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Bills Before Frills: Budgeting and Money Basics

Learn how to create a budget, save for emergencies and your future when you’re just starting out.


Key Takeaways

Managing personal finances doesn’t always come naturally, but you can learn basic budgeting and money skills to help.

Though it sounds basic, one of the most impactful money skills may be creating a budget. It is foundational to managing your money.

Learn budgeting basics and other money tips to help manage your finances if you’re just starting out or even if you’re not.

When you first start out on your own, managing money and the concept of finances may seem intimidating. That can be particularly true if your family didn't talk much about money. The more you know about personal finances, the better you can be at managing them now and in the future. And it may start with something as basic as creating a monthly budget.

Saving Well, Budgeting Basics Fall Short

Even if managing money isn’t your thing (yet), there is good news for Generation Z and millennial generations. Those in your age group actually do better than your older counterparts at putting money away for the future.

The availability of 401(k)s with automatic enrollment features can and has helped your generations start sooner and save more than Generation Xers and baby boomers did.1 If you haven’t joined the 401(k) or retirement plan at work club, now’s the best time to do it.

Managing daily finances may be a slightly different story. One in four Gen Zers say they lack confidence in their financial knowledge and skills. And only 30% have a monthly budget to manage expenses.2

Budgeting skills may be especially important now that inflation has made the cost of living higher. Higher prices, combined with higher interest rates, can make it more difficult to purchase a first home. And renting is more expensive than ever too.

On the positive side, the numbers show young adults like you are eager to learn. Not sure how to become more financially confident? Or need to learn money or budgeting basics to stay on track with your finances? Here’s what to know.

Choose Trusted Sources for Basic Money Tips

You can’t learn without trying—so talk to your parents or friends. Most young adults say they get their financial information from their parents. There are also several other ways to become more financially versed, including through social media.

Gen Zers are nearly five times more likely to say they get financial advice—including stock tips—from social media than adults in their 40s or older.³

The key? Make sure “finfluencers,” or influencers who offer advice, tips and information about a variety of financial topics, are a trusted source. It can be hard to know who’s one. One way is to look at a person’s qualifications and their motivations. Also, do some research to see if what the person says aligns with other more traditional sources.

You could also follow a money blog or podcast that explains concepts in an accessible way. Or join an online personal finance forum to learn about financial concepts.

Learn How to Create a Budget

One of the most elementary but important financial skills is budgeting (and having the commitment to stick to it). Armed with a budget, you can see where you’re spending, know where you could possibly find extra money each month and set savings goals. Budgeting can be a keystone to financial security.

To track your spending, write everything down by entering it into a budgeting app or online tool. Then categorize the expenses. If you want to go old school, you could track your budget using pen and paper or on a spreadsheet.

Whichever tool you choose for your monthly budget, it’s essential to build a detailed plan and track expenses. Many online and app tools can sync with your bank accounts to monitor spending in real time.

Next, allocate what you need to cover fixed costs like rent, utilities, groceries and car payments. A simple but effective budget for beginners is to use the 50/30/20 budget rule. That’s 50% for essentials, 30% for personal and 20% for savings and debt reduction.

How much you need in each budget category can vary depending on living and housing costs where you live and whether you’re paying off student loans or other debt. Want to make sure you cover all the bases in your budget? Check out our budget worksheet to get a good idea of what should be included.

What if Your Budget Falls Short?

If you fall short of savings goals or have difficulty whittling down debt, your budget can help you figure out where to potentially trim expenses. For many people, subscriptions like movie and music streaming services or gym memberships can bust the budget, especially if you’re not actually using the services on a regular basis.

You could look for less expensive ways to still enjoy movies and working out. Your local library could have resources for free videos, music and books or e-books. Or maybe you can swap out a gym membership with an exercise app. You might also reduce your food budget by cooking more often and eating out less.

Build an Emergency Fund

Saving for an emergency is essential for your financial well-being, even though many people don’t like the idea or feel it’s too difficult to save that much money for “what ifs.” And you’re not too young to have an emergency fund.

While about 56% of Gen Zers4 and 37% of millennials5 say they don’t have an emergency fund, here’s why you should consider this a financial priority. Unexpected costs like a car repair, surprise medical bill or job loss can put a major dent in your finances. And an emergency fund can help you avoid using credit cards to pay for the unexpected expense—and save you the headache of going into debt or more debt.

