Finances & Money

Is hardcore budgeting at age 19 frugal, cheap, or SMART?

I got an email from a reader. Let’s call him Bruce:

Hey Mike!

I’ve got one burning question for you, btw I thoroughly enjoy the down-to-earth style of the way you post news.

I am currently 19 years old, but I am definitely already concerned about budgeting and keeping track of things. Of course my impatience gets to me.

Here it goes:

Should I honestly be worrying totally about this sort of thing so young?

I get a lot of flak from people my age and older about enjoying my life so young etc etc, and I make a considerable amount of money and get enjoyment out of feeling mature, accomplished, and financially well set..

Let me know! Thanks!


Here’s my condensed response. I’d also like your feedback too!:


If only I had your discipline when I was 19. Not knowing your specific situation, like how frugal/cheap you may be, I can only make assumptions. I understand what you said about your friends wanting you to “enjoy your life”, because to them, that means spending money. However, you can spend money and enjoy yourself, but still keep a budget for those expenses.

You’ll see on a number of personal finance sites that there is a difference between Frugal and Cheap. To be frugal means you plan ahead. To be cheap means you sacrifice a lot even to save a little.

Keep up with the saving and budgeting. It will only help you later in life (1, 5, 10 and more years from now) when your friends are whining about their car and credit card debt. I’m one of those friends. I left college with $20k in credit card debt and the same in student loans, then I went and bought a $20k car before I even had a job offer. And then 9 months later, I traded it in for a more expensive car and lost $6500 on the trade-in. I was dumb.

Don’t be dumb, but have fun.

What is your advice for “Bruce”? Were/are you in his situation? How do you manage to have a fun and exciting life while still being fiscally responsible?

Oh yeah, did anyone get the Monty Python reference?

About the author

Clever Dude


  • If you’ve got money, you have to manage it or it will manage you. Another way of saying it is you have to tell your dollars where to go. That’s what a budget is: a spending plan. If you don’t plan your spending, you will be worrying about where to get money or how to pay your debt when you are older. Start now while forming habits is easy.

  • I say having a keen understanding of your financial situation that young is not a bad thing! I am only 20 and can relate 110%!!

    BUT, what I do think though is to make sure you DO HAVE FUN along the way. College is an amazing experience If you go that route, and being at our age man is what makes life so exciting! So, what I found is to keep myself financially sound and smart, but also have as much fun as humanly possible at the same time. If you find yourself burnt out from thinking about finances, it is time for you to go to a party and laugh with some friends. Just my 2 cents though!

  • Save or Enjoy Life?

    Does it really have to be so black and white? (I love this part) NOPE! Saving and planning for a future are surefire ways to be able to always enjoy your life. Bruce seems to have his head on straight. If he is making pretty good money now (just wait till later when the money really comes in), there’s nothing wrong with budgeting some fun too. In fact, not doing so in your 20’s can make a bitter, bitter, 30 year old- 40 year old, etc. There’s more to life than having a bunch of money, and Bruce should be able to celebrate the rest of it. -IN MODERATION-

  • I always said 10% of your money should be set aside for fun. Although we don’t have many details for as how much he makes and what are his expenses are.

    But as you said— To be cheap means you sacrifice a lot even to save a little. To be frugal means you plan ahead

  • Howdy Bruce! I’m currently 27, and right around your age I began thinking short-term and long-term about my finances, which allowed me to buy my first house when I was 25! I saw my friends around me making terrible financial decisions, and it was a major wake up call for me. Here’s a couple of tips I can give you, while still being able to enjoy yourself.


