So, here's the deal, I am a senior in college in Finance. I am getting close to graduation, have a great internship gig and my deal with the company is at the end of the year we will negotiate my future there (possible future job, etc.) Now, obviously I am looking for a full time job, and I hope my performance there hopefully warrants it. There will be a LOT of room for negotiation of salary because my position is completely new to this company, and the closest I can get to my job on salary.com is a job with 4-6 years experience.
Thus far, I have written down all expenses I can think of per month (the obvious ones like rent, utilities, car insurance, health insurance, etc.) and a few of the non-obvious ones (tithing, medicines, 401k, car payments to myself (I already own a nice car fully paid for)).
So, I am looking for help from the FWF posters to give me some ideas on how to create a budget of my expenses so that I will be able to make a solid budget so I know how much money to ask for when I graduate and we are negotiating salary at my current job!
I am of the philosophy that budgets: A) don't work, and B) are a huge waste of effort.
I find a much more realistic system is simply tracking all spending... Then review this spending monthly. You will notice where you can make improvements. If something is out of line with your values, or you didn't receive adequate reward for money spent it should jump right out at you... By tracking all spending, each dollar becomes a battle to win. Also, simple observation changes behavior.
When I was on a budget, I was just retweaking it, moving money between the abstract categories and spending too much time on it and spending more money... Tracking spending on a monthly basis it's almost like a game to see how well I can do, rather than just trying to stay within budget.
Corndogg
Senior Member
posted: Nov. 20, 2009 @ 9:32a
mwa423 said: ...so that I will be able to make a solid budget so I know how much money to ask for when I graduate and we are negotiating salary at my current job!
I would not suggest making a budget so you know how much to ask for your wage. I would ask for market wage starting out of school and make your budget fit to that. I agree with JTFH, budgets don't work well and its best to live below or well below your means and evaluate monthly spending rather than set a strict budget to adhere to.
I agree with the above post--rather than budget, track and adjust spending where you think you can cut back.
There are 2 things I do monthly:
Track spending by category--pretty easy once you set up a spreadsheet. I pay for everything on a rewards card, which also makes it easier.
I also keep a running personal balance sheet. Assets, Liabilities & total net worth.
For me, it's important to have these 2 things together in one spreadsheet--after all, the purpose of tracking the spending is to increase the net worth. I do line graphs to show debt reduction, and net worth growth over time. This makes it easy to discuss our situation with my wife and get her on board with cutting spending where we can.
Corndogg said: mwa423 said: ...so that I will be able to make a solid budget so I know how much money to ask for when I graduate and we are negotiating salary at my current job! Not sure what Corndogg wanted to say but for the life of me I cannot figure out what your monthly expenses has got to do with your salary negotiation.
The former is of no concern to your prospective employer. If your expenses are high, is he obligated to pay you more. If you are a FWF tightwad, will you accept a minimum wage?
You negotiate your salary based on what you bring to the company in terms of your skills, experience etc. and to an extent the market for those skills in the industry. How/what you spend your salary on is largely your personal decision.
Take a small little notebook and a small pen carry these with you everywhere. Write down absolutely everything you spend for two months. If spending + savings goals= less then income you are great if more then income look thru and change habits so spending less or making more. This is the key of budgets.
Corndogg
Senior Member
posted: Nov. 20, 2009 @ 10:12a
uutxs said: Corndogg said: mwa423 said: ...so that I will be able to make a solid budget so I know how much money to ask for when I graduate and we are negotiating salary at my current job! Not sure what Corndogg wanted to say but for the life of me I cannot figure out what your monthly expenses has got to do with your salary negotiation.
The former is of no concern to your prospective employer. If your expenses are high, is he obligated to pay you more. If you are a FWF tightwad, will you accept a minimum wage?
You negotiate your salary based on what you bring to the company in terms of your skills, experience etc. and to an extent the market for those skills in the industry. How/what you spend your salary on is largely your personal decision.
Misposted my original response then became distracted before I was able to get back to finish/edit it...
Xnarg
Senior Member - 5K
posted: Nov. 20, 2009 @ 11:57a
People often seem to guess at their potential expenses, determine they have some extra money, and then spend it on a car, fancy electronics, vacation, jewelry, etc..
After a few months they realize their expenses are lot more than anticipated but by then they're stuck with car and credit card payments.
If you really want to budget wisely, pretend you are completely broke and don't spend a darn thing you don't have to.
mwa423
Senior Member
posted: Nov. 20, 2009 @ 12:43p
Some clarifications, I'm not a troll, just want some honest suggestions (thanks to those of you who have provided feedback).
