How to Make (and Keep) a Budget After Graduation
If you’re a young adult who just graduated from college, making financial decisions on your own may be overwhelming. Real world bills are knocking at your door.
Two months ago, I graduated from the University of Delaware with my bachelor’s degree, and I understand this fear. I started managing my finances early, but I know it’s not easy no matter when you start. Whether you’re an incoming college student or new grad, here are a few budgeting tips that may calm your nerves:
1. Create a Budget
The life of a new grad can be unbelievably busy. You have a new job or are looking for one, you’ve moved, or you’re expecting to move. It’s understandable you may not want to add to your stress by having to document and calculate everything you’re spending.
But, it’s an important first step. Start by conducting a straightforward accounting of your likely income and anticipated expenses. If you have student loans, be sure to anticipate your upcoming payments. Most student loans offer a six-month grace period after graduation before payments begin. Use the U.S. Department of Education repayment estimator to explore repayment options and factor your future student loan payments into your budget.
If developing a monthly budget is too big a task, break your bills down by pay period and make a general bi-weekly budget. You can also try Navient’s free budget calculator. It compares what your budgeted cost was, to what you actually spent, so you can recognize where you went over and modify spending habits early.
2. Don’t Shop Until You Drop
Understanding the difference between something you need and something you want isn’t as clear as you think. Determine your needs, or what you must have to survive — like food, rent, and clothing — and what you would like to have, but do not necessarily need to survive, like entertainment and travel.
You can use a number of tricks to meet your needs and wants. Next time you want to go shopping, clean out your closet first. I take the clothes I don’t wear to a secondhand shop and sell them back for cash or credit. I use the money towards a new outfit without spending new money or racking up unnecessary credit card debt.
For more tips, check out Navient’s Money Saving Tips. Some of the ideas are so easy you’ll question, “Why didn’t I think of that?”
3. Simple Doesn’t Mean Boring
You may feel you need to do more in life than just work and pay bills. You’re totally right. Though you need and deserve to be happy that doesn’t mean every weekend needs to have exciting outings, and having debt doesn’t have to affect your ability to build a life.
That’s the advice of Navient’s interactive video about budgeting. Part of the Path to Success series, the budgeting module is free of charge and available to anyone. It includes tips on separating needs vs. wants; the difference between fixed costs (housing, food, and basic clothing) and variable costs (entertainment, expensive clothing and the latest gadgets); to more in-depth content, such as budgeting ratios to help you achieve your goals.
For example, it suggests you may have to decide between making home-cooked meals and going out to restaurants. When I go out to eat, I look for places with half-off appetizers and suggest my buds and I split a couple of them.
I also allow myself one weekend a month, or every other month, to actually go out and enjoy an activity, but I keep it in budget. You don’t have to say no to your friends when asked to see a movie or grab dinner. Instead suggest a movie marathon, or seeing a movie during the day when tickets are discounted.
4. Monitor Your Spending Habits
Finally, be sure to keep track of your finances. Check your bank account daily via website or phone app. You’ll get a constant reminder of spending and may see your balance decrease from non-essentials.
I actually have two bank accounts. One account is to pay essential bills, and a second account includes excess funds for the fun stuff. Also, it ensures the essentials will always be paid before the nonessentials.
Being an adult brings on so many new challenges, but you need to remember you’re not alone. Managing your money is a matter of will power, prioritizing, and being creative. It’s like any other challenge. Don’t be afraid to ask for help.
Heather Gries worked her way through college as a part-time employee at Navient and recently earned her bachelor’s degree.