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Hi everyone. I am 21 years old, working full time for the government as a Web Developer, and I'm looking to make the smartest decisions for my money.

Assuming I get $2100 per fortnight, my planned distributions are as follows :

  • $400 for my future house downpayment
  • $200 for a future car purchase (I already bought a car that I'll be holding for 3-5+ years, this will be a slow saving up for when I would need/want to buy a new car)
  • $100 General savings
  • $100 Travel funds
  • $100 on clothing
  • $300 on stocks which I'll save up to bigger amounts before actually investing to minimize brokerage costs
  • About $300 for living costs

The leftovers go to my luxury fund which I can use to buy my wants.

On top of this, I'm also putting in an additional 5% to my superannuation account (Australia's equivalent to the Roth IRA), which is the maximum my employer matches, totalling to 19.5% (About $585 total) of my pre-tax salary going to my retirement fund.

Is there anything I'm forgetting, or is there anything I could improve on my current plans?

  • How is you full monthly living cost just $625? – JoeTaxpayer Aug 14 '15 at 1:44
  • Do you have any debt? (Student loans, credit cards, car payments, etc.) – Ben Miller Aug 14 '15 at 1:45
  • @JoeTaxpayer, right now, I'm still living with my parents. I'm paying for the internet bill and some groceries in exchange for rent, which still adds up to being cheaper than actually renting. :D – Mark Gabriel Aug 14 '15 at 1:53
  • @BenMiller - Existing credit, yes, but I always pay my credit cards off a couple days before the cutoff, and I've never paid interest on them so far. Car payments, I bought my current car with cash so no more repayments. Running cost will be just the fuel, which is included in the living costs. I also paid for the insurance 1 year ahead so no payments for that either for the next year. – Mark Gabriel Aug 14 '15 at 1:55
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First of all, kudos for thinking about budgeting at 21 years old. So many people don't plan with their money, and years later wonder where it all went.

You are doing a lot of things right with your budget. You've got saving goals, namely your next car and a down payment on a house. You are saving almost 20% of your income for retirement, which is amazing.

I like the luxury fund, too. It is good to put some money aside that you can spend on whatever you want, guilt free, because you know that everything important is already planned for.

When it comes to budgeting, one thing to remember is that your budget does not have to be perfect, and it is not set in stone. If you find that your amount for "living costs" (which I'm assuming includes things like food, utilities, and rent) is too low, you can allocate more money to it and reduce something else. There is no need to feel bad if you end up having to change some things around in the budget.

Congratulations on being debt free! I would encourage you to stay out of debt. Keep the credit cards paid in full each month, and save up for your next car so you can pay cash for that, too.

Another saving goal that I would recommend adding to your budget would be an emergency fund. This is basically a pile of cash that is available to you in case something unexpected and urgent comes up that you haven't planned for. By having the emergency fund in place, you won't be forced to go into debt due to an emergency. The amount recommended is usually 3 to 6 months' worth of your expenses.

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    Hi Ben, thanks for the swift answer. Yep, I've got no debt. Good point about the emergency fund, I've always thought about that but never really actioned on it. I might change the General savings allocation (since general is just so vague), and rename it as my emergency fund, putting more to it initially until it reaches the value I'm comfortable with? – Mark Gabriel Aug 14 '15 at 1:58
  • @MarkGabriel Sounds like a good plan to me. Well done. – Ben Miller Aug 14 '15 at 2:02

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