College Life

When you thought you couldn’t get any more broke than you were in college…

You may be finished with college, but don’t ditch the shoe-string budget habits just yet. With living expenses to consider plus paying for that shiny degree, life post-grad is expensive too. Read on for budgeting tips to start your financial future on the right track. We’ve given you some guidelines for common budget categories along with the kinds of expenses you can expect to have and how to spread your dollars a bit further. Our recommendations go hand-in-hand with a FREE financial planner you can snag below.

Housing should account for 20-35% of your net income.

  • Rent or Mortgage: Since these costs vary considerably by city and neighborhood, look for a home that fits your budget. If your property taxes aren’t included in your payment, be sure to budget accordingly.
  • Security Deposit: This is usually equal to one month’s rent. Ensure you get your deposit back at the end of the lease by cleaning and making the necessary repairs before moving out.
  • Utilities: Keep the thermostat at a moderate temperature and turn off lights and devices when you leave the room. Energy efficient light bulbs can also save you up to $65 a year. (That’s a pair of jeans, people.)
  • Cable and Internet: You may be able to save money by purchasing these services together. However, it’s probably not necessary to have the best cable package available – life goes on. Also include your Netflix or Hulu subscription here.
  • Renter’s or Homeowner’s Insurance: Some insurance companies offer incentives for paying for the year in advance rather than monthly. Take pictures or a video of your belongings to protect yourself in the event of a loss.
  • Apartment Furnishings: You’re young, so no one expects your home to look like an edition of HGTV. Also, if you have a roommate, confirm what they already own so you can avoid buying unnecessary duplicates.

Transportation should cost 10-20% of your net income.

  • Car Payment: Graduating does not mean you need a new car or a car payment. These can quickly drain your budget so be frugal and drive what you can afford.
  • Car Insurance: Some insurance companies offer discounts for good driving, having completed a driver’s ed course or having had good grades in college, even after you’ve graduated.
  • Gas: You’ll want to budget for the drive to work, trips to your hometown and gas for mileage to dine out, shop and hang out. Walk or bike when you can to save in this category and shop around when you buy gas. Don’t just get it where it’s most convenient, chances are that’s also where it’s most expensive.
  • Car Maintenance: This should cover things like oil changes, new tires and other unexpected problems you may have to deal with.

Food costs should run between 5-15% of your net income.

  • Groceries: Try to cook at home most nights because it is significantly cheaper (and healthier) than dining out. That being said, food spoilage is a common problem for budgets so be sure not to waste leftovers.
  • Dining Out: If you haven’t kicked the college coffee habit, remember to budget for those morning lattes or brew your own cup at home. Also, try to pack a lunch for work – those $6 fast food meals add up quickly.

Personal expenses shouldn’t exceed 15-30% of your net income.

Most of these are the things you could technically live without but wouldn’t want to. You may also include pet expenses, gym membership or gifts here if needed.

  • Cell Phone: If there are limits on data or text, be sure not to add costs by exceeding them.
  • Entertainment: This is your “fun money” for hobbies and any events you attend. If your budget comes up short, try to cut costs in this category and find free activities instead.
  • Clothing: Professional clothes for the new job aren’t cheap. Buy the basics first and opt for neutral colors. You can gradually add in accent pieces.
  • Toiletries & Personal Items: You might be tempted to throw unneeded items in you cart during a Target run; stick to the essentials and buy generic brands if possible.
  • Health Insurance and Expenses: Some employers offer medical insurance so be sure you know all of your options. You may also still be covered under your parents’ insurance.
  • Student Loan Payment: Aim to pay more than the minimum each month to reduce the overall cost of the loan. Also, consolidating your loans could potentially lower your monthly payments.

Charity and savings should account for 10-30% of your net income.

  • Charitable Donations: This is a personal decision if and how much you contribute and not everyone is in a position to do so. If you choose to, you might budget around 5-10% of your net income here.
  • Savings: Your savings should include an emergency fund of at least 6 months of living expenses. Once you have met this, you might budget more money into investing and less into savings.
  • Investing: You might think you are too young to start investing, but that’s not the case, you’re never too young. Young adults who start early can earn serious returns on their investments and the more you can contribute, the faster your returns will grow. If your employer offers a 401(k), do it. Contributions are taken out of your paycheck before tax, so your investment builds even faster. Some employers even provide contribution matching up to a certain amount, if that’s the case try to contribute the maximum they’ll match. To learn more, read our guide to investing.

As you’re putting your budget together your expenses need to match your income. If there is money left to spend, put it toward savings or investing. If you come up short, you may have to look for ways to trim costs. Once your budget is penciled out, it only works if you follow it. Keep your spending in check by using an envelope system where the monthly budget amount is added to an envelope by category. When the money is spent, you need to stop spending in that category. Download our financial planner below and get your budget in order.

 

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