Learn How to Budget Your Money Right Out of College

If You Just Got Out of College Learn How To Budget Right

When 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 Budgeting

It'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:
  1. 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.
  2. List all the expenses you have that are guaranteed for every month.
  3. Decide how you're going to allocate any extra money you have every month, which is your disposable income.
Expenses will vary from person to person, but here are some typical expenses:
  • Rent or a mortgage payment
  • Car insurance
  • Groceries
  • Gas
  • Utilities, such as water and power
  • Internet service
  • Health insurance
  • Cell phone service
Certain expenses are easy to record. For example, your monthly bill for cell phone service will likely be the same from month to month. Others, such as groceries and utilities, can vary a bit. Once again, you can go with your best estimate here. After you've been paying these bills for a few months, you can look back and see how much you average for them.

Your First Payment Should Be to Yourself

Here'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 Immediately

There are two big reasons that you should save money as soon as you get out of college:
  • An emergency fund
  • Your retirement nest egg
An emergency fund is money that you save to avoid going into debt when an emergency happens, because they will happen at some point. Your car could break down, you could have a health problem, or you may lose your job and be without a source of income for an extended period of time. Now, there are ways to get money quickly in times of need. You could get a title loan no vehicle inspection and use your car's value to borrow money. We offer an online Texas title loan application if you need quick cash. But it's best to save money diligently and keep your debt to a minimum. Let's look at the second thing you need to save for – retirement. You may think it's a bit silly to worry about saving for retirement when you've only just graduated college. Compound interest is why the sooner you start saving for your retirement, the better. It may not seem like a big difference now whether you save right away or in a couple years for your retirement, but the way money compounds means that it will make a huge difference decades down the road. Your retirement fund could be tens of thousands of dollars greater, or more, just because you started putting money into it when you were 24 instead of when you were 29 or 30. If you want to build long-term wealth and keep yourself in a comfortable financial situation like with a Texas car title loan, the best thing you can do is learn budgeting when you're out of college. You'll be glad you did later.