I am a 22-y/o guy starting my first job.

I am interested to know how I should manage my monthly expenses. Keeping in mind that I need to pay for my rented apartment, food, water, etc., save money for future and medical expenses, etc., how do I calculate the amount of money I can spend each month on expenses that can be classified as "fun expenses"?

I don't want to overspend and thus would like to be aware of a limit that I am allowed to spend on myself in one month. How do I calculate and track this?

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    Related: How to start personal finances
    – Ben Miller
    Commented Apr 8, 2019 at 14:58
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    If your income tax is not taken off your salary before it's paid out to you (this is country-dependent), don't forget to set aside enough to pay your taxes next year! That's a common mistake for people on their first job.
    – jcaron
    Commented Apr 8, 2019 at 15:47
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    A great resource for me was reading The Total Money Makeover by Dave Ramsey. easy read - can finish in a day. It will have mostly everything you need!
    – MattR
    Commented Apr 8, 2019 at 16:24
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    Hi Debanik, in addition to great answers and resources, be sure to track visually what you spend - just put it in a column or on a single piece of paper so you can see. I was interested that I spent $70 on a meal for two, with drinks, etc., but only $49 on a nice watch to wear to work. So it's helpful to see it in front of you. When you can SEE it, you can MANAGE it.
    – Mikey
    Commented Apr 8, 2019 at 18:13
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    Mr. Money Mustache, a mostly-fan of Dave Ramsey, is another great resource even if you aren't, as the blog premises, trying to retire at a very young age. See the comment on budgets here: mrmoneymustache.com/2011/05/19/mr-money-mustache-vs-dave-ramsey
    – InColorado
    Commented Apr 9, 2019 at 1:35

12 Answers 12


A simple budget spreadsheet is fine for this.

In one tab, track all your income:
- take-home money from employment (use an online calculator to estimate if you only know your gross salary, but within a few months you'll have actual real data to work with)
- money from interest on savings
- any other money you have coming in

In another tab, work out your expected fixed expenditures:
- monthly things like rent, bills etc
- annual things like mortgage insurance payments etc, divided by 12 for a monthly equivalent
- weekly things like grocery shopping, multiplied by 52/12 for a monthly equivalent Try to think of absolutely everything you might need to spend money on in this tab - haircuts, clothes shopping, phone bills, etc etc etc.

In a third tab, keep a summary:
- Income
- Fixed outgoings
- Money going into savings (ideally an easy-to-access emergency fund for any unforeseen expenses, plus a longer term investment of some sort).
Anything left over once you have deducted the fixed outgoings and the savings from the income, is discretionary spending.

If the discretionary spending ends up being negative, you will need to cut back on some of your fixed outgoings (buy cheaper groceries, or downsize your housing). If your discretionary spending ends up being large, you can divert more of it to savings.

As time passes and you get more accurate data for various expenses, you can refine the numbers in your spreadsheet.

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    I'd like to add that I've done this for businesses needing to follow a project and it really, really helps to split each tab into two parts - on the one side, your projection/budget. On the other, what actually happened. This helps you decide each month (well, we did each project, but think of each month as a small project!) whether you actually stayed in your budget, what is realistic, what adjustments need to be made, and where you need serious help.
    – corsiKa
    Commented Apr 9, 2019 at 2:23
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    Tracking interest on savings on a monthly basis seems quite risky. Most investments have too much variance for that, and getting one or two "good" months might twist your view on how much money that earns.
    – JiK
    Commented Apr 9, 2019 at 11:40
  • @JiK At this point, I think it's fair to assume that the OP is unlikely to have long-term investments. If anything, they will just have some money in a savings account (which will pay a low level of interest, but it's still worth accounting for). Commented Apr 10, 2019 at 10:44

Vicky provided a great answer and I agree that a spreadsheet is good for budgeting, some of the budgeting apps available make it easier to track spending or resolve deficits/overages in your budget, but none of them are perfect. Having to look at your monthly spending when entering it into your budget can help you be more aware of what you are spending on.

