The Budget Breakdown of a 25-Year-Old Who Makes $40,000 a Year and Lives Realistically
Not everyone has 4 roommates and can use their parent’s phone plan.
Meet David Owens, he’s an average 25-year-old, living and working in Dallas, Texas. Like most people his age, he has a fair amount of college debt after acquiring a degree he was told would be necessary to find a good job.
His degree is in Marketing, which after joining the workforce he realized he doesn’t enjoy, but it’s too late now. His current Marketing job is the only one he could find that was “entry-level” and didn’t require “5–10 years previous experience.”
Here’s a breakdown of how David earns, saves, and spends his money.
What He Earns
David earns $40,000 per year at his current job, which is the average for his age group. Since David lives in Dallas, the cost of living is decent, and he does not have to pay State Tax. After taxes, his monthly earnings come to about $2820.
David has considered getting a second job to supplement his income, but his current position requires a fair amount of unpaid overtime and if he worked on weekends he would not have time to do laundry or buy groceries.
What He Spends
Here’s a breakdown of everything David spends in a typical month.
Rent: $900 for a small one-bedroom apartment, the walls are very thin and he can hear his neighbors arguing. One time he heard them breaking up and then fighting about having an abortion, which is none of his business and he tried playing loud music to cover it up, but then the neighbors complained.
As much as he would like a roommate, his previous one stopped paying their portion of bills and rent, so living alone seems like a much safer option.
Groceries: $400 shopping mostly at Trader Joe’s and Aldi. David cooks for himself quite a bit and most of his meals are rice-based.
He used to buy groceries at the Dollar Store, but that led to severe stomach aches and at least one trip to the hospital.
Dining Out: $200 for eating out at lunch occasionally, maybe 2 times per week. It’s a cost he’d like to avoid, but there is social pressure at work to eat with team members.
When he first began his job, he would turn down lunch invitations but then was given a ‘talk’ from his boss about how he needed to ‘make an effort’ to ‘fit in’ and ‘be a team player.’
Transportation: $550; $380 for his car payment on a 60-month loan for a used vehicle, $120 for car insurance, and $50 for gas. While Dallas does have public transit, it is limited and does not go anywhere near David’s office or home.
Phone: $70 for the T-Mobile Unlimited Plan. He would like to spend less but those plans do not have enough data and he is expected to be available for work calls, texts, and emails at all times. He heard Mint Mobile was much more affordable, but after an incident of not receiving any emails for a month, then suddenly receiving all of them at 4am on a Sunday, he had to switch to something more reliable.
College Debt Repayment: $393, the average cost for adults between ages 20–30. Weird that this cost never seems to appear in other articles about money-spending, right? It’s like they only talk to people who had full-rides or rich parents.
Utilities: $155, that’s an average because in the Texas summer heat electric can increase to $200-$300 depending on how much sweat you are able to stomach.
Internet: $65 for AT&T’s internet-only, basic plan. This is another necessary cost, as David often works from home in the evening.
He tried not having internet at all and only using his phone, but he received another ‘talk’ from his boss about how ‘at-home internet isn’t technically required, but you have to be able to work from home as needed.’
Streaming Services: $0, since he can’t afford it, David pirates shows and movies illegally. He hates doing this, but he has to watch something to clear his head at the end of the day. He’d love to be able to pay for Netflix, he really would.
Health Insurance: $112, on his employer’s health plan. Luckily, his employer covers the majority of the insurance cost. His deductible is pretty high, but David is young so he avoids going to the doctor whenever possible.
After bills and expenses, David is left with $-25 of spending money for the entire month. That’s right, he has a negative balance. Recently, he asked his boss about a possible raise and was told “this company does not reward employees with money.”
Don’t worry about David though, he’s just signed up for a high-interest rate credit card so he can have enough for his monthly splurge of one piece of avocado toast.
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