The Unexpected Costs of Adulthood
For most young adults, the year after college marks the first year of financial independence. The jokes your parents used to make about the doors to “Bank of Mom & Dad” being boarded up and closed for business have become a reality. You have no one but yourself to rely on for financial assistance like you may have had in college. Being financially independent for the first time can be one of the most stressful periods in your life: you now have to worry about making a budget for managing your hard earned bi-weekly paycheck. That is, in addition to managing everything else that’s new in your life, like getting acclimated to a new city, starting a new job, making new friends – you name it.
Fun Comes at a Price
Something I have learned about budgeting as a young adult living in a bustling city is that there are endless ways to blow through your credit card balance. Happy hours, dinners, late-night pizza, that trendy pop-up you just HAD to go to get that one Insta pic… the list goes on and on. Those $12 vodka sodas from your wild Friday night out add up. It can soon become overwhelming trying to manage a budget while having fun in your new life and also trying to avoid credit card debt.
So. Many. Expenses.
There are many standard fixed expenses of living in a city. Rent will become your largest monthly expense, and in a city like New York, it can quickly dwindle your take-home earnings. After that, the next-largest expense will be the much-revered and hated student loan payment, because you know, you’re “using” your degree and everything is #worthit. Then, come the smaller fixed costs such as a monthly transportation pass, utility expenses like Wi-Fi, cable, electric, water, and gas bills. If you live in a city that doesn’t have reliable public transportation, you need to factor in car insurance, monthly car payments, and the gas and maintenance expenses that can add up. Soon, your after-tax net income has dwindled down before the fun even begins.
Don’t even get me started on the unexpected expenses that you probably didn’t even think about factoring into your original budget. These expenses can vary in frequency, but usually add a lot to our everyday lives such as the gym, streaming services, and self care activities. As an adult there will be even more unexpected expenses that you can’t always account for in your monthly budget. These can include entertaining guests, travel, pet emergencies, technical difficulties, and taxes and these are best managed with an emergency relief fund.
Things to Budget for as a Young Adult
Gym Membership Options and Saving Strategies
In college, the campus gym was either heavily subsidized or free from your university. Now, in order to stay fit you have to join a gym, and in a city it can be pretty pricey. With a standard corporate discount, you can get a passport membership to New York Sports Club (NYSC) for $79.99, without it can be $120 (NYC pricing, can vary by city). However, if you’re rollin’ in dough at the ripe age of 23, then you might be a member of the elite, muscular-Greek-god gym, Equinox. Equinox is the gym you want to join when you have enough disposable income.
If you aren’t a gym fan, there are other options such as Class Pass, or joining a running group. ClassPass gives you the studio experience at a packaged price. It uses the points method, so the trendier the work out, the more points are taken from your monthly allowance. Monthly prices vary by package type but it’s generally worth it, especially if you need the motivation of someone telling you what to do and want class variety.
Individual fitness classes can range from $20-$40, and most studios offer first-time clients specials, such as a “2-for-1 deal” or a discounted class, which can save you a good amount of change. Make sure to check in with your favorite studio to see if they offer a cheaper drop-in rate. To get the inside scoop on any future workout experience, check out Sweats and the City to see if they’ve reviewed the studio!
How to Fit a Spotify Premium Membership into Your Budget
Student discounts are sadly coming to a head, which includes your favorite music streaming service, Spotify. As a student, you can enjoy all your favorite jams for a cool $5, but now its $10/month. I know that may not seem like all that much, but that’s a 100% markup – or the price of a Grande Non-fat Iced Caramel Macchiato from Starbucks. But hey, we all need it to play our highly curated playlists for our Friday night pregame, amiright?
Saving for Medical Bills
Most people under the age of 26 (s/o to Obamacare) are still registered under their parents’ health insurance. However, I am not one of them. My parents’ health insurance didn’t provide enough coverage in my new home, so I elected to get a Consumer Driven Health Plan (CDHP) from my employer. A CHDP is usually the cheapest option and has the ideal amount of coverage for someone in their twenties who routinely goes to the doctor. It’s a win-win, so always choose this one!
I am fortunate enough to have health, vision, and dental insurance provided by my employer, but it’s easy to see how quickly medical costs can add up. Once, I went to an urgent care clinic because I had a minor rash on my leg. That little trip cost me $250 alone, just to have a doctor take a 2.5 second look at my leg and tell me I had poison ivy (who gets poison ivy in NYC, wtf).
That’s just one of the many examples of how quickly medical costs can add up. Don’t forget to factor in the cost of an eye exam, contacts, and the bi-annual trip to the dentist. If you have another routine health issue that requires consistent care or a monthly prescription, you’re basically indebted to the health insurance company. Piece of advice – if you’re under 26 and can do so, definitely stay on your parents’ insurance.
For a man, a haircut is one of the only routine grooming necessities. #cool
Whereas women have hair treatments, skin routines, and manicures, many of which are non-negotiables. In New York, the average haircut costs $90, and getting your hair highlighted or balayaged can easily cost you $200. A good trick is to see if your local Ulta has a salon where you can put your earned beauty points towards your next purchase. For anyone that feels really confident in their abilities, utilize Madison Reed, a hair care company that sends you inexpensive but great quality at-home hair color. Sephora stores also do in-house facials with a complementary purchase of $75 worth of product, and also offer free(!!!) mask and peel mini facials.
A time-tested cure all for any sort of girl pain is to get a mani-pedi at your local nail salon, which ranges from $25-$50. This is one of the best ways to treat yourself without treating yourself too much. Plus, there is usually complimentary wine, so you can also get a little tipsy, while getting a foot massage.
The cost of having fun is the silent and most deadly bank account killer. It can be so hard to say “no” to brunch with a new friend or to a work happy hour because you think it’ll just be $30. Then, it quickly turns into three $30 outings in one week, and those add up. Just think about it when you’re having a fun night out: dinner, drinks, Uber rides to the bar, more drinks, and then drunk pizza at 3 am – that’s easily a $100 Friday night.
If you work for a corporate company, then you most likely have to shell out money you don’t have on a whole new wardrobe – just to make money. Yes, we’re talking business casual/professional clothing and like most things you need for adulthood, it isn’t cheap. One pair of dress pants can cost close to $100, and you need enough clothing to last you the entire week. For women, there are endless options: blouses, pants, skirts, dresses, etc.
This new purchase can become pricey very quickly, since there are limited stores that have business clothing which doesn’t make you look like a middle-aged woman. It’s a pretty penny, but it’s definitely worth investing in, since many pieces can be mixed and matched to create unique, professional options. A guide to finding on trend professional clothing at all different price points can be found here.
Building a Budget
It can be hard to manage all of these new costs without feeling like you’re financially drowning. Trust me, you’re not alone here. No one has any idea what they’re doing and unfortunately, there isn’t a college course on this topic.
A great place to start is by creating a monthly budget to help you figure out how much money you should be spending in order for you to start saving. It is extremely important to know your maximum monthly expense allowance so you are living within your means and not over leveraging yourself. Even with that, it can sometimes feel like you’re swiping your credit card a little too often.
Some of my favorite budgeting apps are Mint, Qapital, and Clarity Money. Finance bloggers who are very knowledgeable and informative are @herfirst100k, @blondebrokeandboujee, and @mrsdowjones, all of which explain saving and investment tips to the average user.
Good luck on your financial journey and if you have any saving tips feel free to comment below for others to use!