If you are in your 20s there is a very good chance that you are constantly attempting to delicately balance your income between:
Responsibility and Money Saving
LL (Living Large)
You’re not alone.
However, there is a beautiful balance that can be found in both doing both. And no, I’m not talking “simplify your life, learn to want less and then you’ll be happier”. There is an equation that can lead you to strike that balance and excel at both saving and enjoying your twenties.
Use 15% of your Income as Fun Money
Use 15% of your income for your disposable, fun money. The rest should be divided between the cost of living, savings, and loan repayment, as applicable. Within that 85%, you should be able to save at least a bit amount each month. Remember, absolutely no amount of money is too small to save. So with the remaining 15%, you have fun money! That may not sound like a lot, but the key is intentional spending of your fun money.
Fun money can be broken down into four categories within city living:
How to make the most of these? Pick Two.
Only spend your fun money on those two.
Every month, I allocate my fun money to two of these categories. I find that when I try to do a bit of everything with my fun money, I’m stressed having to make sure I’m not going over my budget. If I’m only focusing on two categories, I can relax and enjoy spending my money which I deserve to do! I don’t need to monitor every single purchase because I know I have money allocated to spend. Plus, once I’ve mentally accepted I am not spending on a certain thing, it leaves my mind and doesn’t tempt me.
This is why spending intentionally can be so valuable.
Switch them up!
A fun way to maximize this method is switching up your two categories every month. For instance, in April I’m more likely to allocate my fun money to shopping and less to events. This way, I can treat myself to spring and summer clothes. Because it rains so much in April, there aren’t many events or concerts I feel the need to attend anyway. In July, I instead put my fun money toward events. I love going to barbecues, rooftop parties, and festivals. But, I will spend almost no money on transportation. With the weather so nice, I’m happy to walk.
This method will help you make the most of your income and still allow you to save quite a bit! It also can help relax you so that every time you spend money on one of the four categories above, you aren’t questioning if it fits in your budget or not. Let me know if you try this and what other budget tricks work to help you make the most of your income!
For more tips on city living, grab your free copy of my City Survival Guide below. It includes the exact budget I use every month to use only 15% for fun money and lots of other useful resources and tips. Enjoy!