When you’re a new college graduate, money missteps can make or break your financial success. Following a budget template specifically designed for new grads is a great way to get and stay on the right track.
Having a budget can help you predict upcoming expenses. You can also avoid living paycheck-to-paycheck, or worse, in debt.
It may be difficult to anticipate what expenses you should budget for if you’ve never lived on your own. Thankfully, a budget template for new grads can be easy to use. You can even make changes as your money skills improve.
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How to Make a Post-College Budget
Learning how to manage your money can help you avoid financial mistakes. You can follow these steps to create a budget for college grads:
- Know your monthly income
- Determine your monthly expenses
- Look for ways to make more money
- Find ways to cut spending
In addition to spending less than you earn, knowing the recommended budget percentages by category can help you build a better budget.
Here are some common expense categories to include in your first budget after graduating from college.
1. Rent and Utilities
Any budget template for new grads should include rent. Try to have rent consume no more than 30 percent of your monthly income.
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Your rental expenses can include these costs:
- Rent
- Pet fees
- Parking fees
- Electric, gas, trash, and water utility payments
- Laundry hookups
- Internet and cable
- Renter’s insurance
Some rental complexes include utilities and amenities in the monthly rent. If you need help making rent, look for ways to increase your income.
DoorDash is an excellent choice if you need a side hustle to help pay rent. It requires minimum skill and offers flexibility to fit with your day job. You can create your own schedule and earn up to $20 per hour.
2. Student Loan Payments
Most student loans give you a six-month grace period upon graduation before repayments start. As a result, it’s vital to come up with a plan to repay them as soon as possible.
It’s typically best to automate payments because most lenders will offer a .25 percent discount on your interest rate. This interest rate reduction is an effortless way to reduce expenses.
Refinancing your student loans for a lower interest rate is another way to save money. Most lenders don’t charge any fees to refinance or pay off your loans early.
Check rates at Credible to see how much you can save on payments. Credible lets you compare up to ten lenders at once and has rates as low as 2.25 percent on a variable loan if you use autopay.
The average person saves almost $19,000 when they refinance with Credible, so it pays to check your rate.
In addition to student loans, you might have these monthly loans:
- Credit card debt
- Auto loan
- Personal loan
Since these consumer loans can have higher interest rates than student loans, you should pay them off first. Like student loans, refinancing your other debt can lower your total interest charges.
3. Groceries
Groceries are another large expense that should be included in every budget for college graduates. The USDA Food Plans projects the monthly grocery cost is between $200 and $250 for one adult.
Here are some simple tips to save money on grocery shopping:
- Shop sales
- Buy store brands instead of name brands
- Stick to your grocery list
- Use meal planning to arrange shopping trips
- Limit your trips to the store to help reduce the opportunity to spend
You can also use a grocery rebate app like Ibotta to save money. With Ibotta you can earn cash back from items you buy at the grocery store. After each shopping trip, scan your receipt to earn rebates.
Once you hit $10 in rebates, you can cash out. You also receive a $20 bonus when signing up.
4. Phone Bill
A monthly cell phone bill can easily exceed $100 per month. Your bill can include these recurring costs:
- Basic voice and text plan
- Monthly data plan
- Mobile hotspot
- Add-on streaming subscriptions (i.e., Hulu and Apple Music)
- Cell phone insurance
- Fees and taxes
Switching to a cheap cell phone plan lets you save money every month without sacrificing coverage quality. It is possible to save at least $50 per month. You are also less likely to pay hidden fees.
Ting Wireless is a perfect option, with plans averaging $23 per month. Frugal Rules readers can receive a $50 credit when signing up.
5. Insurance
This might be a “boring” category, but it is a vital part of any budget template for new grads.
Some of the most common insurance premiums include:
- Auto insurance
- Health insurance
- Life insurance
- Pet insurance
- Renter’s insurance
Increasing your deductible and having small coverage limits can reduce your monthly premium. However, make sure you’re not underinsured. Paying a few extra dollars for better coverage can give you added peace of mind if you ever need to file a claim.
PolicyGenius is a great option for most insurance needs. They offer coverage in several areas, including:
- Health insurance
- Life insurance
- Renters insurance
If you’re new to auto insurance, Gabi lets you compare quotes from up to 40 providers with one search.
