07Jun

How To Save Money When Budgeting For College Grad Expenses

Don't Let College Graduation Expenses Kill You

After a bittersweet graduation and an extensive job search, budgeting may be the last thing on your mind. However, despite what your college lifestyle may have led you to believe, you will now be more responsible for your finances now than ever. Your post-college expenditures will not just consist of late-night library vending machine raids and beach week martinis, but also utilities, rent, and insurance.

Life after graduation signals a new world of responsibility and opportunity. To assist in controlling you finances, here are a few essential tips:

 1. Create A Budget

Start by evaluating the monthly expenses that you have to take care of. Figure out how much you have and if you are in debt, pull out loan statements and deadlines. Then factor in how much money you earn, combine your salary with the money you receive from any part-time jobs, tips, internship stipends and any other supplementary income.

According to Chris Bumcrot, a financial researcher, it is important to take a holistic view of both your personal ‘balance sheet’ a spreadsheet of liabilities and assets as well as your personal income statement. Chris credits the importance of being conscious of your financial standing to avoid debt, but it is essential to structuring your budget too even if you are in the clear.

 2. Do Your Homework

As independent and free-spirited as you thought you were at 18, your parents still took the brunt of worrying about expenses. In addition, while you can easily calculate your savings and spending, it is impossible to know how much certain necessities cost without looking it up or asking around. Once you move to your own place, your bills will show you how much you are spending. However, you can do a few things between graduation and move-in day for preparation.

Look over credit card statements from previous months and calculate the average amount you spend on an item monthly. Factor in important details like how much you use on taxes each month, so that your estimates are as accurate as possible. Do not just research your costs, read up on ways to pay them too. Consult your parents to figure out just how much they are willing to support you if at all.

Look for alternative ways of paying off significant costs like student loans. The federal government offers different options for paying student loans, they recognize that students have bills to pay and may be in transition. Some of the options include, going to graduate school or serving in the military. Always stay in contact with your lender to see what options may be available.

 3. Use A Toolkit

The web is full of budgeting instruments that are enormously helpful in tracking your financial standing and compiling information about your savings, car, investments and living expenses online. For example, mint.com has gained incredible popularity for a reason. This site allows you to determine your ‘net worth’ by calculating all your assets and liabilities in one place, categorize your expenses and create micro-budgets within those categories. In addition, it helps you know when approaching a budget limit or deadline through reminders, alerts and color-coded bar graphs.

LearnVest.com is another fantastic online budgeting resource founded by a Harvard Business school dropout. The site connects its members with financial experts who assist in developing a budget as well as a long-term plan. In addition, it publishes tons of useful articles and tips on how to budget and save effectively. Other budgeting sites with similar features include moneyStrands and Buxfer.com.

 4. Fill In The Blanks

Now that you have gathered enough information about your expenses, list them on the ‘what you owe’ side of your balance sheet. Do not forget to consider the costs of starting out on your own. Sites like the ones listed above not only help you organize your budget, but also add items to it that you previously overlooked. When you are starting a professional career, there are several start-up costs. For example, in an office setting you will need to upgrade your wardrobe.

The most commonly overlooked expenses by young graduates when budgeting are insurance and taxes. Make sure you account for health insurance, auto insurance, federal and state/local income taxes, Social Security tax, and Medicare tax. Some of these come from your paycheck automatically, but you still have to account for them in your budget. Below are some of the most common costs for recent graduates:

  • Rent + broker’s fee
  • Utilities (air conditioning, heat, hot water, gas, electric)
  • Transportation (parking, gas, public transportation passes, maintenance fees)
  • Food (groceries, meals out)
  • New clothes (for moving to a new climate or professional setting)
  • New furniture (bed frames, couches, TV stand, drawer sets, dining table, chairs)
  • Electronics (TV, cable or satellite, Internet, music, cell phone and landline plans)
  • Student loans (federal and private)
  • Memberships and subscriptions (gym memberships or classes, magazines, newspapers)
  • Medical expenses (prescriptions, over-the-counter medications)
  • Insurance (auto, health, dental, property)
  • Taxes (local, state, federal)

 5. Cut Down

If your budget does not look upscale, as you would like it to, look for ways to trim costs, even if it means sacrificing some freedom. Happy hours, lunches out and expensive exercise classes are all fun and tempting when you start receiving your first paychecks. However, these daily or weekly luxuries will eat away at your budget fast. Identify a few classes, bars or restaurants that you want to try, so that when you do treat yourself you do it responsibly and mindfully.

 6. Leave Some Wiggle Room

Remember when you stored a box of chocolate bars in your dorm room in case of a bitter break-up. Put that kind of thinking to use and create a similar fund for financial emergencies. This is a great idea to establish a rainy day fund if you have any extra money at the end of the pay period. It is tempting to use the remaining amount of money for leisure, but for example, you experience a severe heat wave in the summer, air conditioning bills can climb in the summer. In the winter, the heating bills can do the same. It is good to have a cushion so that you can prepare for those types of situations. Saving a small amount of money for unforeseen expenses, like emergency travel or car care, will help you stay within your means.

 7. Save

Set aside a portion of your income for the future. You are probably only responsible for yourself right now, but at some point you will probably be buying a mortgage, supporting children, and eventually retiring, all of which require serious financial preparation.Consider putting money away for a retirement account, especially if your employer is willing to match what you put in. it is hard for young people to talk about retirement, but contributing even a little bit of money in your 20s can amount to a lot in your 60s or 70s.

The important thing is to allocate at least some of your income to savings in a systematic way. Your budgeting toolkit can help with this. However, beyond tracking your expenses, try to establish money-saving habits that can have serious long-term benefits and build you savings for the future.

 8. Track Your Spending And Stick To Your Budget

Lists and spreadsheets can help you organize your thoughts, but only determination and willpower can actually keep you from exceeding your budget. Sticking to a budget on your own is a challenge at first and you may feel inexperienced. However, learning to channel your undergrad experiences into this one can help. There are free phone apps that can help you with your budgeting:

  • iSlick - Consolidates coupons from sites like Amazon and Groupon and notifies you of them in real time so that you can stay up-to-date on all your deals and steals by checking just one source.
  • PageOnce - Allows you to not only track your spending, but also to pay your bills from your iPhone or iPad and to receive reminders and alerts of upcoming due dates and suspicious transactions. 
  • PocketMoney LITE - Includes a set of money-tracking features, plus tools like budget limits and auto-complete to speed up transactions. One of PocketMoney’s coolest functions is its ability to process international currency and its ability in more than 15 languages. In addition, it is perfect for budgeting your adventures and purchases while studying abroad.

Conclusion

Some costs are variable, be sure to review and revise your budget on a regular basis. Even if your income or overall expenditure is not changing, consider transferring money from one category to another. A budget is a working document. You may want to revisit your budget to see that the amounts seem relevant and are working effectively every few weeks or every month.