Budgeting 101

  • money, finance, budget
  • Health, Mental Health, Resources for Parents, Guardians, Families, Resources for Professionals, Resources for Teens and Young Adults
Budgeting 101

Managing my finances felt challenging when I started my journey to transitioning out of foster care. Between trying to secure affordable housing, gaining employment, and figuring out what budget worked best for me, I didn’t know where to start. It wasn’t until I discovered the 50/30/20 method that I felt more secure in becoming financially independent and financially stable. Budgeting helped me manage my money while setting me up for success in the future.

Benefits of a Budget

Creating a budget helped me feel a sense of control during an overwhelming time in my life. With so many changes happening around me, I wanted to make sure I was paving the way for a stable and secure future. Budgeting allowed me to make sure my basic needs were met while setting aside money for things I enjoyed and saving for my first car. I was able to gain a sense of security when it came to apartment hunting, food shopping, and other expenses because I knew what I could afford. I wasn't stressed about overspending or not having enough money to get by week to week. Without a budget, I think my transition from foster care would have been significantly more challenging. I wouldn’t have had the tools I needed to cover my expenses, plan for the future, and to be financially secure.

How to Implement the 50/30/20 Method

The first step I took when using the 50/30/20 method was assessing my finances. Using a pen and paper, I wrote down my total monthly income. I included any and all forms of income in this section. For example, this section could include paychecks from work, money from side-gigs, child support payments, or any financial assistance programs.

Next, I divided my total monthly income and broke it down into the following:

  • Needs 50%: Fifty percent of total monthly income should go toward your needs. This could include but isn't limited to rent, utilities, gas, groceries, pet food, public transit, etc.
  • Wants 30%: Thirty percent of total monthly income should go toward wants. This could include but isn’t limited to eating out, hobbies, going to the movies with friends, going to a concert, shopping for non-essential clothing or accessories, etc.
  • Savings 20%: Twenty percent of total monthly income should go toward savings. I also used this section as money I put toward debt. This section could include an emergency fund, car savings fund, or a future large purchase fund.

The great thing about the 50/30/20 method is that you can adjust as necessary. It’s completely okay if your needs take up more than 50% of your expenses or if you’d like more money to go toward your wants or savings. Eventually, through trial and error, I was able to find what worked best for me and adjust month to month if needed. Feel free to adjust your budget to whatever works best for you!

Tips & Tricks

When I created my first budget, I remember how hard it was to stick to the outline I created for myself. When you're starting out in the world of budgeting, it’s normal to make mistakes or go over and under in certain areas. With time I was able to get a handle on what worked best for me and soon realized that budgeting is a very personal experience. Everyone budgets differently, and sometimes it takes a while for a certain method you’re using to stick.

  • If the 50/30/20 method isn’t working for you, don’t be afraid to try something else.
  • Try to be as realistic as possible when you’re thinking about your expenses and spending habits.
  • Try to make it a habit to go over your budget regularly and make changes if needed.
  • If you’ve run out of money when it comes to stuff that falls under the wants section of your budget, but you really want to make another purchase, give yourself a day or two to think about it. If you’re still thinking about that item in a few days, try to write a pros and cons list of purchasing and decide from there. This method really helped me with buying items on impulse.
  • Be proud of yourself for taking the steps to become financially independent and secure. Creating a budget is a huge step in the right direction!

If you have any questions or need further help creating or maintaining your budget, don’t be afraid to reach out to the adults in your life for support.

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About the author

Kat works in healthcare and advocacy. As a former youth with lived experience, one of her biggest goals is to uplift youth voices within the child welfare system and influence policy to reflect better outcomes for youth in care. Her passions surround everything related to the art of storytelling.