Viral Reddit Story: A 26-year-old youth earning Rs 82 lakh annually is also facing budget problems. Know what he revealed about his income, savings and expenses in his Reddit post.
High Salary Budgeting Reddit Post: It is generally believed that when a person’s earnings are in lakhs, he is not worried about money. But the reality is sometimes completely different from this. The story of a 26-year-old young professional has become a topic of discussion on social media these days. Despite earning around Rs 82 lakh annually, he feels uncomfortable in pursuing certain hobbies. While sharing about his financial situation on an online forum, the young man said that his job is good, his savings are also strong, but he has to think twice before spending big on concert tickets, theater shows, branded clothes or any special occasion.
Every month’s budget is creating pressure
The youth told that he spent a lot in the initial months of starting the job, but later started making a systematic budget. A large portion of his income goes towards rent, student loans, utility bills, food, travel, clothing and other essential expenses. Although she has strong savings such as a retirement fund, health savings account, and emergency fund, she still feels that she does not have enough money left for personal hobbies and entertainment. He says that he wants to buy something expensive by saving money for several months, but every month the fixed budget is almost completely spent. In such a situation, making any purchase of $300 or more seems difficult. While sharing his budget details on Reddit, the young man said that-
I’m 26 years old, live in a very expensive city (VHCOL) and my annual gross salary is $95K. After deductions like 401(k), HSA, and health insurance, I make about $3900 per month. My monthly budget is something like this-
- Rent: $1668
- Student Loan: $800 (with $750 minimum EMI; total interest at 6.5% on $32K and 7.5% on $16K)
- Utilities: $80
- Cat/Pet Expenses: $120
- Gifts: $60
- Subscriptions: $70
- Travel: $80
- Clothes: $75
- Eating out: $130
- Small hobbies/custom purchases: $180
- Grocery: $150
- Healthcare: $50
- Moving/future shifting expenses: $200
- Charity: $250
The young man told that I keep money aside every month in some of these categories (like healthcare, moving expenses, gifts and some pet expenses), so his balance gradually increases. But the categories where I want to buy something big for myself, like a nice $300 dress shoe, are often 90%-110% of the money spent by the end of the month. The result is that savings do not accumulate and it becomes difficult to make big purchases. The good thing is that I have never gone over my budget overall. On a macro level my savings are fine, I also have $40K in a 401(k), $6K in an HSA, and about a 4 month emergency fund. There is also an expectation of receiving a bonus of approximately $10K every year. My plan is to invest it all in a Roth IRA. But there is also a fear in the mind that after restraining oneself from big expenses for the whole year, one might be tempted to spend some part of that bonus. The real problem is that I’m good at saving overall, but I find it difficult to maintain discipline by budgeting by category. So, is there any way that I can save better even in small budget categories and buy a big thing once in a while without feeling guilty? See post below-
People told the real problem
Responding to the post, many people said that this is not a problem of earnings but of financial planning. One user advised that if one has to buy a concert ticket or any expensive item, then a separate fund should be created for it. Such expenses can be prepared for by keeping a small amount aside every month. Some people believed that the young man had set very low expenditure limits in many categories. In such a situation, it is natural for the budget to be breached again and again.
Balance between savings and life is important
Financial experts often say that it is not only wise to save, but it is equally important to enjoy life. What is needed is that the person strikes the right balance between his goals, savings and desires. This case shows that having a high salary does not always mean financial freedom. Proper budgeting, clear priorities and planning for the future decide how much you will be able to enjoy your earnings.