Learn How to Budget Your Money Right Out of College
If You Just Got Out of College Learn How To Budget RightWhen you've just graduated college, you're essentially taking that final step into adulthood. You may have already gotten a taste of it as a student, but now you're joining the real world. It may seem like life is good once you've gotten a job and you're earning a stable income, but it's important that you don't get into the habit of living paycheck to paycheck. By learning how to budget your money as soon as you get out of college, you'll set yourself up for success. Here's how to do it:
The Basics on BudgetingIt's not difficult to create a budget, especially with all the options modern technology provides. You could choose a budgeting app, you could make a budget in an Excel spreadsheet or you could just list your income and your expenses. The basic process for making a budget is as follows:
- List all the income you'll have per month, including from your regular job and any side hustles. If your income could fluctuate from month to month, go with your best estimate.
- List all the expenses you have that are guaranteed for every month.
- Decide how you're going to allocate any extra money you have every month, which is your disposable income.
- Rent or a mortgage payment
- Car insurance
- Utilities, such as water and power
- Internet service
- Health insurance
- Cell phone service
Your First Payment Should Be to YourselfHere's the biggest problem young adults have – they consider anything extra they have after paying their bills as money that they can spend however they'd like. This can come back to bit you in the future. Living paycheck to paycheck is a poor financial strategy that will prevent you from ever building any wealth. Instead, your first payment every month should be to yourself, which means before you do anything with your paycheck, you take some of it and save it. It's good to save at least 10 percent of every paycheck, but more is obviously better. Next, we'll cover why you should do so.
Why You Need to Save Money ImmediatelyThere are two big reasons that you should save money as soon as you get out of college:
- An emergency fund
- Your retirement nest egg