Budgeting is an overwhelming experience at any age—but especially when you’re just starting out in the adult world. The events of 2020 and this year haven’t helped anyone learn how to adult either; with everything so different, everything from grocery shopping to job hunting has changed. It’s time to get real with your budget and lasso it in. Though 2021 could be another wild year for everyone and their wallets, using these tips for setting a realistic 2021 budget will give you financial peace of mind while you figure the rest of your life out.
Keep it Simple
Anything could happen this year, whether on a local or global scale. Keep yourself prepared by maintaining a relatively simple budget. Treat yourself to something nice every so often but try to leave a larger chunk of money aside for savings than usual.
At some levels of income, this may not be possible. In this case, budget for the basics—it may be a stark change from the life you may have been living at college or with your parents.
Consider Future Payments That Are Currently Inactive
If you’re working remote and have federal student loans, you’re currently cutting two large payments out of your life that would otherwise be necessary. Working remote means that you don’t need to commute to your job—which means no extra gas or commuting money. While the future is unwritten, if your job may begin in-office work again this year, you need to think about gas money, car repairs, or commuting expenses again. You may even need to consider buying a car—especially if you just started working during the fully-remote period.
Student loans are another payment with an uncertain future. Prepare your budget for student loans this year at the same amount you were paying before the administrative forbearance—or higher if your income went up. If you haven’t started paying your student loans back yet, research how much you may have to pay based on the loan’s total or your income for an income-based repayment plan. Don’t bank on administrative student loan forgiveness—but remain hopeful. It’s better to be overprepared and have extra money left over than underprepared with no money left over.
Keep an Eye on Your Bank Account
Lastly on this list of tips for setting a realistic 2021 budget, make sure you keep an eye on how much money comes in and leaves your bank account. Watch the flow of money to ensure a stable month-by-month budget. Money not spent for one month may allow you to treat yourself to extra expenses the next, or allow you to invest some into an emergency savings. Knowing exactly what numbers you’re working with puts the rest of your budget into perspective and makes it easier to search for new monthly expenses—like a home, car, or even something small like a new monthly subscription.