All My Worth
I will begin my career in a few weeks. Within in a ten-day span, I will have graduated, moved my family halfway across the country, and begun work in a prestigious company. That means going from working a campus job ten intermittent hours per week to forty full hours per week. I will be going from an extremely low-paying job to an extremely high paying job.
My new career has brought up two major concerns that have been on my mind for the last few months. First, how do I keep focused on the clock for forty hours a week; how do I maintain enthusiasm and fight boredom? Second, how do I handle all that new money that passes through my pockets?
I have solved the “problem” of increased income. After studying Dave Ramsey’s The Total Money Makeover and the Warrens’ All Your Worth—both extremely recommended books—I have decided to make a beautifully simple budget for our family. The budget contains a little “gazelle-like intensity” from TMMO, but is primarily from All Your Worth, mostly because it does the least amount of penny counting.
All Your Worth suggests a budget based on a 50-20-30 balance of Must-Haves, Savings, and Wants.
Must-Haves, weighing in at 50% are anything that you have to pay for, even if you have lost your job. House payments, basic food needs, insurance, and any legal or contractual obligations are Must-Haves.
Savings, pulling a hefty 20%, include retirement funds, debt re-payment, and traditional savings.
Wants is guilt-free money. Do as you please. Internet, vacations, clothes, and eating out are all Wants.
Because I am coming straight from college, with minimal student debt, and no oversized house or car payments, I can live with “gazelle-like intensity” and skew my Must-Haves and Wants into Savings. I am projecting a budget with the ratios 36:47:17. My student loans will be paid off in two months, and we will be well on our way to saving for a house and retirement.
The idea of percentages percolates down into the Wants category. We gave 50% to the whole family, 20% each to my wife and me, and 10% to our son. With our new income, 3.3% of the monthly income (20% of 17%) is huge to me. It is extremely simple. We have no complaints.
I encourage everyone to get a copy of All Your Worth by Elizabeth Warren et al. from your library. It presents an excellent method to get and keep your wealth in balance.
Thursday, July 17th, 2008 @ 9:54 pm 
personal, professional
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July 18th, 2008 at 2:57 am
dude, I hear you man, it’s an interesting “problem” to be facing, especially growing up as we did.
I like your adapted 20×30x50 plan though, looks like a good approach. Especially smart of you to go in with a budget and not just rely on big paychecks to make all the worries go away. Good luck on the move/change/adventure, let me know where you end up brotha
July 18th, 2008 at 8:40 am
Sounds wonderful. Harv Eker, a multimillionaire in his book, “The Secrets of the Millionaire Mind” says to break the savings into two different catagories. Long term savings and short term savings. You invest 10% of the savings for your long term savings and never touch it. The short term savings is for your wants, car, freezer, etc. So, you have 50% for necessities, 10% investment, 10% short term, 10% tithing, 10% education and 10% or less play. Both he and Alex Mandossian say that if you don’t play you will sneak into your savings to do it. Alex says the point of work is to play. So every couple of months he takes a weekend off and he and his family go play. He says it makes work worthwhile and stops the boredom. Have fun!!!!!!!! Love ya
July 19th, 2008 at 2:14 pm
MOMO:
The 100% that I am using is net income. So tithing and income tax have already been taken out. With All Your Worth that leaves about 22% of gross income for Wants (internet, dating, non-basic foods, what have you).
Al:
I’ll be in downtown Seattle, which is awesome. I loved Seattle when I was there last summer.
July 19th, 2008 at 8:13 pm
You’re a man with a plan. My advice (and it’s Clark Howard’s and I believe Dave Ramsey’s as well) when you start your job, sign up for a 401k. Donate enough to get the employer match, if they offer it. It’s free money from your employer! An IRA is good to have too. Good luck little bro!