As for why I want to get a feel for my expenses now before I go into salary negotiations is because I want to know what my minimum income required to live at the level I do now (a lot of bills are paid by scholarships, parents, etc.). For example, if I determine I need $40,000 a year to live comfortably then I'll walk if their highest offer is $30k and find somebody who will pay me $40k. Conversely, if they offer me $50k, why even think about it, just let me sign on the dotted line.
I just want to make sure I have thought of every expense so I have an absolute minimum. I already charge almost all discretionary purchases on my Discover Card (which is paid off in full every month, I just enjoy the extra Cash Back and it makes tracking expenses easier)
barbcole
Senior Member
posted: Nov. 20, 2009 @ 12:45p
Senior in college in "Finance", yet coming here to Budgeting 101 -- and you want us to think you aren't a troll?
Do trolls usually ask about such boring and non controversial topics as budgeting?... Strange trolls... These accusations are puzzling and now redundant -a simply red would suffice.
mwa423
Senior Member
posted: Nov. 20, 2009 @ 12:51p
barbcole said: Senior in college in "Finance", yet coming here to Budgeting 101 -- and you want us to think you aren't a troll?
You're saying there are no tricks for more effective personal budgeting then what is in textbooks? Geez, guess we should just shut down the FWF forum and post a pdf of chapter 6 of a textbook.
MEGAWALLET
Member
posted: Nov. 20, 2009 @ 1:08p
Obviously s/he's not a troll. Grow a brain people... OP was not juicy enough.
To answer the question, here's what you want to do: (1) Type out how much you make each month and how much you plan on spending for each category each month. (2) Keep a spreadsheet for the categories that can fluctuate wildly-- for me that's food, gasoline, and dry cleaning. Track how much you're spending as the month progresses. I have a spreadsheet that divides, say for example, $1,000 into 30 days, and I see how much I'm under or under my spending day-by-day, for food, gasoline, dry cleaning.
I think budgets are stupid (the key is to make a lot more than you spend... otherwise you're screwed and a budget may help) and make sure your expenses stay in line with how much you roughly want to spend on each category each month. Budget < earning a lot more than you spend.
mwa423 said: Some clarifications, I'm not a troll, just want some honest suggestions (thanks to those of you who have provided feedback).
As for why I want to get a feel for my expenses now before I go into salary negotiations is because I want to know what my minimum income required to live at the level I do now (a lot of bills are paid by scholarships, parents, etc.). For example, if I determine I need $40,000 a year to live comfortably then I'll walk if their highest offer is $30k and find somebody who will pay me $40k. Conversely, if they offer me $50k, why even think about it, just let me sign on the dotted line.
I just want to make sure I have thought of every expense so I have an absolute minimum. I already charge almost all discretionary purchases on my Discover Card (which is paid off in full every month, I just enjoy the extra Cash Back and it makes tracking expenses easier)
That's still not a good way to think about it. Just because your particular standard of living is cheaper than someone else doesn't mean that they are worth more money at their job. I make around 4 times more than a friend of mine, yet he spends about double what I do. You simply can't correlate the two.
myadvice
Senior Member
posted: Nov. 20, 2009 @ 1:58p
JTFH said: I am of the philosophy that budgets: A) don't work, and B) are a huge waste of effort.
I find a much more realistic system is simply tracking all spending... Then review this spending monthly. You will notice where you can make improvements. If something is out of line with your values, or you didn't receive adequate reward for money spent it should jump right out at you... By tracking all spending, each dollar becomes a battle to win. Also, simple observation changes behavior.
In general I agree with you on tracking spending.
Where budgeting is helpful is though is for those expenses that occur less than monthly. Finding out how much these irregular expenses will cost each year and ensuring that an adequate amount is being reserved each month to pay for those expenditures when due is a worthwhile exercise.
mwa423 said: Long time lurker, first time FWF poster.
So, here's the deal, I am a senior in college in Finance. I am getting close to graduation, have a great internship gig and my deal with the company is at the end of the year we will negotiate my future there (possible future job, etc.) Now, obviously I am looking for a full time job, and I hope my performance there hopefully warrants it. There will be a LOT of room for negotiation of salary because my position is completely new to this company, and the closest I can get to my job on salary.com is a job with 4-6 years experience.
Thus far, I have written down all expenses I can think of per month (the obvious ones like rent, utilities, car insurance, health insurance, etc.) and a few of the non-obvious ones (tithing, medicines, 401k, car payments to myself (I already own a nice car fully paid for)).
So, I am looking for help from the FWF posters to give me some ideas on how to create a budget of my expenses so that I will be able to make a solid budget so I know how much money to ask for when I graduate and we are negotiating salary at my current job!