I believe that zero-based budgets are most effective. A zero-based budget is characterized by having no money leftover (some call this giving every dollar a purpose). Rather than just budgeting your expenses and savings and then calling any leftover discretionary, you instead also budget discretionary categories. For example, you could budget $100/month for vacations, $75/month on dining out, etc. You can't take a vacation every month, and it's definitely discretionary, but budgeting for it means it is set aside for a purpose.

The zero-based budget can sound inflexible, it's not, revise for future months as needed. Nothing goes perfectly according to plan, that's fine, doing your best to follow a plan will help you achieve your goals.

Starting out, the best thing you can do in my opinion is live frugally. Many people have a strong temptation when they see their new paychecks to get a nice apartment/house, new car, go out with co-workers frequently, etc. At the minimum you should keep living expenses low enough that you can consistently save a percentage of your income (10-15% is a good starting goal). Living well below your means and saving a high percentage of your income now can get you very far. It's also a great idea to increase your retirement savings every time you get a raise.

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    This may feel like a lot of work, but you only need to do this when your income or lifestyle changes (raise, new job, move, new gym, new relationship, etc). After you make the budget, you only need to review your actual spending vs the budget every month (or so). As long as you're sticking to the budget, you get to have peace of mind that "you're on the right track" every day and every purchase with only an hour or two of work each month!
    – Vlad274
    Commented Apr 8, 2019 at 15:10
  • Starting out, build some emergency savings first and then contribute to retirement and save for other things. Make sure you have enough liquid cash to fix car, pay a big dental procedure, pay your bills if you are out of work for several months etc... Commented Apr 8, 2019 at 15:14
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    Is a zero-based budget related to double entry bookkeeping?
    – gerrit
    Commented Apr 9, 2019 at 9:09
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    @gerrit I see zero-based budgeting as a mindset, and double entry bookkeeping as a tool. Double entry bookkeeping can be used to allocate money into different accounts so that the amount in the “unallocated money account” is zero. However, I think this goes against GAAP, because the accounts you would be creating would be liability accounts, but wouldn’t actually correspond to real liabilities. But I’m not an accountant, so take this with a grain of salt :)
    – Jacob
    Commented Apr 9, 2019 at 16:51
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    @gerrit Many companies use zero-based budgets and double-entry bookkeeping, but having a zero-based budget doesn't require double-entry bookkeeping, and double-entry rarely makes sense for personal budgets.
    – Hart CO
    Commented Apr 9, 2019 at 16:53

I think there are a couple of budgeting tools that have served me very well.

Consider the big picture

Think about money in terms of years, not paychecks. Netflix isn't just $12 per month, just one latte per paycheck; it's $144 per year. Your rent is $15,000 per year. A Mercedes lease is $7,000 per year. Etc. Make the numbers in your head bigger not smaller. It's really hard to rationalize thousands of dollars.

In thinking about the big picture, I have never found micromanegy budgeting tools like mint to be useful at all. I really don't care how much money I spent on coffee versus groceries or clothes or whatever in a month. I don't buy clothes every month, so a $30 per month budget for clothes is blown any time I spend any money on clothes. I find these minutia driven conceptions of budgeting to be far more frustrating than useful.

Don't figure it out

You have four main categories of budget. Long term retirement saving, general saving, fixed expenses, spending.

In my opinion, where people get in trouble is when they're shopping for something like a car, they budget $250 per month, then they end up agreeing to $320 per month and they'll figure it out. Don't figure it out. You can rationalize figuring it out 100 different ways for more than one thing until you've decided to figure it out for $1,000 a month that you don't earn. And you'll put it on your credit card this month, but only once (you'll tell yourself) and you'll figure it out.

Force yourself to live within the four main categories, make your decision, put the money there, and that's that. When the loan is up, reallocate that money to a savings bank until you decide it's time to make a new decision.

