Carrie recently reached out to me, sharing her struggles in achieving financial freedom. She expressed frustration over her inability to save money, despite her efforts. She’s a 21-year-old college student, engaged, a business owner, and a pet owner. Her savings account is empty, which understandably makes her anxious about not having a financial cushion for emergencies.
Many people can relate to Carrie’s experience of making money only to see it disappear quickly, often due to unforeseen expenses. I reassured Carrie that she has a significant advantage: time. At just 21, she has the opportunity to turn her finances around. Plus, she’s already running a business while attending college, demonstrating her determination and willingness to work hard.
To start, I advised Carrie on the importance of budgeting. I’m not the biggest fan of budgets because they can be demanding and require meticulous tracking of every expense. However, for Carrie, a budget is essential to understand where her money is going. When I asked her about her usual expenses, she provided a list that included groceries, loan payments, insurance, and clothes. Carrie mentioned that her business income fluctuates between $1,300 and $1,800 monthly. They have been cutting down on bills, which is great. Their current expenses are:
– Rent for a two-bedroom apartment: $550
– Phone and internet: $65 per month
– Electricity: $125 to $180 per month
– Small household items and puppy food
While these are the most obvious bills, Carrie didn’t mention other expenses like groceries, car-related costs, or other necessities. I suggested that she track all her expenses for a week, so we can identify any areas where she can cut back and ensure her expenses fit within her minimum income of $1,300.
If the budget is tight and there isn’t enough money, we’ll need to consider ways to increase her income. As a freelancer, Carrie needs to know her survival budget and stick to it until her financial situation improves.
After a week, Carrie excitedly reported that she and her boyfriend had embarked on a spending freeze and managed to save $98.06. Here’s a breakdown of their spending:
– Net income for the week: $347.96
– Laundry: $10.00
– Beer: $13.00
– Dollar General: $15.66
– Sofa rental: $90.00 (adding another monthly bill of $124)
– Walmart: $94.00 (including paint, brushes, transportation, food, paper towels, and McDonald’s)
– Dollar General (again): $10.19 (snacks and pop)
– Miscellaneous: $3.89 (chips and allergy medicine)
Their total spending was $232.85, with some additional expenses likely from ATM fees.
Carrie could cut some expenses like beer and fast food. They might also consider buying a used sofa from Craigslist instead of renting one unless they’re tied to a rental contract. However, it’s important they make these changes gradually to avoid getting overwhelmed and giving up.
Lastly, I asked my readers for a simple, painless tip for Carrie. One easy suggestion is to avoid ATM fees by changing to a bank that doesn’t charge them or only withdrawing from fee-free ATMs.
Thank you for your input and support!
