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- Food: Basic groceries should cost a single person about $150 a month. You'll spend a lot more if you eat out frequently, however, or if you buy lots of processed foods, frozen dinners and gourmet stuff. Cut your food costs by bringing lunches and snacks from home. Substitute potlucks or picnics for expensive socializing at restaurants. Shop grocery-store sales, and learn to make a few healthy meals at home. See "Secrets of superstar grocery shoppers."
- Utilities: A cell phone, a big long-distance bill or a need to walk around your apartment in shorts in January can all put you over budget in this category. Shop around for cheaper long distance. Conserve energy and wear a sweater in the winter, shorts in the summer. Consider getting rid of the cell phone, or at least switching to a cheaper plan.
- Personal: Let me guess. You're waaaaaay over budget in this category. The good news is that just about everything in this group represents a want, rather than a need. That means you can easily trim out the fat: Disconnect your cable or at least switch to basic; ditch the gym; find a cheaper haircut; carry (and spend) less cash and stop smoking.
- Savings: You might have to temporarily trim this percentage to pay off credit card debt. But don't cut savings to spend on anything else. And make sure, if you're eligible for a 401(k), that you contribute as much as you can -- at least enough to get the full company match. If you can, try "7 painless moves to save $1,000."
- Debt: If you're like the average college graduate, you've got about $20,000 in student loans and $2,000 in credit card balances before you even get your first paycheck. Just making the minimum payments in this category can put you over budget.
There are several steps you can take to keep these debts from wreaking havoc on your budget. First, consider consolidating your student loans to lock in low rates. In July 2009, grads will be able to opt for a kinder, gentler loan-repayment program based on a percentage of their income (see "College students get a break on costs").
You might also talk to your lender about other options, such as interest-only or income-sensitive plans. If you're really hard up or unemployed, you can ask for a deferral or forbearance, but remember that your interest usually will keep piling up even if you don't pay. This is why it's usually best to pay something each month, although student loans are one debt where it's often OK to just pay the minimum.
That's not true with credit card debt, however. You always want to pay more than the minimum if you possibly can. Otherwise, the interest charges and fees will just keeping adding up, and you may never get out of debt. See "Your 5-minute guide to credit cards." Consider taking money from savings and trimming every other budget category so you can get credit card balances eliminated in a hurry.
Otherwise, congratulations. The blueprint you just made will help you navigate your way through some potential money minefields and should speed you on your way to financial independence.
Liz Pulliam Weston's new book, "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life," is now available. Columns by Weston, the Web's most-read personal-finance writer and winner of the 2007 Clarion Award for online journalism, appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.
Updated March 28, 2008
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