5 Tips for Budgeting Post-Graduation

Contributed by: Clare Lilek Clare Lilek

Graduation season can be a whirlwind of exams, parties, job interviews, parties, endless nights fueled by caffeine, and more parties. Once the adrenaline and celebration subsides, however, and when reality comes hurtling towards you at full speed, it’s helpful to have your finances in order. Life after graduation can be exhilarating, partly due to the uncertainty, but don’t let uncertain finances take the fun out of adult life.

Here are 5 simple tips to keep in mind when creating your post-college budget, as you prepare for a *hopeful* increase in monthly income:

  1. Whether you’re working at a fast food chain or a Fortune 500 company put 10% of your salary away into what I like to call a “No Touch Savings.” This is a savings fund for emergencies only—in case you lose your job, or your car needs major repairs, or just for when life happens unexpectedly.
  2. Divide your bank accounts into sub folders: Emergency, Travel, Bills, Fun Money, etc. Put money away each month into the various buckets and don’t dip into other buckets. Pro Tip: Make sure you’re allocating the appropriate percentage of funds to each bucket—your fun money bucket probably shouldn’t have a higher deposit rate than your bills bucket (well not yet at least).
  3. Cut out unnecessary spending. When you’re first starting out on your own and creating a budget, it behooves you to be as frugal as possible. If you’re buying coffee and breakfast every day, cut that out of your spending and try to do your early morning routine at home. See how far your salary actually takes you each month first and then add in luxuries, as long as your savings do not suffer.
  4.  Write it out. When drafting up a budget, with your subfolders, savings, and planned spending, write it out on paper. It helps to physically write out your spending and saving goals. For the first few months under your budget, make sure to write out your actual spending and saving as well. See how closely your goals align with your spending reality and make adjustments as necessary. It helps to physically see how much you’re spending to know where you can eventually save.
  5. Set spending priorities. Watch out for superfluous spending on items or experiences that aren’t really important to you, but don’t be afraid to splurge on the things that truly matter. Save as much as you can, but remember to find joy in what you choose to spend your money on, or better put, spend money on items and experiences that truly give you joy.

When creating and following your budget, use the method that best suits you and your style of living. Some people prefer paper and pen (including myself), others excel spreadsheets, and more recently, a growing number of people are using applications and websites. If you need a larger system to help you create and stick to a budget, I suggest Mint. It’s a website and an application that helps you track spending by linking to your bank account. Find what works best for you and stick to it! Consistency is key.

Joining the adult world can be an amazing experience but comes with a rather large learning curve. As you, your children, or your grandchildren begin professional careers post-graduation and start to receive an increase in monthly earnings, remember to take it slow and follow some simple guidelines. You never want to end up over your head, fresh out of college.

Clare Lilek is a Challenge Detroit Fellow / Client Service Associate at Center for Financial Planning, Inc.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Clare Lilek and not necessarily those of Raymond James.