A Post-Grad Guide to Budgeting and Finance

By Sam Casteris on June 13, 2018

You’ve done it. You’ve graduated from college. You’re on your way to becoming independent, living on your own, getting your own job, cooking your own meals, shopping for your own clothes, paying your own insurance, finding your own gym, paying bill after bill after bill after bill. Yes, finally graduating from college is liberating, but it’s also fair to admit that it can be pretty intimidating. You’re going to have a dozen new responsibilities now, and even if you have parents to fall back on, juggling finances and budgeting is something everyone has to learn to do eventually.

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What even is budgeting?

Budgeting is actually rather straightforward: it’s just a plan for your money. You can make it complicated, layering in percentages and tax expectations and expected increases—or you can make it simple and just jot that where your money is going and how much you expect for a monthly/regularly anticipated expense to cost. Once you start learning more about budgeting, you can jazz it up a bit and explore different ways of budgeting, like zero-based budgeting, rolling forecasts, beyond budgeting, and percentage budgeting.

How do I budget?

Spreadsheets, the drain of teenagers everywhere, are an adult’s best friend. Not only are they a physically neat and conveniently packaged why of displaying information, spreadsheet software actually manages the calculations for you. Input things correctly and all you’ll need to do is ask for the sum to see how much you’re paying for a particular expense in a certain time period and how much you might save if you cut out another expense. Spreadsheet budgets are particularly helpful for people who have multiple income streams or have jobs freelancing because you’ll be able to go into more detailed expense charting.

What expenses should I expect to pay?

Expect expenses to vary for everyone, but the basic expenses you should prepare for include rent, car insurance, renter’s insurance, health insurance (including life insurance), utilities (water, internet, electricity) and groceries. Under groceries, you’ll want to include any household supplies like toiletries or cleaning supplies. Depending on some of your more recent life choices, you’ll also have student loan payments and either a car loan or public transportation expenses.

Car expenses should be a separate entry that includes fuel, regular oil changes, maintenance, and parking permits, if necessary. To keep car expenses to a minimum, find a used car that won’t depreciate as quickly as a new one. Get a loan you can afford from a reputable bank and make payments every single month.

You should also give yourself an allowance for entertainment, restaurants, clothes, shopping, streaming services, haircuts, monthly subscription services, and gym memberships. Got a pet or planning on it? Add in pet food and pet insurance (and your dog walker, if you have one).

Although it’s not exactly an expense, you should definitely add a line for your savings and retirement. As every financial planner will tell you, it’s important to start saving as early as possible, even if you’re just squirreling away $20 every month. And while you might not need to do so immediately, you’ll hopefully become skilled enough at budgeting that you’ll need to create a line for “investments,” so that your money can start making money for you.

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Messed up your budget?

It happens. No system is perfect, and the chaos of ordinary life sometimes throws us off. If you find that you’re constantly failing your budget, maybe you should try using a program that automatically tracks your spending or a digital personal finance tool that’s more in line with your spending style. You can also use the “cash out” method to make sure you don’t overspend on certain categories. For example, if you’re routinely overshooting your entertainment allowance with trips to escape rooms, simply withdraw the cash equivalent of your entertainment allowance at the beginning of the month and limit yourself to that amount.

Budget Maintenance

One of the number one mistakes people make with their budgets is not maintaining it, or just setting it and forgetting it. Even if you stick to your budget religiously, you need to update it on a regular basis to account for changes in your spending patterns. Maybe you decide to stop spending so much money on subscription services. Maybe you received a small pay raise and want to divert that money to a good place. Equally important to maintenance is knowing that you’re going to mess up. Part of the reason you have a budget is to actualize your relationship with money.

Goals

The most important part of budgeting is setting and meeting your financial goals. If you don’t have any financial goals, overspending gets easier and easier, and you’ll see fewer reasons why you should try to stop overspending. If you’re fresh out of school, one of your top goals will be becoming debt-free. Once you’re nearing that summit, maybe you’ll decide to set your priorities on buying a home or saving enough money to go on a life-changing trip around the world. Having a budgetary goal gives all the small sacrifices you make, from saying ‘no’ to expensive coffee to getting all your furniture from IKEA, worth it.

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