6. Savings
When you make a budget after college, it’s important to start setting aside some cash for savings. Even if it’s only a few dollars, being able to save money every month helps you pay for future expenses.
Give yourself a goal when you start saving. You can work towards saving $500 and then aim for $1,000. Also, try to contribute to a 401(k) plan to save for retirement.
Saving for specific money goals can make it easier to budget. Some of those goals can include:
- A replacement vehicle
- Your upcoming vacation
- A house downpayment
Select an online bank like CIT Bank where you can house your savings and earn a decent interest rate. A CIT Bank Money Market Account earns a competitive interest rate with no monthly service fees.
You can open an account with a minimum $100 initial deposit. Your first $250,000 is FDIC-insured, just like a savings account.
7. Transportation
Commuting costs can vary from month to month because gas prices and public transit costs change. Balancing your monthly rent and transit expenses can reduce expenses.
Here are some common transportation expenses:
- Gas
- Vehicle repairs and maintenance (i.e. oil changes and new tires)
- Tolls and parking
- Public transit monthly passes
Calculating your daily commute distance and the miles you drive for errands can help you determine your monthly driving distance. From there, you can estimate your monthly gas expenses and how often you will need to perform maintenance on your car.
Depending on where you live, Uber or Lyft might be cheaper than owning a car. If so, using these companies could be a potential way to save money every month.
8. Entertainment
Contrary to what some might think, it is possible to enjoy life while living on a budget. Saving money on essential bills can ensure you have money for entertainment.
Depending on how detailed you want your budget to be, you can break entertainment down into these subcategories:
- Restaurants
- Bars
- Concerts/Festivals
- Sports games
- Movies
- Streaming plans
- Books
Since entertainment is optional, it’s a good idea to leave this category for last. You might also use sites like Groupon to save money when you go out.
9. Pet Expenses
If you’re the proud owner of a furry family member, you should budget for any pet-related expenses. These can include costs like:
- Behavioral classes
- Daycare
- Food
- Insurance
- Litter
- Medicine
- Toys
Consider saving money in a dedicated pet savings fund. Finding cheap vet care can also save you money on inevitable trips to the veterinarian.
10. One-Time Expenses
Regardless of your age, there are oddball expenses you’ll encounter when you create a budget.
One-time expenses can include things like:
- Annual memberships
- Birthdays
- Car registration
- Charity donations
- Clothing
- Furniture or technology purchases
- Taxes
- Travel
Plan for expenses like travel and special events when possible. In other situations, you might need to adjust your spending elsewhere for a month to make room for these expenditures.
Additional Budgeting Tips for New Graduates
Knowing how you spend your money is important when you make a post-college budget. A few other practices can help you create a budget and save money.
Monitor Your Credit
Increasing your credit score can help you qualify for lower interest rates and insurance premiums. A credit score drop may increase your monthly costs when you need to get a new loan or renew your car insurance policy.
You can monitor your credit score for free with Credit Karma. In addition to tracking your score, you can receive tips to boost your score.
Grow Your Savings
Spending less and saving your salary increases lets you plan for upcoming bills. To avoid accidentally spending your cash, consider scheduling an automatic transfer into an interest-bearing savings account.
Remember, CIT Bank is a terrific choice to grow your savings and avoid bank fees. You also have instant access to your cash for surprise bills.
For money you don’t need in the next few years, consider investing some of your spare cash to build long-term wealth.
Supplement Your Income
Two ways to achieve your budget goals are to lower your monthly expenses and make more money. Since you can only reduce spending by so much, using your free time to pursue a side hustle is an easy way to earn extra money.
You can use your side hustle income to pay your critical expenses, make extra debt payments, and grow your savings account.
Manage Your Money
Stay on top of your finances whether you’re at home or on the go with the Simplifi by Quicken app. You get an easy to understand, comprehensive overview of your finances while having the ability to track what you want.
Link your bank accounts, loans, credit cards, and investment accounts and create an auto-generated spending plan.
Summary
Managing your money after graduating from college does not have to be difficult. Following this budget template for new grads is a great way to set yourself up for success and use money as a tool to get what you want in life.
