LEXINGTON, Ky. -- Before newlyweds Dan and T.J. Nickolich were married, they did something a lot of young couples in love don't do: They made a detailed budget.
They didn't -- and still don't -- have a lot of money to work with. The job market has not been good to them, and Dan, 24, hopes to go back to school this fall to do graduate work in political science. T.J., 23, baby-sits when she is not at the University of Kentucky working on a degree in individual and family development.
"With money not being in abundance," Dan said, "we knew budgeting was going to be a top priority."
The slow economy and shrinking job market mean budgeting is that much more important for the Nickoliches and others like them in the twentysomething crowd. Gone are the days, financial experts say, when recent college graduates could go ,, out and spend a bundle on stereos, cars and entertainment. The 20s crowd needs to tighten its belt like everyone else.
"Everybody needs to look at their overall picture," Lexington, Ky., financial planner George Pierce said. That should include a look into the future, which is probably the biggest challenge for the twentysomethings.
Some budgeting basics are the same for people of all ages -- setting goals and determining priorities. But people in their 20s face a challenge because they have large start-up costs, including furniture, transportation and deposits for apartments and utilities. In taking care of the monthly bills, one of the most important chores of money management gets lost -- saving.
"It's easy not to think about the future; the future is the next vacation" when you're in your 20s, Mr. Pierce said. "You're thinking about TVs and stereos and CDs. We've had a very prosperous 30 years, and everybody is spending like the next 30 are going to be the same."
Well, maybe not everybody. The Nickoliches watch every penny, they said. They live in a small apartment in an old building, limit themselves to one meal out a month and seldom make long-distance calls. They never shop for groceries without a list and coupons.
"There are a lot of things we'd like to have," T.J. said, "but you have to make sacrifices in the beginning."
The Nickoliches said their parents and older friends have taught them the importance of budgeting.
The Nickoliches are moving in the right direction, financial planners say.
They are budgeting and saving, as opposed to spending as if there's no tomorrow.
"Financial decisions are also lifestyle decisions," Mr. Pierce said. "I think people need to be more aware, think more about the economy."
First, people should look at their monthly net income, then look at monthly net expenses. Some advisers recommend devising a budget using percentages -- setting aside a certain percentage for rent, a certain percentage for food, etc.
One of the biggest mistakes for the 20s crowd is spending too high a percentage on cars. "What I see when they come to me, their budget has just got way too much in cars," he said. "It's real easy for them to overcommit on transportation."
The amount allocated for transportation should be figured after other key costs -- such as housing, utilities, savings and retirement -- are figured.
Housing should be no more than 25 percent of monthly gross income. Savings should account for 10 percent of gross income. And even though retirement seems eons away when you're in your 20s, people in that age group should set money aside for the long haul.
There is no fast rule on the amount younger people should put into retirement. But they should try to take full advantage of any job-related benefits, such as a 401(k) plan.
Like all people, twentysomethings need a cash reserve of at least three months' income. Spending money on frills should be deferred until the reserve is secure.
"That is hard to do when popular culture has told them to spend and acquire," Mr. Pierce said.
That could be the single biggest factor working against people in their 20s -- spending rather than learning to save.
"Some people are waking up and doing something about it, and other people are just rolling right along," Mr. Pierce said.