An associate’s personal/family budget situation plays a foundational role in negotiating for a position, be it “only” a job or a career track. In view of rising student loan debt and the practice market trends discussed earlier, it is arguably now more important than ever that an associate develop a detailed, retentive personal/family budget so s/he knows fairly precisely what compensation is necessary to meet personal/family needs. Our advice is associate candidates develop a budget before beginning to look for a position. Additional information on personal budgeting is available elsewhere (for example, 23) and websites such as http://feedthepig.org.
A sample budget template is presented in Table 1. Many templates are available online, including Meet Every Dollar.24 The essential point is this: develop a detailed budget using this template or another one! And realize the budget amounts are AFTER TAX dollars, meaning the amount you actually get to “take home.” You may have a guaranteed base of $100,000, but after state and federal income tax and other taxes, you may take home only $75,000.
As any financial advisor would assert: it is vital that a “liquid” (cash available) emergency fund of 3 (for single individuals) to 6 months (for those with dependents) be established as an overall strategy in budgeting.
Table 1. Personal/Family Monthly Budget.
|Estimated take home monthly income|
|Car Replacement Savings Fund|
|Nonfood (household cleaning supplies, shampoo, etc.)|
|Gifts and Stamps/Postage|
|Personal Debt (credit cards, dept. stores, etc.)|
|Waste and Recycling Services|
|House Maintenance (repairs, etc.)|
|Mortgage Loan Payment or Rent|
|Escrow for Insurance/Real Estate Taxes|
|Replacement Funds (furnace, roof, carpet, furniture, etc.)|
|Other Insurance (could be a work benefit)|
|Health Insurance and out of pocket expense|
|Entertainment (movies, eating out, etc.)|
|Giving to Charities|
|Savings/Retirement (could be a work benefit)|
|Miscellaneous (newspaper, magazines, haircuts, sports, school expenses for children, etc.)|
|Continuing Education (could be a work benefit)|
|Contribution to Emergency Fund if Not Fully Funded|
|TOTAL MONTHLY BUDGET|