Budgeting: How Low Can You Go?

Budgeting is hard for everyone- and part of the problem is that many of us are led to believe that life is expensive. I see college students spending $1,100 on rent for a small studio apartment in Washington D.C, and with an income of $8.50 an hour, that only leaves you about $347 a month before tax. So how do you even begin to budget?

The first thing you need to do is make sure you’re not overspending on rent. Look at the small local towns outside of your main city. City living can charge you upwards of $1,600 a month for a small apartment, while instead you could potentially find a studio apartment outside of the city for $500 – $700 monthly. With an $8.50 hourly income, which totals to around $1,473 a month before tax, and a worst case scenario rent of $700 per month, that gives you $773 leftover. Let’s find out how you can spend that money!

The easiest item to budget is food. Why? Because your grocery bill is entirely under your control. The best way to save is to cook at home, eating mostly simple meals. Sure, McDonald’s is advertised as being overly cheap, but let’s tackle that myth right now. If for both lunch and dinner you go to McDonald’s and get 2 cheeseburgers a day for $2, that averages to $4 a day and $121 a month- all for 2 unhealthy, unsatisfying meals a day. In reality, an individual can spend as little as $100 a month by cooking their own food. You don’t have to trust what I say, let me break the math down for you!

A 21 oz box of Cheerios costs nearly $4 and has 21 servings. Most people do 1.5 – 2 servings per bowl, which translates to about 14 bowls of cereal per box. A gallon of milk contains about 16 cups. 1/3 – 1/2 cup of milk is what’s usually added to cereal, giving you enough milk for up to 48 bowls of cereal. A gallon of Great Value milk at Walmart is $2.79. Assuming you use milk for more than cereal, you’ll use about 2 gallons a month. That’s $5.58 a month spent on milk, $8 a month spent on cereal, for a total of $13.58 a month spent on breakfast. One meal down, two to go!

Lunch and dinner can get a bit more complicated. Let’s assume you want a variety in your lunch. Some days you’ll want pasta, some days you’ll want chicken, and some days you’ll want pork. You may have a salad and some sort of starch like potatoes with your meal. A box of pasta costs around $1.39 and will give you 4 bowls. 24 oz can of pasta sauce costs about $2, and you will probably use 12 oz of sauce per bowl of pasta. If you want to eat spaghetti 12 times a month, that’s $28.68 a month. The USDA recommends adult males eat 6 1/2 oz of protein daily and adult females to eat 5 1/2 oz. Chicken breast is about $3.43 a lb and each lb of chicken is 16 oz, meaning if you buy 3 lbs of chicken, you’ll get 48 oz of chicken for $10.29. That’s 16 servings of chicken. A pork roast is about $2.64 a lb, so 3 lbs of pork for 48 oz would be $7.92. For salad, the average is 6 oz per meal. A 24 oz bag of Iceberg salad is $2.74, which is 4 salads. To have salad once a day would cost $32 a month. For potatoes, roughly 3 medium Idaho or Russet potatoes is 1 lb, which means a 10 lb bag of potatoes gives you 30 medium potatoes- $5 for a whole month. 8.75 oz of canned corn or vegetables is around $1, and with 4ish oz serving of corn per meal, leaves you with $30 a month spent on corn. This rough grocery list will cost you about $113.89 a month, which is 3 meals a day for $7.11- less than two daily meals at McDonald’s!

To recap, you started with $773 a month after rent. The simple meal plan constructed here cost $113.89 a month, leaving you $659.11. Assuming you use prepaid cards for your phone and spend almost $30 a month on that, along with $40 for your studio’s electric, and $30 for water (so long as you’re not wasteful). Those utilities come to $100, leaving you at $559.11. You’ll most likely have decent internet for around $75 monthly. $484.11 is your current free income. If you own a car, you’re probably spending about $20 – $40 a week depending on the year/make/model and amount of driving. Assuming the worst, that’s $310.78 left a month.

Now this is all before I took tax from your income, so you might be thinking you’ll have substantially less. As I previously mentioned, on an hourly rate of $8.50 at 40 hours a week you’ll be making $1,473 a month. Let’s assume you live in Taxifornia. Ignoring any weird tax situations you could be in, you will most likely be making $1,285.25 a month after taxes. That leaves you $122.43 a month free! Now, that number will be a little less, since depending on your state, you might be paying taxes on some of the things I mentioned above, but with the absolute worst case scenario you should have $102.43 a month left over. If you have a newer car or drive less, you could actually have $189.70 a month! Or you can get cheaper internet for $30 a month and have $234.70. On top of that, you can be an energy savant and have $254.70! If you’re a coupon user for your groceries, you can maybe even have $284.70 a month. That gives you some extra room to put money into savings, and purchase essentials like toilet paper and paper towels (which are harder to explain here since that’s not really a monthly thing).

The two biggest factors in your budget are your housing and food expenses. Housing expense can be significantly cheapened by looking outside the city, and your food expense can be made cheaper by cooking your meals and grocery shopping. You can even save money on transportation by using public transportation if that’s available to you. There are many different things you can do, you only need to put in the time and effort!

 

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