- My name's Elsa.
My biggest problem right now
is just budgeting in a big city.
Four years ago, I moved to LA.
I wanted to see if I could stand on my own two feet.
I feel extremely blessed
for everything that my parents provided,
and I think they did whatever they could.
They pretty much always told us, "Don't go into debt."
And, "Don't put stuff on the credit card you can't afford."
But that, realistically speaking,
you can only do that for so long when you're on your own
and you have to pay for stuff and you have to charge it.
I think one of the things that never really crossed my mind
was the cost of living,
I wouldn't even think of looking at the prices.
I called my mom and I'm like,
"Milk and chicken are so (laughs) expensive in LA."
I'm like, "What's going on?"
The bills just come and I pay them off,
and I hope it works out.
(coin jingling)
- Hi Elsa, my name's Jean Chatzky.
I am a financial expert and the CEO of hermoney.com.
And I was once just like you.
I moved to the big city and I didn't have any money at all,
so I had to learn how to budget.
The way we budget is first by knowing what's reasonable
for certain amounts of money
to be devoted to certain expenditures in our lives.
So for your housing,
you don't wanna spend any more than 35%.
For transportation, no more than 12 and a half percent.
If you've got debt that you're working on repaying,
like student loan debt and credit card debt,
that gets another 12 and a half percent,
25% goes to your overall cost of living.
And then if 15% is the money that I want you to try to save.
And I know that that sounds like a lot of money,
and you're probably not there yet,
but you wanna try really hard
to work your way up to that level
'cause that's your money for emergencies.
That's your money for your future.
If you need to borrow from any category for any other,
if you're not spending the full 35% on housing,
and you wanna spend a little bit more on general living,
totally fine, but savings is sacrosanct.
You don't want to see that money going down.
I want you tracking your spending.
You can use an app to do this, like Mint.
You can use pencil and paper to do this.
Your bank may have tools that help you do this,
but basically you wanna follow the flows of your money
so that you know where your money is going,
down to the dollar.
That's gonna enable you to make changes
about where your money should be going
in order to get you in line with that budget.
And just one hot tip, pay extra attention to food.
Many people find that just between eating out,
take out, groceries, they spend more money on food
than they ever, ever expected.
Good luck.
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