Leaving college often means the start of a new job, student loan debt to pay off, new living arrangements to pay for, and other new expenses to cover. All of this means your finances will likely need an overhaul. It’s time to create your post-college budget.
If you’ve been working with a budget throughout college, you’ll already have the concept down pat. You’ll want to rework the numbers, though, to incorporate your new expenses, as well as your new salary. If you’ve floated by on a wing and a prayer while in school, you’ll have to start at the very beginning as you build a workable budget to manage your finances.
In either case, these tips can help you create your first post-college budget.
1. Use a personal finance app
Let your smartphone do half the work for you by downloading a personal finance app, like Mint or YNAB. These apps make tracking expenses and sticking to your monthly budget almost effortless.
2. Make your student loan a priority
If you’re like most college graduates, you’ll be leaving school with a lot more than a diploma in hand. The average U.S. college student graduates with a student loan debt of $32,731. The thought of a loan that big can be overwhelming, but don’t make the mistake of putting your student loan on the back burner. Instead, as you work out your post-college budget, prioritize student loan debt and maximize your monthly payments as much as possible.
3. Research your post-college living expenses
When leaving college, you’ll be facing a whole slew of new expenses, and it can be difficult to calculate how much these new expenses will be. However, a bit of research can give you the answers you need to make your budget work. Find out about the going rate for apartment rentals in the area you’ll be living in and incorporate that expense into your budget. If you’ll be using public transportation to get around, take the time to work out how much that will cost, too. You can also ask some friends who’ve already made the leap to the after-college world to help you work out what utility bills, food costs, and other new expenses might look like.
4. Leave room for mistakes
Most budgets are created by reviewing your spending of the past few months and working out an average amount for each monthly expense. Now, since you’re trying to create a budget to cover new, anticipated expenses, it’s natural to make some mistakes in the calculations. Leave room for error so you have extra cash to fall back on in case you underestimate those new expenses. You can re-evaluate your budget after a month or two and adjust as necessary.
5. Budget in some fun
You’re likely feeling super-responsible as you work out your first budget to use in the “real world,” but it doesn’t have to be all work and no play just because you graduated college. Be sure to leave some room in your budget for things like entertainment costs, dining out, and vacations. You don’t want to face burnout when you’re less than a year out of school. Budget in some fun!
More from the Banking Simplified Blog:
All You Need to Know About Checking Accounts
7 Money Myths You Need to Stop Believing Now
Your Turn: Have you worked out a post-college budget? Share your tips with us in the comments.