Wednesday, March 27, 2013

Budgeting Life After College

Being out of college and in the 'working world' can be a scary thing.  You're on your own, or almost on your own, and you're at that point where you need to balance the things you want versus the things you really need.  Chances are that you didn't get that dream job you always wanted and the salary of your first post-graduate job may not be enough to make ends meet.  So how do you survive life after college?  Welcome to my world and trust me when I say a budget will be your new best friend.  So sorry to all of you out there that find this boring, but never underestimate the power of an independent woman, or man, with a budget!
Your budget is something personal based on your own individual saving goals.  This is not about me making a generic budget for you but me helping you create a budget that makes sense for your needs and goals.  I hope it helps you start the process of budgeting, prioritizing your finances, and get you on the road to finding what works for you.  Woohoo, budgets are so exciting! *sarcasm*

Getting Started:

One of the biggest things you have to think about about before you plan a budget is what are your biggest/most important expenses?  I decided to save money by living at home, and as my mom cannot afford to help with my loan payments she kindly offered to pay my car insurance and cell phone bill to help me save money making my major expenses: gas, student loans, visiting my boyfriend, and plans to move to Spain.  Now being that chronic worrier that I am, I worked two jobs my senior year of college anticipating my expenses this year and saved enough to pay for all my gas and student loan payments for this year...but what about next year?  And the years after?

What Are Your Goals?

After graduation I had to be a 'boring' adult-ish person and create a budget.  There are tons of different budget templates you can find all over the internet but it can be overwhelming to find the one that is a perfect fit for you.   First, you have to know your goals and what it is that you really want.  Obviously gas and student loan payments are a necessity that will have to be paid at one point or another.  But travel is also as important to me, just as is making long distance work with my boyfriend.
To stretch my salary to cover these things I knew I would have to curb my spending and make sacrifices.  I allow myself around $50-$60 a month on spending and have to make constant choices on when to splurge or save; I rarely go out and spend money on food or drinks, I can count on one hand the amount of times I go shopping in a year, and if I need a trim I ask my dad.  Sometimes it stinks when I have to say no to friends and it has definitely changed some of my friendships with people who may not understand I don't have the money to spare.  But you just have to stick with the plan, right?  It will all be worth it in the end, right?  Excuse me while I sit and pull out my hair...

How Much Are Your Expenses?

It all depends on what you have in mind for that 'end' based on your goals and major expenses.  My ultimate goal is to move to Spain with one of the programs I applied for and teach English.  In the long run it would allow me to be closer with my boyfriend, have a more consistent job, and put me closer to the places I want to travel.  This forces me to look into the future, I'm working to save for next year so that during next year I can save for the year after that.  While my budget looks forward at where I want to be the next couple of years, it is by no means 'long term.'  Most of my 'savings' are being saved for use over the next year or two, not for things like a house one day or retirement.  If you're like me and don't have long term saving goals yet, you still have to at least glance into your future to plan your budget.  Maybe you don't want to travel, but you want a new car or to live on your own?  Estimate those costs and plan accordingly on how much you will need to save to make that happen.
As for my future and hopeful move to Spain: you can get paid pretty well with the programs but have to pay for rent, utilities, food, cell phone, transportation, travel expenses, necessities, etc.  And some of these programs have a history of not being paid on time, so I would need to make sure that if I am accepted that I have money saved to pay my expenses in Spain and my loan payments.  Past participants have recommended bringing enough money for the first three months of expenses, and since I hope to be in Madrid that's roughly $4000 (rent, safety deposit, utilities, food, transportation, and spending) + the flight there (one-way roughly around $450).  That's quite a good chunk of money I'm saving up for, not to mention the around $2500 a year for my student loan payments.  (Yikes!)

How Much Do You Make?

Now that you know your major expenses and what goals you have to work towards/save for, the next step is knowing how much money you make and if it will be enough.  If you have a yearly salary, lucky you, then you can estimate the amount you make per month, remembering to anticipate the taxes and such that will be taken out.  Unfortunately, many of us recent graduates aren't always lucky enough to have a job that pays a yearly salary.  I am one of those grads that makes an hourly wage and it certainly does not help figuring out how much I make each month especially with hours changing monthly and substitute teaching being so inconsistent.

Again as a chronic worrier, I over planned and initially set up my budget for the entire year by underestimating the amount I take home per month to keep me from having any nasty surprises. The plus to this is I never overspend and it's a killer surprise every month when I see I actually made a few hundred more dollars than I originally planned.  Winning!  Now to work out how much I make for each specific month I keep track of all of the hours I work at my different jobs (the joys of an hourly wage) to more accurately estimate the amount I take home.  Once I have the anticipated hours I work for the month I calculate my gross income and then subtract the amount that will be taken out by taxes and any other fees (I know this by looking over past paychecks and determining the percentage that is taken out for everything).  And voilà, you can anticipate how much you will make!

[Now remember to include in your budget some leeway for emergency funds.  You never know if you have to go to the doctors, or your car breaks down, or you get abducted by aliens.  Surprises happen all the time and the best thing to do is have some extra money saved to dig you out of an unexpected hole.]

Is It Enough?!

Ah the moment of truth for any budget.  Will you have enough to afford your hopes and dreams?  Or will you become that disillusioned and bitter adult years from now thinking, if only I did this...  Just kidding though.  That doesn't have to be you!  What's the worst case scenario, you don't have enough to do all you want right now and you have to put something on hold?  You are never without options: re-prioritize your expenses, look into your goals, or get another job if you can.  As I said before, you may have to sacrifice things to curb your spending but if it's for something you really, truly want then it will be worth it.  Remember to stay positive and know that most new graduates struggle with finances for a while, keep your head up and keep doing what you do until you love what you do.
I have people ask me how do I make it work for me?  How do you travel so much?  How do you afford it?  Well, I work my a** off.  I have three jobs, work at least six days a week, and am already looking for jobs I can take during the summer when school is out and I can't sub or run the after-school program.  I make it work because I want it so badly.  Sometimes it looks bleak but you just have to hold onto your dreams, even when someone tells you to grow up.

Concluding Budget Tips

  1. Know your biggest expenses
  2. Have saving goals and plans
  3. Prioritize your spending and prepare to have to make some sacrifices
  4. Think about the future/estimate costs
  5. Know how much money you make and have to work with
  6. Have an emergency fund, no matter how small

How is life after college treating you?  Any great budget tips you live by?


  1. I agree. The first few years after college will be all about financial juggling, particularly if you took college loans. However, I consider it great practice for after I’ve settled my debts. It’s a good way to curb the spending habit and saving money for upcoming rainy days.

    Bobbi Burtch

    1. I feel the same, even though I have to sacrifice things now I just see it as good practice for my finances in the future.