Budget should have nothing to do with how much compensation you think you're worth. Determine that by comparing location (Cost-of-living adjustment) and what comparable jobs pay as starting salaries. If you budget $40k to live comfortably and take $50k, how dumb is it if someone else would have offered you $70k for the same job in the same area?
And define live comfortably too. We bought our first house on $32k/yr household income a few years back. It was way far in suburbs, was small and not very nice property but hey that's what we could afford. If we had budgetted with that in mind for our jobs we'd still be in that house years later and my employer would not believe they can retain me for so little. Now earning 6 figures HHI, I don't think I'd call those early days living comfortably, probably because we can afford much better. So this is not a fixed scale.
So get a fair estimate of how much your total compensation should be and then make a budget for it, not the other way around.
mwa423 said: As for why I want to get a feel for my expenses now before I go into salary negotiations is because I want to know what my minimum income required to live at the level I do now (a lot of bills are paid by scholarships, parents, etc.). For example, if I determine I need $40,000 a year to live comfortably then I'll walk if their highest offer is $30k and find somebody who will pay me $40k. Conversely, if they offer me $50k, why even think about it, just let me sign on the dotted line. You are putting the cart before the horse. You have a net income based on your salary less taxes, mandatory deductions etc. You then figure out how to live within that and possibly save some. You don't go with I need $X "to live comfortably" and start expecting that as an income. Is this the current (newly graduated) generation's way of thinking?
MEGAWALLET
Member
posted: Nov. 20, 2009 @ 3:04p
Imma let you finish, but Beyonce had one of the best videos of all time!
Chiming in one last time-- it's absolutely idiotic to take an offer based on how much money you're budgeting spending. The only corollary to this is comparing wages to cost of living (NYC vs. podunk town). You should be aiming to take the highest-paying job you can get, in a city/town you like, which would give you the most job satisfaction (prospects, future employment, fun, etc.). Plus, you also don't want to be too picky in this economy.
mwa423 said: So, I am looking for help from the FWF posters to give me some ideas on how to create a budget of my expenses so that I will be able to make a solid budget so I know how much money to ask for when I graduate and we are negotiating salary at my current job!Your paycheck is based on how much your work is worth, not how much you spend.
Your approach is exactly why we are in the rough shape we are - people keep trying to earn based on what they spend, when you should spend based on what you earn.
mwa423 said: For example, if I determine I need $40,000 a year to live comfortably then I'll walk if their highest offer is $30k and find somebody who will pay me $40k. Conversely, if they offer me $50k, why even think about it, just let me sign on the dotted line.
Terrible way of thinking. If the company's first offer is 50K, you can probably negotiate something better. Plus, salary is not all there is, benefits are very important. You want to be paid a reasonable salary for what you do.
I'd suggest that instead of planning a budget, you simply spend less right now. Obviously don't skimp on things like business attire if it required, or a periodic work lunch. Focus your energy on having a really good image at the company. Try to come in early, network, and offer to help with something, or to learn something new that may help. Absolutely network, and get contact information from people in the company. Do basic internet research on salary ranges of people in the company on your level, and your bosses level...Come up with a plan of how much value you can bring to a company and be able to show it during the salary negotiations.
Because you mentioned that it is a new position, it seems that the salary for it is very negotiable. If you can show the company how much value you add, time you save, or new projects you finish etc... They may offer you more if they like what you do.
-Greyrabbit
alaetra
New Member
posted: Nov. 22, 2009 @ 10:49a
Actually, I don't think it's unhelpful to budget. I budget a year ahead of time so I know exactly what I need to make. Then I'll adjust the budget for the month I'm in depending on circumstances. For instance, last month I got hired full time again so I had to buy work clothes. So I adjusted the budget for last month to allocate for that. Sure, if circumstances change I can cut the cable, but I am still going to have to pay for electricity, gas, car payment, car insurance, mortgage, health insurance, student loans, etc. I budget gas for getting to and from work and my fiance to and from school at $4.00/gallon so I don't get too surprised by gas increases. In the winter, I budget $350/month every month for natural gas (it's a drafty house and I have had a $500 natural gas bill before so $350/month every winter month covers any outrageous bills) although with the winter we've been having this year my natural gas bill this month was $15 which is VERY unusual. I plan to take the savings and insulate my addition which will drop the higher gas bills in half. I inflate my budget so that I can pay for the essentials even if they vary a bit. If the bill comes in less than what I've budgeted - great I can save that money or put it towards some future bill. I find budgeting is helpful for me because I know exactly what I will spend money on and even the limit of what I can spend. I also don't worry that essentials won't get covered because if it's not allocated in the budget and I don't adjust the budget then I'm not buying it.
