I used to be a financial planner, so I have dealt with the budgeting issue a lot. Most of the resistance is along the lines of: "It's too much trouble." We don't like delaying gratification in our culture.
Having said that, DH and I don't budget ourselves, except in the most general way. Nor does MMM. What we did, when we were working, was save off the top. We would have savings goals, and once we reached those, we did whatever we wanted with the rest of our money. When others were budgeting, we were optimizing. We bought used. We learned how to make our favorite restaurant dishes at home. We carried lunch to work. We went to Europe when DH went for work and tagged on a vacation. We paid for airfare with frequent flyer miles. We sent the kids to public school and state universities.
For people who do not like to budget, I recommend what we do: track spending for a number of months, then analyze. Identify problem areas and adjust. If, in the future, savings goals are not being met, repeat. Our "budgeting", such as it is, attempts to forecast major expenses over the next decade or so.
You sound very similar to my husband and me. However, when we were younger and newly married, we DID budget. We needed the structure of a budget at that point in our lives. As time went on, we internalized the budgeting, we reached agreements on what's okay/not okay to spend ... and now it's automatic.
Most people will need the structure when they're just starting out /learning.
Some people will ALWAYS need the structure.
For me, it's the emotional minefield. I have a hard time separating math from it's implications in my life. Yes, reducing my restaurant budget from $250 to $100 gives room for a $250 car payment (for example; I've never had a car payment), but the numbers have so much emotion- the restaurants are FOMO, the car payment is is social status, reflecting on both can make me feel socially isolated, etc etc. To manage my finances, I had to learn to manage my emotions so that I could see the numbers clearly.
Personally, what really helped with this is doing the case studies for other people. That way it wasn't MY numbers, or MY excuses. So maybe bring them an example from another student, or one of your friends, or ask for a volunteer's budget, something. That way, they don't have to dive straight into their OWN budgets, which can be overwhelming and is laden with meaning past the simple math that underlies personal finance.
Hope that helps! What you're doing is really, really awesome.
About the eating out vs. saving: You have to find the sweet spot between saving what you ought to be saving for TOMORROW ... and also living a life that's comfortable and rewarding TODAY. For one person, that might mean eating out occasionally, for others it's an expensive car or an expensive house. Some people set their budgets too low, fail, and then throw their hands up, saying, "I knew it was impossible!"
The folks who humble-brag on this site and put down anyone who's ever spent a dime that wasn't absolutely necessary fail to realize that most people aren't going to "make it" long term on a Spartan budget that allows for no unnecessary spending at all, and it's better to encourage a realistic budget.
I also agree with your suggestion to analyze other people's budgets. It's easy for me to see that you're overspending on this or that. It's harder for me to recognize that
I can't afford -- oh, whatever item.
I think one of the most important life lessons to learn at that age is that everyone wants your money. Teach them to see commercials for what they really are: ploys to get your money.
Good idea. A surprising number of people simply aren't tuned into a business mindset /can't see the reality behind the pretty commercial.
Something that comes to mind: I was reading a vacation website not long ago, and a certain company was offering a hotel discount /vacation package to teachers. Someone wrote in saying that the company should be offering such a package to some other profession -- I'll say it might've been fire fighters. This person could not understand that the company
wasn't trying to reward teachers (though they made it look that way in the adverts); rather, they were marketing towards a group that would probably be planning vacations in the upcoming summer months. Far from being a gift, it was an attempt to sell, but a BUNCH of people were so short sighted that they couldn't see that.
It should have been set up as the 50-20-30 budget because it's easier to explain that way, and it would also help reinforce the concept of savings better. I'll explain the costs in 50-20-30 order.
50% (max) Needs and Committed Expenses
20% (min) Savings and Early Debt Repayment
30% (max) Wants.
Yes, I've always thought that plan is a good "starting point" for a young person, and it's what I've been teaching my own two children. It works for a new adult who isn't used to having a real paycheck: You want that top-of-the-line new cell phone? Sure, you can have it, but once you sign the contract, it becomes a committed expense ... so when you agree to that spend, you're lessening what you can pay for your first apartment and your car. My soon-to-be-nurse daughter will
genuinely need scrubs and shoes with good support, but going-out-on-weekends clothes should come out of the wants category.
I think this plan is ideal for a young person because it allows them some of their wants, because it forces them to address their priorities (for today and for tomorrow), and because it gives them a sense of control over where they spend. And it "grows with them": As their pay increases, so does the amount they deposit into savings.
Some people will need to keep this chart in front of them all their lives, while others can use it as a learning tool and then begin to "wing it" as they become adept at budgeting.
I'm going to put in a plug for the swear-filled MMM posts.
I'm a Christian, and I went to a small Christian liberal arts college. These students are no strangers to swearing. But nearly all personal finance advice is dry, stuffy, boring. When these Christian kids hear MMM's language, they will sit up and take notice. A guy who makes personal finance interesting, but has a few swear words? Yes please!
I disagree. I find MMM's writing (and perhaps his personality) rather off-putting. He's arrogant and foul-mouthed. I don't think I'd like him on a personal basis. I totally agree with his ideas, but they're hardly unique: Plenty of other writers have addressed the same material -- his is biased towards early retirement, a topic that isn't likely to resonate with college students (after all, they're working hard to get into the work force -- few of them are going to throw themselves heart and soul in to that PLUS the idea of leaving early). I'd suggest offering a variety of reading options.
Two books come to mind right away -- I enjoyed them both, though they are so different:
- Nickel and Dimed by Barbara Ehrenreich. This author set out to prove that a person earning only minimum wage simply cannot make it in America today. She details her several months-long experience working at Walmart, as a waitress, and at a nursing home. In each case, she found that her minimum wage job did not pay enough to allow her to stay in a cheap-o hotel and eat fast food value meals each day. When she became sick, she cheated on her plan and took out money from her before-experiment savings account to get medical care. She proved her point: She could not survive on that pay.
- Scratch Beginnings by Adam Shepherd. A college student read the above book, didn't believe it, and he set out to show that he COULD "make it" at minimum wage, without the benefit of his college education. After graduation, he left his hometown on a bus and went to a new city with $25 in his pocket. He lived in a homeless shelter, worked as a furniture mover, sought out opportunities for free food, and took extra work whenever he could find it. Within a year, he had amassed enough for an apartment and a vehicle. He learned to cook, and when he injured his foot, he kept working in spite of the pain. He proved his point: He could make it on that pay.
You could do a great class exercise by having half the class reach each book (both are quick reads and entertaining, though Nickel and Dimed is quite whiney),
then discuss WHY each one failed /succeeded. My own college daughter read something about Scratch Beginnings and was thrilled to learn that I already owned the book. She was then motivated to read the other book as well.