Yahoo Finance

Yahoo Finance is taking it back to the fundamentals with our theme week, investing 101. Five rules to build wealth. Today, we give you the fourth rule, bulletproofing your budget. We have an expert here to give you actionable tips for building a smart budget that still allows room for little fun. Joining me now, we've got Tiffany Aliche, who is the budget that you may already know. She's also the host of the new Yahoo Finance podcast, Money Glow Up. Tiffany, great to see you. Thanks for hopping on. So, let's start with a situation a lot of young people are going through. Just out of college, just got their first job, saddled with thousands of dollars in student loan debt. How do they pay their debt, invest for the future, and still have money left over for a latte or perhaps some food away from home and night at the bar, just turn it up.

Well, Brett, it is possible, although maybe not as easy as it used to be. First things first, especially you should know what is the actual take home pay. Let's just say on average you're making $60,000 a year, which is what the average American worker is making, give or take. Right, you want to know how much you're actually taking home. There's a great website called paycheckcity.com that you put in the state where you live, what your, your income is going to be for the year, your gross income, it will take all the state components out, all of your unemployment stuff, and it'll tell you what your take home pay will be, monthly, bi-weekly, or however often you get paid. So you actually know what your actual number is. Once you know what that number is, you can start to create a budget before you actually start working ideally. If it was me, and it was me, um, I'd be looking for a roommate if I'm just graduating college or if I'm super young, so that way I don't have to pay as much. The average rent is about 27, 2500, uh, dollars a month for a two bedroom. So maybe your, your piece would be just over $1,200, splitting utilities, you're looking at maybe around $150 a month, um, your cell phone around $70, groceries about 300. I did a little bit of the math to see, and this person making 60 could still put 5% away of their gross income toward retirement, because you want to start as soon as possible. And if you find a company that matches the average company matches four and a half percent. So you're getting close to that 10% or more ideal for setting away for retirement, you would still have about 200 bucks a month left over to save and even about $175 or so left a month, um, to save to set aside for, for something like your fun fund, F-U-N-F-U-N-D. So it is possible, but you have to really look at your budget, work the numbers, and then automate that thing so you don't have to think about it.

Tiffany, unforeseen circumstances can take place from time to time. So tell us how to budget for an emergency. What do we need to know there?

Well, one, you have to split it before you get it. So if you have a job, try not to have all your money land in one checking account. Ask HR payroll to split your money before you get your money, because you've done the math and maybe you see there's an extra hundred bucks a month that you can put aside for emergencies. So that's one. Two, the best way to really circumvent emergencies that might cost more than what you have saved is you might have to swipe that credit card. It's not ideal, but you might. So if that's the case, you want to make sure you're already in good standing. You should know your credit before you need your credit. And so I'd be working on making sure I had a strong credit score, so if I had to lean on a credit card for a little while, I have the option to do so.

Now, when it comes to spending on fun, a lot of people tend to feel guilty about adding something the way they want into the budget, especially when they have debt. So on your new show Money Glow Up, you actually spoke to a financial therapist and coach, Asia Evans, about this. Let's watch a clip of that.

It's really difficult to talk about money. Yeah. A lot of times people feel so much more comfortable talking about, you know, anything under the sun, but talking about money can be really, really difficult to people. So what I like to do in the beginning, it's kind of like, hey, what's the crisis? What brought you in? Why did, why did, why was now a good time for you? Okay. And then figuring out what's going on. Okay. And for some people that is us looking at their numbers, um, because something is pressing. And for other people it's like, okay, take me way back. Let's start at the beginning. Walk me through your money story. Walk me through how your parents talked about money, all the money experiences that we were just talking about and naming. Okay. That's what we're doing first. And then what I'm doing is picking out the patterns. Um, what comes up for you and then how does that intertwine with your mental health? So a lot of times we don't realize that, oh, I am spending this money because of my self-esteem. You're not thinking that. I'm thinking that, but you may not be thinking that. Okay. But you're like, oh, it's a new weekend, so I'm going to get this outfit. Oh, we're going somewhere different or on vacation, I need a new outfit. And I'm asking you, how come, what does it mean if you don't have that outfit? Okay. What does that bring up for you if you're not showing up looking dressed to the nines all the time? So it is a lot of questions and walking me through somebody's story to understand kind of what's been going on for them and how does their mental health, how they feel about themselves and their life experience impact their patterns with money.

Okay, so let's talk more about financial therapy. Just tell us more about and how it should fit into someone's money journey.

So it might not be for everybody's money journey, although I feel like everybody needs a little therapy. And so what's so interesting about financial therapy is actually, um, Asia is a licensed therapist that kind of has like a concentration in money, if you will, because so much of us, so many of us are affected by the lack of money, too much, too little, you know, how we grew up, how much we're making now, and financial therapy, if you find yourself stuck because money is holding you back from the life that you actually want to live, might be able to unlock, why are you in this position? And what can you do specifically from the therapy standpoint, but from the financial standpoint as well to move forward. So to me, if you're someone who's struggled in that space, I didn't even know this existed. I probably would have tapped into Asia years ago. Um, but to me, if you're someone who struggles specifically with your mental health, um, because of your finances, then it might be a tool that you might want to tap into.

Tiffany, always a great pleasure to grab some of your time here with us. Everybody can continue to tune in, listen up to the Money Glow Up, launching today. You can listen to Tiffany's very first episode on all streaming platforms, 12:00 p.m. Eastern Time. Today, she'll speak with financial therapist, Asia Evans, on all things budgeting and how to have a good relationship with money hearts. Tiffany's got some great guests lined up as well, including Cabral Miller, who is the head of business growth and operations at Elegant Eyes, Brandis Daniel, who is Harlem's fashion row and Icon 360 founder, plus no madness, travel tribe and TV founder, and Vivian Tu, your rich BFF media CEO. You do not want to miss those conversations. They're every Thursday, 12:00 p.m. Eastern time.