One thing that changes most after graduating from college is finances. After graduation, you secure your first job and start getting an income. Any mistake at this point can ruin your entire life. This is why you need to immediately start budgeting after graduating from college. Otherwise, you will spend more than you are earning and start living in debt.
How to start budgeting
The first step to start budgeting is figuring out your take-home income. The second step is anticipating expenses you should include in your budget. This can be difficult especially if you were living with your parents. Living on your own comes with more expenses. But no need to worry. We have provided a list of 8 things that you should include in your budget after graduating from college.
After graduating from college, you may choose to move out of your parents’ house. This means you starting spending on rent and utilities. As part of your budgeting, you should ensure you spend as little as possible on rent. But, you must still live comfortably. You should spend less than 25% of your salary on rent and utilities. Look for a cheaper but comfortable house. You may also consider places where utilities are included in rent. Alternatively, you may choose to live with a roommate and share the rent.
You have moved out of your parents’ house but you have to eat. So, spending on food is inevitable. But, it is not time to overspend on groceries. Some people get excited at stores only to throw some items they couldn’t consumer on time. The excess items go bad and have to be thrown out. This is equivalent to throwing your hard-earned money away. Shop for only what you need per month. Don’t go overboard. You may consider having a grocery list or meal planning to control spending on groceries.
Consider cheaper phone plans to reduce overspending on your phone bills. If not controlled you can spend over $100 per month on phone through calls, texts, and data. But, with cheaper plans, you can spend even $15 per month for calls and texts with no compromise on quality.
You have to include your debts in your budget. You need a plan to repay your debt such as student loans. It is important to pay all debts as quickly as possible. Paying debts faster will help you save on interests. If you take longer to repay your loan, you will spend more on interest.
Sometimes an accident can happen. So, it is important to always have a health insurance plan. This can help you in paying medical bills. So, you have to include health insurance in your budget especially if you are not under your parents’ cover.
Saving is not easy especially after graduating from college. Most people wait until they are older to start saving. Be wise. Start saving now. The best way to do this is by budgeting the savings. It doesn’t matter how much you start saving. What is important is saving regularly. Set the amount you will be saving per month. When you make saving a persona goal, it becomes easier to achieve this goal. These savings can be of great help during emergencies.
Budget for entertainment? Yes, you should include entertainment in your budget. It is important to have fun. But, it is more important to have fun within your budget. You need to save more but still live a better life. Allocate enough money for your entertainment. Again, don’t go overboard because you think you are entitled to entertainment. Just spend enough on fun life experiences. This can pay off with great memories.
It is never too early to start investing. Budget for investment money. You may start by buying stocks or bonds. Investing early means your money will have more time to grow. Most people regret investing their money too late. Be different. Start now and live to tell of a great decision.
Stick to the budget
It is one thing to make a budget and another to stick to it. So far, you have done a good job by making a budget. But, the hardest part is sticking to it. You need the willpower to live on a budget especially just after graduating from college. You have to exercise self-control. Know when to spend money and when to save it.
Also, be ready for some changes in your budget. Some costs will vary over time. This means you may have to revise your budget. The most important thing is learning to spend your money correctly. Saving more for tomorrow is a better idea. If you want to avoid financial stress, always be aware of how you spend your money.
You now know some of the expenses to include in your first budget after college graduation. Make your budget now and set yourself up for a successful life.