Brace yourself for a couples edition — 11 years old and 23 years old
You’ve heard the mantra over and over: budget, budget, budget. This is money management rule number one as you graduate, start bringing home a paycheck and begin life in the real world. But if you’ve never had to pay for life’s essentials yourself, coming up with a realistic spending plan can feel like wandering in the dark.
If your parents have been covering or subsidizing your living expenses at home or college, you probably need a reality check before stepping out on your own. For many young adults, the combination of lower-than-expected take-home pay coupled with higher-than-expected living expenses can be a recipe for financial disaster. We’re here to shed some light on your finances, and help you build a home budget that avoids surprises.
Let’s start with your paycheck. While you know that Uncle Sam gets first dibs on your hard-earned money, you may not be prepared for how much the government will take. For example, if you earn a salary of $35,000, you’ll likely only see about $28,356 after federal taxes, Social Security and Medicare are subtracted. That doesn’t include state taxes or any deductions from your paycheck for workplace benefits, such as medical and dental insurance or a retirement savings plan. When all is said and done, you’re likely looking at a take-home pay of—brace yourself—$25,350 or so per year. That’s a net income of about $2,100 per month.