Saving is not restricting yourself, it's paying yourself

When I was a kid I read a book that, to me, coined the concept of "paying yourself." When you spend you're paying someone else; when you save, you're paying yourself. When you're coming up with your budget, make sure to pay yourself. When I was your age (and before), from every single paycheck I received, 15% went to savings, no questions asked, no exceptions. This is the amount that becomes your emergency fund, it's your medium term non-specific savings account, etc. From here, you budget. Pay yourself first. If you're one of the fortunate 22 year olds who has come out of school in to a high paying job, you should calculate your savings to be the remainder of your spending because it's likely to be substantially more than 15%. This is really about making saving mandatory and spending discretionary.

Segregate your fixed expenses

Get a sheet of paper, write down your: rent, car payment, car insurance, utilities bills, internet subscription cost, netflix subscription, gym membership, cell phone bill, etc. Everything that gets spent every month, predictably. These are your fixed expenses. Take this number add two or three percent to facilitate some degree of buffer and fund it with a couple hundred dollars to absorb an unusual gas bill in the winter. This account pays your known overhead and that's all it does. This money is separate from all of your other money, your rent always gets paid; these bills are never missed. If you want to start a new subscription, you need to adjust your direct deposit; it's annoying on purpose to add friction to assuming new expenses and it's separate so when you check your spending account, this money isn't there. For expenses like Netflix and others that are designed around credit card payment, I keep a credit card that is only used for this purpose in addition to the checking account. Only you know if you can be trusted with a credit card.

Keeping money in different banks, in particular, keeping your spending account in an entirely different bank than your regular expenses and savings, means you never feel like you have easy access to spending, you can't accidentally spend your savings. Making it harder to make a bad decision means you're less likely to make a bad decision.

  • Adjusting the deposit takes 1 minute... Also where I am, having multiple accounts with multiple banks will ruin your credit score (the infamous Schufa in Germany)
    – Mehdi
    Commented Apr 9, 2019 at 14:03
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    This answer is outlines things that have served me well, me specifically. Other answers stress the importance of spreadsheets and apps to track budgets, I have never found those methods to be helpful for me. In the US bank accounts have no bearing on credit score. My methods might not be valuable to everyone, but they work for me.
    – quid
    Commented Apr 9, 2019 at 15:06
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    I had the same problem with budgets being too geared towards micromanaging. YNAB has been a pretty good tool for me, because unspent money accumulates in the categories over time. And very broad categories like “groceries/food,” “utilities,” etc.
    – Jacob
    Commented Apr 9, 2019 at 16:56

In addition to the other fine answers here regarding spreadsheets, and zero-based budgets, I have found that another great key to success is to only allocate money to be spend in the month after it was earned. I allocate the paychecks I receive in March to be spent in April, etc., because until I actually receive the paycheck I'm really just hoping that they will arrive. Most of the time I am not disappointed. In any case, I'm only making my spending plan from money that I already have.

In reality, however rarely, I've worked for companies that missed payroll, ran out of operating income, etc., and the paychecks that I expected either didn't materialize (I was laid-off on the first day of the month), or arrived later than expected.

I don't consider the extra money in my checking account as a result of this delay in spending to be any kind of emergency fund, rather, I treat it like operating income. I keep 6 months of expenses in a separate account for emergencies, and I rarely tap into it because there is a cushion in my operating account.


Short version:

  1. Find a budget methodology you believe in.
  2. Remember to save some.
  3. Automate as much as possible.

My answer sort of got out of hand so I made a shorthand version above with the gist of it. You can read my initial draft below.

Long version:

There’re a lot of great answers already but I feel I can still contribute some. when I first moved out on my own (as a student) I pretty much made a budget like Vicky describes. I made a detailed budget and kept a tight watch on everything in it. It was a complete bore, I hated it and soon quit budgeting all together. That said budgeting is a great tool and I have taken it up again (7 years later) although in a simplified form. My budget only contains 3 columns.

Column 1: Regular monthly expenses. As you can guess this column contains everything from rent to Netflix and Spotify subscriptions. if the amount stay the same every month it goes here.

Column 2: Irregular Monthly expenses. this column will take some time before you figure out but you usually have monthly expenses that varies in size. For me that’s food and electricity it goes here, and it should be a pessimistic expected monthly average. Meaning most months, you should use less than allocated.

