Here's the budget of a 31-year-old who wants to retire before 60 (2024)

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James Colvin started keeping a budget during his first job out of college, when he was making $28,000 a year and getting a paycheck only once a month.

"I paid everything off and needed to know what things were coming, so I didn't have something spring up on the 20th of the month when I would be low on funds," he explains.

Colvin, 31, continues to use this strategy today.He keeps his costs low and prioritizes his savings and investments.

"My dad passed away when I was younger, so I knew I was getting some money when I turned 30," he says. "The goal was to get as close to matching what I would get at 30, so it would automatically double. It trained me to have this habit of paying myself first."

Colvin works for a consulting firm specializing in nonprofits and lives with a roommate in the Philadelphia suburbs.By age 30, he'd managed to save $98,000 — close to the final $108,000 he received from his father's annuities totaling $188,000.

On top of that, he remembers, he witnessed his mother being out of work for three years during the economic downturn. "I saw the issues of always having to worry about where your money was, and I didn't want that," he says. "Having enough of an emergency fund so I didn't have to worry what would happen if I lost my job and trying not to worry about my retirement were my two goals."

Here, he shares his budget.Colvin makes $60,000 a year and brings home $3,552 after taxes each month. The budget shown here is for January 2015. He also keeps track of his net worth, which is currently $292,100.

To simplify the visual, we've consolidated his two separate gym payments ($30 and $35) into one $65 category that includes both his workout gym and his gym to play volleyball and other sports, and his two charity payments ($15 to Greenpeace and $100 to Doctors Without Borders) into one $115 category.

The "Nec" category includes things that are needed but not particularly wanted, like cleaning supplies and toothpaste. The "Misc/BLOW" category covers any expenses not otherwise categorized, like birthday gifts. "BLOW" comes from the idea that Colvin has a buffer so an unexpected expense won't "blow the budget." "Food" includes both groceries and going out to eat.

He divides his expenses into two groups: the 7th and the 21st, according to which expenses are due each time he gets paid. If he has any money left over at the end of the month, it goes towards his investments or into his vacation fund.

Categories that he sometimes includes in his budget but didn't need in January are doctor's appointments, prescriptions, haircuts, car insurance, and water. His water bill is paid quarterly and his insurance category is technically his own $50 incremental contributions that allow him to pay the bill in full when it comes due.

As for doctor's visits and haircuts, "I don't get those bills once a month so I don't budget for them, but they have a tendency to occur in a larger time frame," he explains. He likes to foresee any cost because he considers his investments and savings top priority.

"I want to know that I'm always going to have $1,500 to invest," Colvin continues. "I don't like that to fluctuate. I would rather have a bare minimum to invest and invest more than have the dream, 'This is what I hope to invest.' I want to know what I can expect out of my investments."

Those investments are for his retirement, which he hopes to achieve before age 60. He has $265,000 so far. "I invest primarily in low-cost mutual funds, ETFs," he says. "Basically, they match the S&P 500. I'm a passive investor, so I just do the market funds. I have a Roth IRA and that has $75,000, and then I have a regular IRA — which is a rollover from my 401(k) — which has $21,000. The primary $169,000 is in a brokerage account."

He also has eight months' worth of expenses saved in an emergency fund, which he contributes to through the "savings" category of his budget.

"Sometimes on budgets, people don't take into account things that could happen to them," Colvin says. "In order to be able to make the unknowns as minimal as possible, I try to accommodate for all the unknowns. I can't predict an emergency, but I can prepare to my best ability. My budget is an insurance policy on myself."

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