    Make a clear financial goal, and allocate how much money you can spend on certain categories… here’s how: for 1 month save EVERY receipt for everything you purchase. This includes food, fun, car, bills, etc. Now that you have some numbers in front of you, it will be much easier to break down each of these categories and see what you can lower or completely eliminate. What are your long term goals? Do you want to buy a house? If so, start a second high-interest savings account (like the ING Direct online account, which I use) and put $x in every month using an ACH withdrawal so you’ll never forget about it. Every 6 months, take that entire savings account and put it into a CD. The CD will make a slightly higher percentage than the high-interest savings account. Don’t put all of your money in a CD because there are penalties to get it out early, always have a few hundred bucks (or a few thousand, if you think you’ll need it) available in your main savings account for emergencies. If possible, move all of your money to high-interest accounts like the ING Direct checking and savings accounts… may as well make some money off your money!

    Start an IRA now while you’re young (or 401k if your company offers them), and put as much as you can into it every month… you won’t see this money until you’re 60, but you’ll be so glad you put it there. If your company offers a 401k with a salary matching plan, put as much into your 401k as they will match… for instance, if they’ll match 4% of your salary, put in AT LEAST 4% of your salary so they will match your input.

    Build credit… get a few credit cards, use them to pay for things you buy on a regular basis (food, gas, etc.), and pay off the card IN FULL before it’s due date (don’t let the balance carry over to the next month, the interest will be insane). Never buy anything on credit that you can’t pay off before your next due date. If you’re going to buy a car with cash, get a loan and immediately pay it off to avoid paying interest. Your credit score is calculated by how much credit you’ve had in your past, how much you owe now, and how much income you pull in. Better credit scores will get you a lower finance rate if you are buying a house.

    Eliminate (or lower) unnecessary expenses. For instance, I canceled VCAST on my cel phone plan (saved $15 / month). I was using NetFlix with the 3 DVD plan, I moved it down to a 1 DVD plan (saved $10 / month). I no longer have cable TV (it was $60 / month!), I just catch my favorite shows at friends houses, or online for free… has all of their shows for free the day after they air, has all of their original programming for free (sometimes days before they air). There are tons of other unnecessary expenses you can drop.

    When you turn 21, you and your friends will want to go out to bars and drink. I’ve seen friends rack up $200 bills really fast and just throw it on their credit card. Offer to drive, it will save you tons of cash. Or, drink lightly. Or, if you really want to get hammered (and let’s face it, some nights you will want to), take a few pre-bar warm up shots, or even bring a flask. Watch your drinking, expenses can add up really fast, not to mention the health risks involved.

    NEVER EVER drink and drive. Despite the obvious safety concerns, it is insanely expensive to get a DUI. My friend has two DUIs, and has shelled out more than $15,000 in legal fees, fines, alcohol classes, getting his car out of impound, his insurance skyrocketed, he lost his job because he had to do 12 days in jail (and had to move in with his parents), etc etc etc. Worst comes to worst, call a sober friend or get a cab (keep these numbers in your cel, or a piece of paper in your wallet). One night I met some friends at a bar (I drove), and my friend offered to drive me home so I pounded a few cheap pitchers… my driver ditched me because he got in a fight with his girlfriend and left, so I called my parents. They were upset at first, but the next day they were like “we’re so glad you called us”.

    Avoid the latest technology. The older stuff works just as good. I have a Pentium 3 computer running Linux, I won’t have to upgrade for years!

    Learn Linux! It’s free, and there is a lot of free software for it. I use The Gimp for touching up photos, Open Office for email / calendar / spreadsheets / etc, and the possibilities are endless. Checkout Ubuntu Linux, excellent build and very easy to install and configure. Checkout

    Scour Craigslist, eBay, and thrift stores for things you need to buy. I buy 100% of my clothing at thrift stores (except shoes, which I wait for sales to buy), and I have scored some really nice business clothes and ski clothes from thrift stores (yes, skiing is my financial vice, but it is in my budget that I created when I was 20… I have spent close to $5000 on skiing in the past 7 years or so). I also got a free bike off Craigslist and fixed it up, and I ride it everywhere.

    Do as much free fun as you can… I bike, hike, and Frisbee Golf like it’s going out of style. I go to matinee movies, and I ski on “college night” with my *gasp* expired college ID which I have removed the expiration date.