Column 3: Savings After you have tallied column 1 and 2 from your monthly earnings you hopefully have some left. That’s why it’s important to set some saving goals.
Preferably a percentage of monthly earnings but can also be a lump sum or detailed list of saving goals and commitments to those goals. Ps. Compounding money is quite fun when you start to understand what it’s doing for your other finances.

Notice! column 1, 2 and 3 should not equal your monthly income because what’s left is your fun money. After all, they are not in the budget and you should use them any way you want.

Remember to adjust your budget on changes in your finacial life. Geting a raise, new internett subscription, new insurance etc.

Soooo, lets talk about the new stuff. How do you keep a budget?

All the budgeting in the world won’t do you any good if you can’t keep it! that’s why you should automate as much as possible. You should have at least 3 accounts. One for monthly bills (column 1 and 2), one for saving and one for your fun money. Preferably the only account with a connected debit card/check book is your fun account. When your paycheque money comes into your account, they should automatically be distributed to its allocated account according to your chosen budget. No manual transferring should be needed. And it’s much harder to overspend with money you can’t reach easily. By that reason I don’t recommend owning a credit card either. Although there are some benefits for owing one, I personally find the drawbacks way more troublesome than they are worth.

Hope this helps.

Tips for future studies.

How to manage your savings.


I need to pay for my rented apartment, food, water, etc., save money for future and medical expenses, etc., how do I calculate the amount of money I can spend each month on expenses that can be classified as "fun expenses"?

You don't even need to calculate anything. First thing you do is to pay (or set aside) the must-have things that you've mentioned (be sure to not forget any) and the rest you can spend on daily needs (like food) and fun. Yes, saving is one of those first-priority things. Food can wait : )

If you're using cash, that's easy: The moment you get the money, divide it into piles, one per destination, and you're done. It works as long as you can control yourself to not take the money from the wrong pile.

Using bank account is bit more difficult. You can ask at your bank if you can have multiple accounts, 2 is a good start. One for the daily stuff - with debit card, the other for important things. The piles are still there, in your mind, they're just mixed together and you need to keep track of them.

I don't want to overspend and thus would like to be aware of a limit that I am allowed to spend on myself in one month. How do I calculate and track this?

If you want to plan in advance, that's harder (but yields much better results). What you need to do is to write everything down. Pen and paper works best at the start. You don't want to get distracted by annoyances of spreadsheet software and wonder "which cell do I chose". You need to focus on your budget.

First, pick a time period. You can do budgeting weekly, bi-weekly, monthly, quarterly, whatever. Easiest is to use same as you get paid. Let's assume it's monthly - so recalculate all bills into this period. Eg. got yearly car insurance? Use 1/12 of that. Rent paid every week? Write it x4. Since now it's just subtraction. Take the salary, subtract all the things that are mandatory and you're left with your "everything else". It's hard to plan dailies for a month, most people find it more manageable to split daily expenses into weeks.

I urge you to write down all your spending for the first few months. Eg save the receipts, annotated what it was and why you bought it. After you gather enough data, you can move it into a spreadsheet and do some summing while experimenting with sorting into categories. Food, clothes, cosmetics, fun are nice starting point. This way you'll learn what do you spend most money on, and maybe notice where you can save some.


I recommend doing the spreadsheet income/outgoings thing first to work out a budget - decide how much you need to pay for your fixed outgoing, how much your "fun" money is, and how much you want to save - and then separate them.

This has worked for me for years. I'd recommend setting up separate bank accounts if possible. I'm not sure where you are, nor what the banks are like there, but here in the UK we can setup current accounts for free, with no monthly charges.

I have one account into which I get paid. This is my "bills" account and is set up with direct debits (automatic payments) for all the important bills: mortgage, gas, electric, phone, etc which come out at different times in the month, but happen every month. I transfer a small fixed amount into a quick access saving account (to build up a buffer in case of unexpected expenses), and another fixed amount into long term savings/investments. I also buy groceries with this account - but not eating out.

