Useful Financial Planning Tips for Your Early 20's
By: Leo Falcone
Tags: Youngadult, Budgeting, Financial Planning, Excel

I have created this post as a result of a recent conversation with a college roommate. He and I are both a little crazy about our personal budgeting (he is a CPA, and I work in financial planning). We wanted to give some tips on ways that people in their 20s can manage their budget and expenses the way 17 years of school never taught us.

Create a Balance Sheet

The simplest way to track your expenses is with a balance sheet. Add up all of your assets and subtract your liabilities. Some common assets to list on a personal balance sheet include (but are not limited to) your checking account balance, Venmo/Cash app balance, savings/investment account balance, and unused credit card cashback.

If you own a car, the value can be added to your assets as well.

Now it's time to subtract your liabilities. Common liabilities to include are your credit card bill, any unpaid phone bills or subscriptions, the money you may owe to a friend (unpaid Venmo requests), and any other money you owe but has not been taken from your checking account yet.

If you have debt, like a student loan, it could be added to your liabilities.

Your final assets-liabilities will be your net worth, and you can track that number each month. Hopefully, it is increasing! If you are as crazy as I am you can make graphs to track the progression of your net worth over time.

There is a Microsoft function that can save you time while typing all of these numbers in. Money in Excel is a new function available in Microsoft 365 that connects to your bank accounts and lets you update cells with your values in real-time. You can learn more about that here: https://www.microsoft.com/en-us/microsoft-365/blog/2020/06/15/introducing-money-excel-easier-manage-finances/

Create a Pie Chart

It is important to know how much you are spending in a given month. A great way to visualize this is by creating a pie chart in Excel. Simply list out all of your expenses (rent, groceries, Metro card, dining/going out), and make sure to include the amount you are putting away each month. It can look something like this:

Once you have typed the information, click “Insert”, and then the pie chart icon.

Track Your Spending with an App

There are many apps on the market that can track your monthly spending and provide you with data. These are a good idea. They can categorize your spending, and show you where all of your money is running off to. Maybe you spend $300 a month on Uber, and it’s time to take the metro. Or, maybe you're spending $400 a month ordering food when the grocery store is 2 blocks away. Whatever your vice is, these apps will tell you.

The most popular example is called Mint. This is a free app that pairs with your bank accounts, credit cards, Venmo/Paypal, etc. It categorizes your spending and allows you to set budget limits, and will alert you when you go over.

A similar app is called Clarity Money. It has the same basic features as the previous example, but this app can actually help to cancel some of your unused subscripts you’re too lazy to log in and do yourself.

Another example is Simplifi. Simplifi by Quicken offers a personalized spending plan with real-time updates of how much you have left to spend throughout the month. The app syncs your bank accounts to show you where you stand and your progress on financial goals. The drawback of this app is that it costs $35.99 per year.