    Never buy a new car. As soon as you drive it off the lot, it loses 15 to 20% of its value immediately. Get a used car with at least 10k miles on it, because it has already depreciated its maximum value. Depending on how many miles you drive per year, you should get a car with the highest mileage possible. Personally, I need a low mileage car because I drive about 30k miles per year for business.

    If you can avoid it, don’t buy your car at a dealership or car lot. Look for cars in the newspaper, Craigslist, eBay motors, etc. BUT, and this is important, always have a mechanic inspect the car before you buy it, and always make the seller show you 100% of the maintenance records. Important things to consider are: has the oil been changed on time, has the timing belt been changed and when will it need to be changed (most cars need the timing belt changed between 90k and 120k miles), and has it been in any accidents that damaged more than the body? If you don’t know a good mechanic, checkout Carmax, they inspect their cars thoroughly and provide a fair price for their service.

    If you buy a car from a dealership, never buy their extended warranty… it is always way more expensive than a warranty that you could get from another place. I bought a used Prius from a Toyota dealership, and since I financed through my credit union, I bought a much cheaper extended warranty from the credit union (it was less than half the cost, but with the same benefits).

    If you buy a car from a dealership, they may try to offer you financing through them at a slightly lower percentage… tell them that you’ll only finance through them if they offer you a cash back incentive (let’s say, $500), then the next day go refinance at your credit union, then BAM you got yourself $500, and you can still finance through your credit union and get the credit union’s warranty.

    Don’t eat out (unless it’s a social thing). Learn to cook!!! Cook with fresh ingredients (I buy organic veggies, which I know are more expensive, but they really are better for you), avoid frozen / prepackaged / precooked / pre-anything… they are always more expensive than their fresh counterpart. Always keep a well stocked pantry with dried pasta, brown rice (don’t buy white rice, it’s bad for you), oat meal, veggie oil, vinegar, sugar, flour, dried beans, spices, and checkout for pantry tips. With meal planning and a well stocked pantry, my fiancée and I only spend about $25 per week on food for BOTH of us! Oh yeah, chicks love a guy who can cook…. TRUST ME ON THIS

    Buy store brand. It’s the same stuff, just cheaper.

    Buy vegetables in season. Believe it or not, there ARE winter veggies (sweet potatoes yummmmm). Checkout

    Start a veggie garden. I have a small balcony (5×8), but it’s enough room for a productive container garden. I don’t have much sunlight, so I grow shade veggies (lettuce, broccoli, garlic, kale, summer squash). I got all of my planting containers (pots) for free when I posted a WANTED ad on Craigslist… I got like 15 responses! I get free compost from my parents, and I buy a cheap potting soil from Home Depot. I got my seeds in bulk from like 3 years ago and I have yet to restock on seeds.

    Things you’ll need to be a successful chef: sharp knife, decent cutting board (nothing fancy, a plastic one with rubber feet works great and they’re cheap), and as much “Tupperware” you can gather so you can avoid throwing out food… eat leftovers! They’re free!

    Watch Craigslist for free appliances… I got a nice blender for free, and I use it several times a week.

    For emergencies keep at least 5 gallons of water around per person in your house (I have 15 gallons for me and my fiancée), and keep ~1 weeks worth of non-perishables for like canned veggies, canned fruit, canned soup, dried everything, but avoid eating them… every 6 months or so, eat some of your emergency food and replace it with new stuff. Canned stuff will keep forever as long as it’s not punctured. Again, buy store brand.

    Don’t buy coffee at coffee bars like Starbucks or Caribou, they are making a killing on their markup costs. Get a cheap coffee maker (they all do the same thing, you don’t need anything fancy), or try to find a free one on Craigslist, and buy your coffee in bulk and freeze whatever you’re not using.