I have an automatic transfer setup to move a fixed amount the day after payday into a separate "Spending Money" account. This is the account that I use to draw out cash to buy lunch out, go to pub, buy the latest gadget I want - anything discretionary. This is the money I've set aside that I can spend each month as I see fit. If I overspend early in the month, I have to go out less later in the month, make packed lunches etc. When I go to the ATM, I can take out as much as I want and know the bills will still be paid.

You should routinely have a little money left over in the main "bills" account at the end of the month. If not, you need to put less into saving or spending accounts. If you've got a lot left over, move it into your buffer short-term savings. If you keep having a lots, adjust the amount going each month into your long term savings. Live as frugally as you can, sure, but if life's not fun (and you're still meeting your fixed payments!) reduce the amount going to saving and give yourself a little more fun money.

This means I'm not checking my budget regularly - as long I don't feel too constrained by the amount in my spending account, and my bills account has always got some funds left at the end of the month, I don't worry. I try to put as much into savings that still keeps this balance of paying the important stuff and feeling I got enough cash for now.


Your question here seems to revolve specifically around the 'monthly' aspect of it, otherwise I assume you wouldn't have asked about that specifically. It kind of alludes to the fact that it is different to some other income period (Weekly, fortnightly). At the end of the year, it's all the same. If you're comfortable managing your money on a different distribution, (Again - Weekly etc.) you could set up an account you don't look at but get your pay deposited into, and organise a regular transaction to your main "managing" account. But I feel like this may be aiding you in avoiding the central problem of managing your money better. Just a thought though.


There are many ways to track what you've spent: spreadsheets, envelopes, accounting software, even an old-school paper journal. But I think that's all rather boring, and the particular methodology you choose isn't really what determines your financial success.

Instead let's skip to what I think is the core of your question:

how do I calculate the amount of money I can spend each month on expenses that can be classified as "fun expenses"?

This is the crux of the problem: you can use all kinds of methodologies to track your spending against some goal, but how do you set the goal in the first place?

I prefer the novel approach taken by the retirement calculator at networthify.com. Put simply, your years until retirement is determined by only one thing (at least, one thing you can directly control): the percentage of your after-tax income saved.

If you save 5% of your after-tax income, you will be working for 66 years. If you save 66%, only 10 years. This holds whether you make $15,000/year or $1,500,000/year.

If you use raises in your career to increase your savings rate, you'll retire sooner. If you spend your raise and don't increase your savings, your savings rate actually goes down and your retirement becomes later. This is because you now need to save more money to finance your increasingly expensive lifestyle.

If you cut spending from your budget, you not only have more money to save, but also you need to save less because you need to generate less investment income.

With this knowledge, you now have the tools to answer your question. I would begin by making a bare-bones budget with no discretionary spending. Now calculate your retirement date. This is the soonest you could retire, living the most Spartan life possible.

Now for each discretionary item you'd like to add to the budget, calculate how this will impact your savings rate and retirement date. Now you can quantify the long-term impact and ask yourself questions like, "would I rather have $200/month to spend on fun, or retire 2 years sooner?"

Track your spending however you like, and periodically review your progress against the goals you've set. Revise the goals if necessary. Your tracking methodology can be frequent and detailed, or lazy and basic: as long as you don't lose sight of the long-term goal and you periodically review progress, you'll do well.


Calculating a budget spreadsheet is key. My strategy is mildy different in that I boil my budget into a weekly perspective.

Initially, this was because I was paid weekly. But it was also nice since it gave me a per week spendable budget. I calculate these by multiplying monthly regular bills/pay by 12 and dividing by 52. Annual bills get divided by the 52. Etc.

I also work out how much a couple month's cost and pretend that number is 0 in my checking account to help float the fluctuations that the above causes, as well as be an emergency fund.

If you can, maintain a credit card that you pay off each month. This is for building and maintaining credit as well as protecting your checking account. There are different rules for fraudulent charge refunds on the credit card vs a debit card.

  • This also helps you see expenses that on a yearly basis add up to a huge amount; the typical "well HBO + Showtime" package is just $20/month, I take 20 * 12 and ask is it really work $240 per year? Commented Apr 10, 2019 at 15:22

... how do I calculate the amount of money I can spend each month on expenses that can be classified as "fun expenses"?

