how much is being taken out of your check. so after
all of that is taken into consideration and then 10% for my tithe and
right now I contribute 6% to my retirement plan I’m coming home like I
said with 57.9% of my paycheck so I’m going to take this
and multiply that by .579 and that is my monthly take-home
pay so this is the number that I am using to budget with every single month
and so first the way that I like to do things in terms of expenses is I think
it’s best to start with your non-negotiables. These are the things
that are not changing from your budget regardless of what you do. These are the
things are either the most the most important to you or just expenses that
are going to be there that really aren’t going to go away so for me personally I
start with my savings and I know that there is no way that I’m going to be
saving less than $500 a month. that is non-negotiable. if the world was
ending I still need to make sure that I need to save $500 a month like that’s
not that’s not going to change and this is another tip if you have problems or
trouble staying to your budget sticking to your budget having trouble saving
money of any kind this is where this comes in for me. I’m just gonna label it
savings for now but you can label it whatever you want.
currently what my savings is going to – and that’s another thing you don’t just
save for the point of saving you save for a purpose. if you don’t know what
you’re saving for then of course you’re not gonna stick to your budget. For me
right now my current savings goal where that $500 goes every month is my emergency fund and why that’s so important is because my
emergency fund allows me flexibility. My goal right now is to have six months
worth of expenses saved up and so what that means is that if I ever lose my job,
God forbid, or anything were to ever happen where I can’t have income
coming in for a while that means I can still go about my
business and nothing will change for at least six months.
I can go about business as usual and that means I don’t have to you know
scramble and if I can’t pay rent or I have to go live with my parents again. So
that’s what’s important to me is being financially independent and my emergency
fund will allow me to do that and so that is my goal so I’m actually just, for
purpose of this video, going to change this to financial independence fund but you can name it whatever you want whether your goal is to get out of your parents –
of your parents house like that can be your goal. whatever your goal is put that
there. so next I’m just gonna run through all of my other expenses that I have. my
internet right now costs me $20 a month My bill’s $40 a month but once I
have my roommate who’s moving in pretty soon so that’s gonna be split in half so
$20. I have my car note that is to 217.82 I have my student loan payment that’s
going to be $386 Now I haven’t started paying
those loan payments just yet as I mentioned in a previous video however if
I’m trying to figure out how much money I can afford to pay in rent now I need
to take this into consideration because this is gonna start in January and of
course in January I will be mid lease so definitely need to take those student
loan payments into consideration and I talked in a previous video about how to
find out what your student loan payments will be using the student loan repayment
estimator which I will link again in the description box below for those of you
who do have federal student loans and want to take your payment’s into account
when setting up your budget so that’ll be linked below. so some other fixed
expenses my phone bill’s $50 a month I’m currently still on a family plan and so
I just pay my share for my line which is $50 a month and let’s see if any other
non-negotiable thing well my gas typically runs me about $60 a month and
this is another thing don’t feel like your budget has to be right the first
time because things are definitely gonna change a little bit. when I first set up
my budget I had budgeted $50 for gas and I quickly realized after a couple months
that I needed to be adjusted so now it’s $60 a month and that’s been pretty
consistent even with the rising gas prices
so yeah don’t feel like you have to get it right the first time you don’t ever
get anything completely right the first time so now let’s go on to some
discretionary expenses so I am going to plug in for groceries I’m gonna put $100
a month and honestly I barely I don’t think I’ve ever spent my full hundred
dollars every month like not that I don’t eat but I eat very inexpensively
if that makes sense I don’t eat out really really ever like
rarely so I basically cook all of my meals at home and so that’s really all
that I’m spending my money on I’m not no crazy fancy cook like I’m fine with some
basic you know pasta and some beans and vegetables some rice and you know basic
stuff so $100 will do then I have to How could I forget about my car insurance? so right
now I am paying my car insurance – I pay my car insurance premium every six
months because it saves you money you have that, you know, six-month discount
