@anna_5588 - I’d weigh the opportunity costs of spending the money. What are you foregoing when/if you spend the money on something you deem to be “extravagant”? What are you saving that money for in the future that you feel odd spending it now? Other than possibly establishing an emergency fund/stash, which would be prudent, why wouldn’t you spend the money on frivolous things?
you might be technically correct when referring to buying the latte as a sunk cost - but this term is usually applied only to business finance - I rarely see it applied to consumer spending. You’re meeting a want/need in buying that latte thus receiving a greater marginal value than the dollar price of the latte - hence it’s not REALLY a sunk cost.
You buying bulk coffee at home is the opportunity cost associated with buying the latte now. You’ll have to think about your indifference curve to determine whether or not you’re receiving marginally more utility from one over the other…
I feel like people are just using “austere” on here because of the Baghdadi headline…
It has been one of my favorite words for a long time. Very smooth, like a spring breeze. I only get to use it during European financial crisisises though.
Your necessities take as much of your income as they take. You can’t really play with that number too much. If it’s a necessity, you need it. If you don’t need it, it isn’t a necessity. I would figure out what expenditures are actual necessities and just take that straight from your income before you divi the rest up.
It makes no sense to me to allocate 80% of your income to “necessities” if your necessities account for 60%, or 90% of your income.
I’m short on time so didn’t read the thread complete, so forgive me if this has been covered, but I’ve been thinking for some time now - glad you brought it up, actually! - that your budgeting reminds me of your diet in terms of its rigidity, seemingly arbitrary rules, and anxiety consequences for breaking the arbitrary rules.
If you want something small: pizza/halo top/eating out, do it. Just pace it accordingly.
I had a point where I was holding off on buying new clothes until I read a new book. Then I started growing and my clothes started ripping.
If the flex dollars are “use it or lose it” use the F out of them. Otherwise, you’re losing there. But if you can roll them over to nicer/bigger items (whole pizzas, full meals, etc), do that
EDIT: Also it should be noted that you shouldn’t look at your peers for financial advice. Most of them don’t know what they’re doing. My old college roommate used to clown me for being “cheap” and not having nice things/clothes. Now he’s broke as hell and barely sliding by.
I agree with a lot of what’s been said, but I also think it’s a good idea to work on / establish good spending habits even if it’s not your money because eventually it will be.
If I was in your shoes, I would probably do something like this:
10% Charity
10% Savings
40%-60% Life enrichment (travel, fitness, jiu-jitsu lessons, learning guitar, etc…). Things that you want to do, but also make you a better more well rounded person.
The remaining 20%-40% Other: Whatever you want. You’re young, enjoy it.
They’re actually very helpful. As someone else said, they give you money with the intention if you spending it and not having to fret over how you do so.
It’s a gift with a reward: you completing your education.
This likely won’t make you feel better, and comparisons usually aren’t so good to make. However I’ll say I grew up with some kids with not only such a gift, but luxuries and gifted discretionary income that most adults don’t have and never will have. They didn’t seem too guilt-ridden either. In fact, they let it all hang out.
I accepted a hefty gift two years ago from my family. I didn’t ask for it, nor was it deserved, in a sense. The spoiled feeling weighed heavily on me for about a month. So I sympathize.
The way I budget is I spend whatever I want as long as all expenses are paid (mortgage, insurance, food, pets, etc), and I have maxed out my 401K ($19,000/year).
Being in college the 401K max is going to be difficult! I would just make sure you have a bit of extra room for an emergency.
To an extent this is only something your own life expereience is going to teach you…my advice would be to keep a record of your spending (on a weekly basis) & use said record to generate a realistic budget. You may also benefit from grading your spends in terms of importance (let’s say you have three grades) the first is for food & rent the second is for travel and clothes & the third is for booze and junk food.
From that point and beyond it’ll be much easier to see exactly what you are spending & on what and how you can potentially tweak things for the future
