Adulting & Finances: Budgeting 101
Becoming financially independent is a milestone most young adults aspire to—but with independence comes responsibility. One of the most crucial skills to master in the early stages of adulting is budgeting. Understanding how to manage your income, expenses, and savings not only helps you stay afloat but also builds a strong foundation for your financial future.
Let’s unpack the basics of budgeting and how young adults can begin creating a simple, yet effective, monthly financial plan.
- Budgets Explained: Definition & Categories
A budget is a plan for your money—it’s how you decide what to spend, save, and set aside. Without a budget, it’s easy to lose track of where your money is going and struggle to make ends meet.
Common budget categories include:
- Income (salary, side gigs, grants, etc.)
- Fixed expenses (rent, transport, phone bill)
- Variable expenses (groceries, electricity, entertainment)
- Savings & investments
- Debt repayments
- Identify Income & Track Spending Habits
Before you create a budget, you need to understand how much money is coming in—and where it’s going.
Step 1: Add up all sources of income.
Step 2: Keep track of every cent you spend for at least a month. Apps or spreadsheets are great for this.
Step 3: Group your spending into categories so you can identify patterns and areas to improve.
- Wants vs Needs – Know the Difference
A crucial part of budgeting is being honest with yourself about wants vs needs.
- Needs are essential for survival (food, housing, transport).
- Wants are nice-to-haves (subscriptions, dining out, fashion splurges).
Cutting back on wants doesn’t mean eliminating joy—it means prioritising long-term stability over short-term satisfaction.
- The Importance of Savings
Savings aren’t just for big purchases—they’re your safety net. Start small, but stay consistent. An emergency fund (3-6 months of expenses) is a good goal to aim for.
Other savings goals could include:
- Travel
- Education
- A deposit on a home
- Business capital
- Setting & Sticking-to a Budget
Creating a budget is the easy part—sticking to it requires discipline and regular review.
- Schedule a monthly budget check-in.
- Adjust for any changes in income or expenses.
- Use apps or set reminders to stay on track.
Remember, budgets aren’t restrictive—they give you control.
- The 50/30/20 Rule
This classic budgeting framework is perfect for beginners, it’s flexible and helps you visualise how your money should be allocated:
- 50% for Needs
- 30% for Wants
- 20% for Savings & Debt Repayment
- Save First, Spend Later – Setting Financial Goals
A powerful strategy is paying yourself first. As soon as income comes in, allocate your savings portion—then budget with what’s left.
Define your financial goals clearly:
- Short-term (3–6 months)
- Medium-term (1–3 years)
- Long-term (5+ years)
Setting goals keeps you focused and motivated.
Budgeting is a life skill every young adult needs to learn. The earlier you start, the better you’ll be at managing your money long-term. Start simple, stay consistent, and remember: your future self will thank you for every smart decision you make today.
