Creating A Post-Grad Budget



For most people, the first budget they will ever have to make comes shortly after graduation. That's because in college they either get allowances from their parents (some of whom can be very flexible) or often don't have a steady income, such as myself. I was a waitress throughout college and because of that my income varied quite a bit from week to week. Without really knowing how much I was going to make, I couldn't properly budget, and went through those years spending as little as possible while picking up extra shifts at the end of the month if I needed to make some more cash.

Luckily, now that I have graduated this is less of an issue. At least for the summer, I know exactly how much I will be making (and hopefully I will have something waiting for me when the summer is over). Thanks to this steady pay, and the fact that I need to focus on paying off my student loans as quickly as possible, I knew it was time to sit down and make a real budget that I would have to stick to as closely as possible.

I am fortunate enough to have parents who are very open about their finances and very helpful when it comes to mine. They are always open to answering any financial questions that I have and when I asked about making a budget quickly pulled theirs out for me to see. While there are many different budgeting methods such as the envelope method, my parents used a simple spread sheet, and I ended up doing the same. I have it saved on my google drive so I can pull it up from any computer or my phone whenever I need it. Of course, you can use any method that you want, but here I will be explaining the method that I use.

This is my blank budget for these two weeks. I make around $400 per week after taxes so I estimated my budget at $800 for the two week time period, and any extra that I make on top of that will go directly towards my loans. Housing and utilities are zeroed out since I'm housed by my work program right now, but I wanted to still leave the categories in there. I also like having a blank medical category in case something unexpected comes up. However, as you can see I budget for most of my money to go directly towards my loans, since I'm currently trying to pay them off as soon as possible.


The Time Frame
First of all, I make my budget bi-weekly. My parents do it monthly which works for them because they don't plan on leaving their jobs any time soon. With my job being only a 10-week program, the monthly schedule wouldn't have worked out as well. Setting it up as bi-weekly allows me to start a new budget when the program ends.

How long you want to make your budget is up to you. If you are the type of person who will spend the maximum amount of money you are allowed to on the first day, you should probably make a shorter budget. The important thing is that you have it synchronized with your pay schedule in some way. For example, if you are doing a weekly budget, and you get paid bi-weekly, you need to make sure you are only budgeting for half that paycheck.

The Categories
Each person's categories are going to be very different. For example, my parents had a category for our dog. I, on the other hand, don't have a dog, so it would be pointless for me to have that category. To make the different categories it is best to look at your finances for over the past few months and look at what you paid for. Even though I'm not paying for utilities this summer since I'm living in corporate housing, I still made a utilities category since I may be paying for them soon afterwards. I think that it's generally good to list things in terms of importance as well, with things like Rent, Utilities, Car Payments and Insurance towards the beginning and things like Eating Out towards the very end. This way when you break down the budget you are looking at things in the order that they should be paid, and can fill up the less important categories with whatever is left over.

Also, don't forget the little things! Gifts, for example, was a category that I never thought of having until my mother pointed out to me that I usually have to buy at least one person a gift each month. Between everyone's birthdays, fathers day, and mothers day, it can really throw off your budget if you haven't planned for them. Even if you're great at DIY'ing presents, it's important to have this category each month for buying supplies or cards. 

Zero Your Budget
I've already mentioned David Ramsay in my post on how to tackle your student loans, and this method that I use for my budget also comes from his book. Dave suggests that everyone should have an emergency fund (for real emergencies only) of around $1000, and then after that, you should be zeroing out your budget. This means, at the end of the month (or two weeks in my case) you should have zero dollars from that check left. In this way, you're putting the maximum amount of money possible towards paying off whatever debt you have. Of course, this changes once you are out of debt, but with most post-grads in some sort of debt from student loans, car payments, or credit cards, I'm writing this budget with debt in mind.

In order to zero out your budget you should start figuring out how much each of these categories really costs you. Start from the beginning of your list (which is why I said to put the most important categories first) and look through old payments to find out what you're paying. Things like rent should be easy, but maybe utilities changes a little, so assume that it will match the highest bill you've paid so far. Go through and fill out these categories until you have zero dollars left in your budget.

Now, look at what you have. Maybe after all of your bills you still have $100 left over. That's great! But you probably just put it right into your "Eating Out" fund, right? Because I said that you can use the leftovers for the fun things. But do you really need $100 of eating out each month? It's likely that you don't. And it would be a lot smarter to move that over to pay off your student loans, or car payment, or credit card debt. So go ahead, cut that $100 down to $50 (still a lot, in my opinion), and there you go! You have $50 more dollars per month to put to paying off your debt on top of your minimum payments.

Stick To Your Budget
Once you've planned out your budget, stick to it! Make sure that you're entering in all of the money you spend, whether you do it daily, or just weekly. Save all of your receipts and go through your debit card transactions. And remember, it takes some getting used to. My first two weeks on my budget I went way over on groceries without realizing, so I had to cut back elsewhere for those weeks. But I didn't change the budget the next week! I tried harder to cut back on what I was buying, look for more sales, stop buying so many snacks. I figured there was no reason why I should need more than $75 for two weeks of groceries, and I'll do what I have to to stick under that amount. Give yourself some time to get adjusted.

Don't forget that this budget isn't flexible. If you managed to spend less this month on utilities than you had planned for, that doesn't mean that the extra money should automatically go into your "Eating Out" fund! All of the extra money that you have at the end of your budget should be put towards paying off your debt! In this way, you can keep paying off small amounts of money, and you'll be way ahead of your scheduled repayment. And like I said, once you're out of debt this entire budgeting system can change!



So far I'm less than a full month into budgeting and it's still taking me some getting used to, but it has definitely changed the way that I do things. I am a huge coffee drinker, and I love checking out different little coffee shops in town. I used to try to go as often as possible, and now I limit myself to once a week. I've also had to cut back on eating sushi (so expensive! but so delicious) and learn how to pack some creative lunches while at the office. But I don't really miss these things as much as I thought I would. I still allow myself to go out to dinner once every two weeks with my Eating Out budget, which is definitely enough. I could honestly probably cut it back to once a month and still be okay. I'm mostly just proud of myself at the end of the budget when I see that I have money left over that I can put towards my loans.

If any of you have suggestions for other methods of budgeting please comment below! I would love to have some tips on how to make this system even better!

Liz Cipriani

My name is Liz and I'm a 22 year old with a B.S. in Wildlife Conservation. I love beer and fashion and exploring the outdoors, and am currently figuring out how to do all of the above on a post-grad budget.

6 comments:

  1. SO FANTASTIC! And rare, I'm sure. How great that your parents are so transparent with you about finances and helpful to you with yours. You are on the right track. So impressed!

    ReplyDelete
    Replies
    1. Thank you so much! It's nice to hear good words about my budgeting because most of my friends just think I'm crazy!!

      Delete
  2. This is very important many people don't like to speak about their finances

    ReplyDelete
    Replies
    1. Thank you!! I really think that you have to be open with people to really help them.

      Delete