The only number you provided is your age.

You must pay for all the essentials, after that you have a certain amount of money remaining; it depends on what kind of fun you are planning on having as to how much it will cost.

It's best to save as much as you can and not have too much fun until you accumulate enough to allow for any expenses you might incur. If you need to repair your vehicle how much do you expect to spend, if you lose your job how much will you need until you can find another - these are all amounts unknown to us but something you need to decide upon.

After you have accumulated a sufficient savings then you can budget for fun. Going skiing for the weekend with friends might be affordable or too expensive, it depends on where you go, how often, and how much you earn - we don't know these amounts.

Ideally you could save enough and afterwards be able to spend 10-20% of your excess money and be able to have enough fun. If that's 1 or 2 hundred dollars you'll be able to have a limited amount of fun the Friday after payday; if it's only 10 or 20 dollars you have too many expenses or don't earn enough.

Saving and expecting to earn interest isn't ideal, with interest rates at ~1%. Getting into debt, living above your means, and not being able to save enough is your biggest concern. Credit cards, get rich quick, and risky investments are probably best to steer clear of.

I like to earn enough that after I pay for everything I am able to bank well over U$1000 per month. For the average person that means living on the cheap or being well paid. Learning to avoid spending too much and avoiding wasting money will be the best lesson you can teach yourself, sometimes that has to cost you some money to learn; other times you can learn from free advice.

That's how to calculate the unknown.

To keep track you can store the money you allocate to spend in a cookie jar (literally) and try not to spend it all. You can keep all your money in the bank and rely on ATM receipts or keep a diary of expenses. As long as you have excess money and never spend it all.

I use a beer stein, it reminds me not to waste my money in the bar. If it gets too packed I dump more in the bank. Being able to see all you can spend encourages you to save (at least it does for me); going to the bank to withdraw money frequently instead of deposit it occasionally will be your downfall.


I'm surprised everyone is saying to use a spreadsheet - use a budgeting app! Spreadsheets are a waste of your precious time and are seriously underpowered. It's the current year, people! Here's why you should instead use an app (Mint, Personal Capital, etc.) to track your finances:

  • Automatic budgeting: The apps automatically categorize your spending, and they're surprisingly pretty good at it. You can set up a budget based on those categories and then see where your money's actually going.
  • Reality-based budgeting: This is almost a repeat of the last one, but there's a big difference where you think you've spent your untracked dollars and where you've actually you spent your tracked dollars. You'll never think you only spend $X on, say, groceries when you've actually been spending $2X the past 4 months.
  • Historical data: You'll be able to easily see all the fine details in month over month details. When you got a bonus, what did you do with it? Did your raise cause you to spend more? Should you plan to spend more money in certain times of the year for one-off things that always seem to happen around then?
  • Automatically updated information: Spreadsheets require you to manually update everything. Apps do this for you.
  • Single point of reference: When you have a savings account, a checking account, a 401k, credit cards, and possibly an HSA, brokerage account, and who knows what else, seeing everything at once makes everything far simpler. It's much easier to log in once than to log in half a dozen times or more.
  • Low psychological barrier to entry: When it's easy to do the right thing, you're far more likely to do it. Compare the ease of taking half a second to open an app vs the dedicated portion of time every week/month you'll need to meticulously do needless grunt work.
  • Net worth displayed: This serves two purposes. First, seeing your combined net worth across all your accounts month over month is motivational for long-term financial planning (pay down debt, grow net worth). Second, you're much less likely to fall prey to the "credit card money is pay it later money" belief when you see it's dragging your net worth down right now.
  • Easier fraud detection: I have caught fraud same day because it's so easy to see my balances and recent transactions. This is a byproduct of just opening my app every day.

All in all, a budgeting tool will do all of the tedious work for you and should naturally push you in the right direction. Spend less on this, save more on that, maybe you can afford X after all. Then you'll start asking questions like "How do I best get rid of this debt?" or "How much should I save for retirement" or even just "How much should I be spending on groceries/car/clothes?"

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