for paying it upfront as supposed to paying it every month and so right now
my last premium was right around $900 so I just make sure that I’m saving $150
every month so that I’m able to just pay that premium when it comes up I actually
just got my new premium for my premium that starts in a couple weeks and
it’s actually a lot less than nine hundred dollars so that is a nice
pleasant surprise and some extra money that I will use for a very important
purchase which I will do a video on very soon when I purchased said item. so
that’s my car insurance I’m gonna continue accruing that just to be on the
conservative side and then I have my discretionary spending this is the money
that I can literally spend on whatever I want I’m not a very needy individual so
a hundred dollars a month will do and then I’m going to have a travel budget
in here and I’m just going to put $85 in there for now and this travel budget
essentially allows me to see my family go visit Meshack when I need to so
that’s what I’m gonna budget so I can at least you know see my friends and family
at least once a month and that’s typically how much it costs me for roundtrip every
time I go to New York so that’s what I’m gonna leave in there for now
so now and I’m also going to add a line item I’m just gonna call it my
Uh-oh because you know stuff happens. sometimes you get a little trigger-happy
and you know things you go a little over budget or there’s an expense that it’s
kind of unexpected but you don’t necessarily want to take it out of your
emergency fund you still want to have a little bit of cushion for me I like to
have a little bit of a cushion there so I’m going to plug in$150 a month and you know if nothing ever happens this is also money that I
can use to save towards short term things or maybe just things that you
know I just straight-up want that or maybe a little bit more expensive so
that’s what I do there and then we’re gonna put a placeholder for rent
and I’m just going for right now to plug in $850 so let’s see where that
leaves us – actually – want my things to look fancy so let’s make sure that our budget
is balanced so we have this we have this We’re under about $15 so I’m just
going to say that we are going to make this 135 $34 – whatever so that means that
I cannot afford to spend more than $1,700 on rent. This is the golden answer
that I was looking for. So when my roommate and I are going to see
apartments we know that we are not looking at anything that it’s going to
cost us more than $1,700 a month inclusive of utilities so this is my
budget in its completed form like I said I prioritize the things that are
important to me which are my savings goals all of my non-negotiable expenses
and I’ve left a little bit of cushion in there so while you’re meeting your
savings goals or whatever goals you have you have a little bit of wiggle room
so you’re not just in this straitjacket and leave no room for error so that’s
also really important. At the end of the day I’ve answered my question as to how
much rent I can afford and, you know, life is good
all is good my goals are gonna be met and it’s really just a great empowering
process so the most important thing to remember when it comes to creating and
sticking to your budget is to remember your “why””. why are you doing this why are
you devoting your hard-earned money to this specific purpose now once you
remember that and any time you want to make an impulse buy or something that
does not align with your budget just think about
what you’re sacrificing think about that important goal that you’re sacrificing
in that moment and that will help you stick to your budget now if you guys
want to see how I actually track my cash flow from day to day or month to month
and reconcile my budget at the end of each month let me know in the comments
and we will do a follow-up video on how I actually track my day-to-day
expenses and see how I am doing compared to my budget so thank you guys so much
for watching if you enjoyed this video and you think it’ll be helpful to
someone else make sure you share this video send it to whoever needs to watch
this video and you know who they are also we have some really awesome content
coming up starting next week so make sure you guys stay tuned make sure you
subscribe don’t forget to subscribe and turn on notifications so that you never
miss a beat. There’s a lot of transition, a lot of cool things happening, so make
sure you guys are along for the ride. Thanks again for watching and we will
see you guys next week. Bye!


The Bemused: Making Sense of Money ?

Jul 7, 2018, 11:02 am Reply

You asked. We delivered! What did you think? Let us know in the comments!

J Mercer

Dec 12, 2018, 8:39 pm Reply

After graduating I realize the importance of having a budget to manage income and expenses. Thanks for making this video!


Jan 1, 2019, 8:35 pm Reply

This was awesome

Alex Korchev

Feb 2, 2019, 9:40 pm Reply

Will you make a 2019 version of this video?

Devon Wesley

Mar 3, 2019, 6:01 pm Reply

This helped immensely – thank you!


Sep 9, 2019, 3:22 am Reply

Thank you for this! Did you ever make a follow-up video? Because I'd like to see one 🙂

Leave a Reply