A general guide is to save enough to cover three to six months of your living expenses. Putting money aside for emergencies may feel challenging, but even if you can only save $50 or $100 per month, that’s something.

Make it automatic and add to your emergency account before you spend money on fun extras. Try our savings goal calculator to see how small amounts can add up.

An emergency fund cushions the financial impact of unexpected costs.

Choose Cheaper Ways to Have Fun

Once you’ve set a financial goal, you might need to say no to budget-busters. Saying no to an impromptu invitation for sushi with friends is hard, so budget a bit of money for going out. That way you don’t have to say no all the time, and you can still keep your spending in check.

You could also suggest a hike or a potluck instead. The goal is to eliminate budget creep with unplanned spending, not put yourself on a starvation diet.

Deal With Debt While You’re Young

Credit card debt has reached all-time highs for Americans, including younger adults. From 2022 to 2024, millennial credit card balances increased by 65%, and Gen Zers' balances grew by 50%.6 With those higher balances also come lower credit scores that can impact how you obtain credit in the future for cars and homes.

Paying off high interest debt (like credit cards) can help your financial standing, so it’s important to tackle the debt as soon as you can. A basic but effective way to do it is to reduce what you spend and avoid buying high-priced items on credit.

Another option? Increase your income. More Gen Zers and millennials choose to work extra hours or obtain a side gig to pay off debt. Using that extra income to pay down credit cards (and not spend more) can help put your finances in a better place. Other options like balance transfers or consolidation loans can be used. However, a key to any of these options is to change your spending habits.

Invest for Your Future

Dealing with today’s financial needs may seem like enough to tackle, but saving for your future should also be a priority. That’s because more time investing in the markets can make a big difference in what you may have for your future.

Use our future value calculator to see how an investment today can add up for your future.

Investing can seem like the great unknown and with today’s higher prices, you may find it hard to find extra money in your budget for the future. A workplace retirement plan is a good place to start because it’s easy to save from your paycheck, and chances are you won’t miss the money that much.

However, if your employer doesn’t offer a retirement plan or you’re doing gig work, it could feel more difficult to invest. There are ways to save on your own, such as in an IRA; it just may take more discipline. Or you could set up an automatic investment from your bank account to take the guesswork out of when to invest and avoid spending the money on other things, because as everyone knows, something always comes up to spend money on.

Another important thing to know is "what" you should invest in. A potential option for younger people is a robo-advisor because it’s usually inexpensive and easy to start. You can get a recommended portfolio by answering a questionnaire about your goals, timeline and how you feel about risk.

These can seem like complicated topics, so another option is to speak to a financial advisor who can help you develop a financial plan, including recommendations for what to invest in for your age and your goals.

Basic Money Skills May Require a New Mindset

Money skills aren’t rocket science, but for some people it can feel that hard. Oftentimes dealing with money is more emotional than rational. That’s why habits about money can be tricky to change. Everyone has a money “script.” People pick up financial messages from their families when we’re very young, which shape their attitude toward finances.

Some are vigilant about money, operating from a scarcity mindset ruled by anxiety. Others just spend what they have or are afraid of missing out on what friends are doing. Once you understand your subconscious attitude toward money, it may be easier to change your habits.

Financial Consultant Addison Schubert
Addison Schubert

Financial Consultant

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Ok, Boomer: Retirement Prospects for Younger Americans Actually Look Bright, Investment Company Institute Viewpoints, February 2024.


Gen Z least financially confident generation: survey, New York Post, March 2024.


From loud budgeting to girl math, here’s what you should know before taking financial advice from TikTok, CNBC, January 2024.


56% of Gen Z doesn’t have an emergency fund—here’s the first thing you should do to build one, according to a CFP, CNBC, November 2023.


I’m a Financial Expert: How Much Money Should Be in Every Millennial’s Emergency Fund?, February 2024.


The credit card crisis is worse for millennials and Gen Zers, Business Insider, March 2024.

You could lose money by investing in a mutual fund, even if through your employer's plan or an IRA. An investment in a mutual fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.