Surviving the Summer: A Budget Story
As soon as I finished reading the internship acceptance email, I got up, did some jumping jacks, walked three times in a circle and did a fist pump to celebrate. As I sat back down and the adrenaline faded, I came to a realization and thought to myself, “Oh heck, this company is based in Massachusetts, and I have no idea how I’ll live there.”
Eventually I was able to figure out all the financials, it probably took only 90 minutes to get an estimation of my summer budget, and I felt confident about my summer afterwards. I’ll walk through my process and the steps I took. I encourage you to follow along with your own spreadsheet or paper to calculate your finances!
Step 1: Figuring Out My Income
My employer offered me a salary of $25 dollars an hour over a 40 hour work week over the 3 month long program. This translates to $4,000 over each month, and a total of $12,000.
$25Hour*40 HoursWeek*4 WeeksMonth*3 MonthsInternship=$12,000
Next I had to figure out how much of this wage I would be losing to taxes. First I looked up income tax brackets in the US (see here), and figured out I would be paying 15% of my salary in taxes.
I also had to calculate how much my tax refund would be to get a full picture of my salary. I used TuroTax’s TaxCaster calculator to estimate my tax refund, and came up with $568, or $189/mo. My total income was then:
($12,000*.85)+$568=$10786
Step 2: Essential Survival Expenses
Next I needed to know how much I needed to spend to survive. I came up with a list of all my essential expenses:
I decided to start by figuring out where I would be living as that would decide utility, internet, transportation, and laundry costs. I looked at 3 different sites to find housing: Zillow, apartments.com, and Airbnb. I set a max price of $1,500 a month I was willing to pay, then I prioritized finding a place as close as possible to the company I would be working with.
I ended up going with Airbnb because of a listing with a price of $1,100/mo within walking distance of my workplace, and with internet and utilities included, so I could take those off of my budget.
Being in walking distance also really let me cut down on transportation costs. I figured I may go out and take the bus twice a week for entertainment and food shopping, which boils down to a monthly cost of about $40.
Next I focused on food. One of the problems with estimating food costs, is that it varies wildly on what life style you want to live. It’s possible to eat for $200 a month, but it’s also possible to spend $200 on a single exorbitant meal.
I approached this problem by first figuring out if I would either be cooking, eating out, buying microwave meals, or doing a little of everything. Let’s say I would be eating out once a week, then out of the 6 remaining days, I might cook a big meal for three of them, and eat frozen dinner for the other 3. The same applies to lunch, and I’m fairly content with cereal and milk for breakfast.
Box of Cereal — $3
Gallon of Milk — $3
Eating out — $40
Frozen meals — $25
Cooking — $30
This comes down to a total food cost of $101 a week and $404 a month (I used peapod to get an estimate for food costs).
For both phone and insurance costs, you can get an accurate assessment of cost by looking at previous bills. For an individual these costs will land around $75 and $350 a month respectively. For laundry, toothpaste, and shampoo, I set aside $20 a month, which should be plenty.
Totaling these costs leads to a monthly expense of $1989 for all the necessities to survive.
$404 + $40 + $75 + $350 +$1,100+$20 =$1989
Step 3: Savings and Non Essential Expenses
I next made a list of all non essential expenses:
- Investing
- Saving
- Entertainment
My first step in determining non essential expenses was to make a personal investing goal: Invest a quarter of my total paycheck every month ($1000). This left me with $594 to divide between saving and entertainment. I chose to spend $120 on entertainment which assumes I’m spending $30 a week to go out. That leaves a total of $474 to keep in my checking account for future spending.
Conclusion
Overall, I now feel much more confident about my ability to survive my summer, and I hope you as the reader do also! I’m sure that my actual spending will have some variations from the set budget, but for only 90 minutes of effort, this quick planning period alleviated a lot of my stress about living on my own in a new city.
Post your own thoughts and budget experiences in the article responses! If you enjoyed this article and want more, follow me on Medium or email me at cedrib@umich.edu with questions, comments, and ideas for future articles.