How did you approach budgeting when you were a new grad? Do you have any advice on how to manage money right out of college? What’s one fun category you like to include in your budget?
These are great tips. After graduating, I found budgeting to be more difficult because for once I was no longer a poor college student. I was finally able to afford more but still wanted to keep myself in check. These are great areas to look at because they cover some of the most basic areas that most people will have expenses in.
Lifestyle inflation is definitely really easy to succumb to after college, provided you can get a good paying job. It pays to have financial goals set up, too!
I think a lot of budgeting in the beginning is trial and error. These categories are a great place to start, and then you can adjust accordingly based on your own needs / wants / lifestyle.
Yes, it is! I had to make adjustments a lot, but having the basic foundation there can help keep things organized.
I see a lot of people get trapped into the “I need to make rent” and then forget about everything else budget early on – they don’t realize that planning for everything will make every singular thing easier.
Very true. Rent is a big deal, but far from the only one. You never want to get in over your head with rent and then not be able to afford to eat! They’re all pieces to the puzzle.
I feel new grads should take things slow, and not rush into big purchases. Like a new car, just because they have a new job. Keeping things frugal in the beginning will go a long way to set someone up to retire sooner. The end goal is to have freedom so think in that aspect if your young.
Agreed. Unless you’ve been saving and managing your money really well, buying a new car or a house so soon after graduating is just going to be financially overwhelming. It’s better to ease into things. Plus, your values are probably going to change! I know mine have. It would be a waste to spend so much only to regret it down the road.
This is great advice! Budgeting has really changed my life and the way I view the world and my future.
I think that it’s something that people should be doing while they’re in college. This can help them avoid falling into student loan debt or adopting lifestyles that are incompatible with their financial situations.
Thanks, Monica! In a perfect world, I’d say budgeting is important as soon as you start earning money or have any expenses to take care of. I didn’t, only because my situation was fairly simple in college, but I still made sure to save. I really wish more financial literacy was taught in high school or college, though.
Absolutely! Starting as early as possible is what needs to happen. We are the future, or current parents, of the next generation, and it’s up to us to lead by example now and teach these valuable life skills to young people from an early age.
Great post, Erin. When I was a new college grad I really didn’t budget, and honestly can’t say I budget at this time, either. I think tracking your spending is an important first step for grads. If you know what you are spending it’s much easier to make adjustments.
I definitely agree with that, and I’ve done the same. I had a spreadsheet set up to track spending, but I didn’t budget in the traditional sense. Just depends on how well you manage your money and what works for you!
These are all great tips! When I graduated, I bought lots of clothes and shoes, even if I really don’t need it. Budgeting for me is really hard to do, but now I tried my very best to keep my spending low.
That’s definitely another easy trap to fall into as you enter the workforce. I had to get dress clothes, but tried to do it as cheaply as possible.
Good tips! I should’ve set up a budget when I was a new grad. If I had, I wouldn’t be in debt like I am today. Sigh!
It’s tough because when you graduate, you have high hopes for the future and your earning ability. Unfortunately, reality doesn’t always cooperate!
Great tips! It’s so important to set those savings goals right away. Whether you want a car, a vacation, a wedding, or just larger investment accounts, getting into the savings mindset is well worth it.
Yes, it’s all about the mindset! That’s the hardest part. I grew up with my parents being in debt, and I could have easily fell into the mindset of “charge and pay later.” Thankfully I didn’t – it can be hard to get out of.
Number nine is great, having savings as part of a monthly budget is important. When I first started out I did the “save whatever’s left” thing. Some months I saved a bit, other months I saved nothing. Later on I started to budget for a certain $ savings each month. That made it much easier to save regularly (although sometimes I did have to dig into savings in a pinch)
Glad to hear it worked for you, Thomas! I try to save as much as possible so I’ve never tried it, but I’ve seen others struggle with saving when everything else is up in the air. Budgeting and getting organized helps.
Entertainment is the last thing I spend on after saving some and paying my bills. I think this kind of expenses is the one I can really sacrifice such as gym membership. There are lots of videos online on exercises that use body weight and no equipment.