Am I overspending?

I am 22 years old. I started a new job about six months ago. I totaled up my deposits for a total of $26,402 from Jun 22 - Dec 22. I gave $5,590 to pay off federal student loans and $362 for a state loan, leaving me with $20,449. However, to date I have $11,104 in savings. I also have a credit card bill of $1,372.

This is my first full time job and I do pay things like gas, bills, groceries, and other payments, however, I am unsure if I am over spending in other departments (shopping, miscellaneous expenditures). I do like to go out to eat with friends so I think that could be an issue. I live with family so I do not have rent to pay.

How much should I have in savings to be financially sound? Do you think I am overspending and how can I fix my problem now before this affects me in the future?

Debt, Financial Planning
Answers
Sort By:
Most Helpful
January 2018

Let me start by congratulating you on your ability and initiative in paying down your student debt! In addition to paying down your debt, you have a healthy savings account which isn't something a lot of recent college graduates can say. The best way to figure out how much you're spending is to track your spending with a budget. I like to do this using the mint.com app which can be linked to your credit card, bank account, etc. You can track your expenses on a monthly basis and tailor your budget into categories until you find consistency in your spending. Once you find a number that seems to be consistent I would recommend establishing an emergency fund that is 6 times your monthly expenses (you may already have this in your savings) since you only have one income source. As for your credit card bill, it is perfectly fine to charge expenses on your credit card, so long as you pay the balance off at or before each due date. I would not recommend carrying a balance forward on your credit card as the average interest rate is ~17%! All in all, continue to pay down your student debt while you don't have a rent/mortgage payment, pay off any credit card balance in full, track your spending to establish a budget and invest the excess cash into a retirement plan like a Roth IRA to start saving for your future retirement.

P.S. If your employer sponsors a 401(k) or other qualified retirement plan, enroll as soon as you can!

January 2018
January 2018
January 2018
January 2018