    I decided to stop eating meat, and I saved almost $100 / month. I still eat meat if it’s served to me at a friend’s house or something, but meat is damn expensive! Fair warning, if you stop eating beef, DO NOT EAT IT EVER AGAIN! After about 4 months of not eating beef, I ate a delicious burger at In and Out on a business trip…. huge mistake, I was backed up for days… gross. No other meats seem to cause such serious constipation, but beef definitely will, and this has happened to a few of my veggie eating friends.

    I hate to be a negative nancy, but “peak oil” will be a serious problem. Never heard of it? Checkout for a well balanced presentation of the impending energy crisis. Once gas prices sky rocket, it might be a good time to seriously stock up on non-perishable food, and start riding a bike to work. My parents are totally prepared for peak oil, they have a year’s supply of canned food in their crawl space, and a 500 gallon water storage tank. They are really smart folks, not paranoid in the least, and peak oil is a very valid concern that will have major impacts on the economy.

    If your friends rip on you for being thrifty, just snap back with something like “well you can enjoy that brand new PS3 on credit, but I’ll buy a house in 2 years and I’ll still be playing my Wii which I bought with CASH”

    And last but not least, if you are considering a major financial decision, whether it be now or 5 – 10 years from now, consult with a financial planner. If you know someone you can talk to for free, great, but if you need to pay for it DO IT!!! They will be able to help you plan your accounts SOOOO much better than you think.

  • oh one more thing, research research research! i use google, wikipedia, and bloglines like crazy. you can learn everything from how to haggle a car price to how to properly grow an organic balcony garden… yay internet!

  • living life has nothing to do with being frugal or cheap. you can spend money, you can spend lots of it, if you have a plan for the money part of your life. The whole purpose for having a financial plan (i.e. budget) is so you CAN spend money. spending wisely or frugally is really a matter of personal value and relativity. So long as you can afford it then who really cares. The idea is simple: live within your means so you don’t go in debt.

    set near, mid, and long term goals based off of your current income. Then budget towards these goals. it’s as simple as that. goals are both want and need items and there is no reason you cannot, should not, could not spend on either. your savings toward these goals should be based off of your own risk assessment, not anyone else’s. probably the only thing i agree with ski freak is to do your research. then make a judgement based off of your research and your values.

    there is no reason you cannot buy a new car or the latest and greatest thing or have a latte every day, so long as you plan and budget for it. does it make sense based off of pure numbers? No, but nothing in life makes sense for anyone else but you. Remember, it’s your money and your values. If it fits your budget, then who really cares. i personally love having a latte or capuccino with an oatmeal raisin cookie at the coffee shop. I like reading a newspaper or just spending time with my wife at a coffee shop. i like the ambience, i like the fact it’s not in our house, i like the fact i can watch people. i’m still meeting my financial goals, and we can afford it, so why not.

    i love having a new car. i keep them for a long time, which is probably why i like a new car when the old one dies. does it matter that it depreciates the instance i turn the key? No (really if you keep it until it dies, it really doesn’t make any difference. if you are quick to change over cars, yes, i’d argue to buy used), but did i plan for it and can afford it? Yes.

    Again, I cannot say enough that regardless of the advice people give you about how you should spend your money, it is basically that: the way they would spend your money. I’m not saying these aren’t good tips, they are, but just mirror them up with what you want out of life whether it be a comic book collection, a weekly walk through an art gallery that charges a fee, a trip to vanuatu, or a snow cone.

    it’s good you are planning ahead. most don’t and have to play catch up the rest of their lives.

  • Holy moly Ski Freak (and Tim). Thanks for the detailed advice! Either you copied an article you wrote or you were really psyched about helping. Either way, good advice!

  • Bruce, you’re fine. In fact, you’re better than fine. I admire people who pay attention to their money, rather than putting on blinders when it comes to their finances.

    And why is it everyone thinks finances aren’t fun? I don’t get that… I have tons of fun with finances! Who doesn’t love money?

  • That sort of discipline at such an early age is unheard of. All I can say is keep it up. The great thing about saving at such an early age is that you have so many years to compound your earnings.
    You don’t have to give up having fun and yet you can still end up way ahead of the game later on in life.

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