If I waited to look at my spending after the fact, I feel like it's too late. I already bought something.
I agree with those who indicate that your budget should drive how much you ask for in salary...it needs to be somewhat the other way around, although some background planning and knowledge can help to determine what you're willing to accept. For example, there were plenty of opportunities in San Francisco for $40,000 a year. In some areas, that would be livable, but in the Bay Area, I'm not sure what type of hovel you'd have to live in with how many other people.
You might use a budget for a certain area to get an idea of what you'd LIKE to be making, but there will always be give and take.
As for my approach...we took our combined incomes, created a list of expenses, how much we were allowed for each item, made sure to include an emergency fund and a slush fund (for when a budget is blown so far, you need to balance out a section and start over...or for things we didn't realize would be recurring...eventually they get moved into the overall budget), then broke it down into a spreadsheet for each of us.
Many once-a-month recurring expenses (e.g. electric bill) sit at the top and just have a 'budgeted', 'previous', 'available', 'spent', and summary column (which adds the previous+budgeted-spent, then is carried over to the next month).
Sections which have multiple amounts get their own...eating out, groceries and supplies, etc. They work similarly to the previous section, except they allow for multiple entries, then sum them up to have a carryover amount for the next month.
No, it doesn't force you to stay within the budget, and it can be tempting to see that slush fund grow a bit, but it makes it very easy to see where your money is going (for me it seems to be food...I'm apparently a food addict).
If interested enough, PM me and I can send an example of the layout.
wilkinru
Senior Member
posted: Nov. 23, 2009 @ 5:31p
Finance major and you want to know how to make a ....budget?
Budgets are kind of stupid anyway. I prefer just listing my fixed costs and then listing the variable costs (food, gas) and estimating. After 3 months you can adjust with a monthly average.
I mainly do this to see how much passive income I make in comparison to my living needs. (100% would be cool, after taxes)
uutxs said: mwa423 said: As for why I want to get a feel for my expenses now before I go into salary negotiations is because I want to know what my minimum income required to live at the level I do now (a lot of bills are paid by scholarships, parents, etc.). For example, if I determine I need $40,000 a year to live comfortably then I'll walk if their highest offer is $30k and find somebody who will pay me $40k. Conversely, if they offer me $50k, why even think about it, just let me sign on the dotted line. You are putting the cart before the horse. You have a net income based on your salary less taxes, mandatory deductions etc. You then figure out how to live within that and possibly save some. You don't go with I need $X "to live comfortably" and start expecting that as an income. Is this the current (newly graduated) generation's way of thinking?
Nope, the current generations level of thinking is I have a college degree, now hire me and give me a 6 figure income. I think the recession is banging some sense into there type of people at least.
I think it is OK the OP is trying to figure out a rudimentary budget. As others have mentioned, you really shouldn't base salary expectations off of this budget, but it is always good to look ahead and to get a feeling of what the cost of living for the area the OP will live will look like. My recommendation is that almost always people underestimate the non fixed costs. Food, gas, alcohol, household goods, entertainment, girlfriends, exc. almost always run more than what people think it will.
lotusgardener
Broke Member
posted: Nov. 23, 2009 @ 7:29p
Finance major needs finance help, no wonder we're in the state we're in.
Xnarg
Senior Member - 5K
posted: Nov. 23, 2009 @ 7:51p
JorgeBurrito said: ...Nope, the current generations level of thinking is I have a college degree, now hire me and give me a 6 figure income....An additional part of that thought process seems to be:
"Old people are to blame for all our troubles, we'd better cut their Medicare benefits & hold down Social Security payments to punish them and to give us what we want now without having to work for it ourselves."
guruganesha
Member
posted: Nov. 24, 2009 @ 12:54p
I concur with previous posters that tracking my actual spending is much more helpful. I do set a budget just for a generalized picture (net income minus expenses = remaining into savings), but I quickly found that certain areas were never "to-the-penny" accurate. For example, for "utilities" I budgeted $100 monthly for electric (just me, small place) but spring/summer that can be less than $40, while in winter it can be $100+. Trying to modify my budget every month to reflect that drove me bananas. Instead I now know that I'm saving ~ so much every month and don't sweat it. What I do focus on is tracking every single purchase/expenditure and then at the end of the month seeing what my big hitters were. No surprise, eating out was last month's big hitter. So this month (and in general) I now focus on cutting back on that and savings naturally happen.
Pay your bills on time, spend less than you earn and don't waste a ton of time "managing" aka obsessing over your monthly budget.
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