Budgeting After College: Avoid These Budget Mistakes

Budgeting is hard. There are so many things I wish I would have known right as a recent college graduate. Getting a job was so important that I really did not think any further than that. But then I got the job, and had to move to a city where I did not know anyone.

One of the biggest things I struggled with was balancing my bank account. There were a lot of start up costs for being on my own, and many things I didn’t account for. Here are some tips I would give to college graduates just starting out on their own.

Budgeting: Create the Budget

This might seem obvious, but I promise you it is not. Many recent graduates get their new job and salary and think they have enough money where they don’t have to make a budget. It can seem like you have a lot of money at first. Up to this point, most jobs were probably part time and paid a lot less, and you survived through that. Now you have so much more. However, you have so many more bills, too. Reality hit me the first month. I moved into my new apartment, but there were tons of unexpected expenses. Student housing provided me with many things that regular apartment complexes don’t – such as internet and cable. Plus, I was living on my own instead of with a roommate so rent was much higher.

Create a budget and stick to it. Write down all necessary expenses (including savings, this should be nonnegotiable!!) and then figure out what you need for everything else. Play around with different personal accounting systems. Do you use cash or a debit card and pay all expenses right away? Or do you put everything on a credit card and pay it all off at the end of the month? Do you set all your bills for one day or scatter them throughout the month? Try different systems and see what works best for you. This might also depend on your work’s payroll calendar and when/how often you get paid.

Pick Housing Wisely

Speaking of budgeting, have a reasonable budget. I will admit that I might have spent a little too much money on my first apartment out of college. I’ve had to make a lot of sacrifices so that I can pay the rent. Many people suggest that rent should be no more than 30% of your income. However, if you think things through and decided that you would rather have a nice place to live than go out to eat or go shopping all the time that is your choice. A huge part of budgeting is the tradeoffs. Picking one thing means giving up another. If you define your priorities you should feel comfortable in your choices. I just suggest that you think things out thoroughly before committing. A good exercise would be to pick two choices: one at the high end of your budget and one at the low end of your budget. From there write down all other expenses and budget the “fun stuff” as well. Visualizing each budget and actually deciding where you would have to cut money might help in your decision.

Set Up Autopay

Autopay is the easiest and most convenient thing and it astounds me to find out that a lot of people do not take advantage of it. Would you like to have less bills to stress out about and worry over? When I first started working and living on my own I spent so much time worrying over whether or not I had paid all the bills I needed to pay and on time. Plus throw in tons of time spent forgetting many of my usernames and passwords and having to reset those just to pay a single bill. So many systems offer an autopay feature. Most of the time it is as easy as going into your account, entering you pay information, and selecting a day for it to be taken out of your account.

Now I understand that not everything has this feature or you may not want to use it. For instance, I pay my rent and credit card manually since they are large amounts and I have to make sure to time things right. For what you cannot set to autopay, I suggest you set a calendar reminder in your phone to pay them. Your credit cannot afford any mistakes.


It is odd to think of retirement as soon as you get your first job, but you should. The more time your money sits in an account with interest, the more money you will have at the end of the process. Set up a retirement savings account right away! Most employers offer this with their full time benefits package. Many even match a percentage of what you save. Say an employer has a 50% match policy. This means that for every dollar you save in your retirement account, they will add $.50. This is free money. Free money that will also accumulate interest. You do not have to start off with a huge amount. Start off with a small percentage of your paycheck. As you find your footing and figure out your budget you might find that you can increase it without missing the money too much. Just remember that the more you have early on, the more money there is to grow interest off of.

Avoid Large Unnecessary Purchases

I cannot tell you how many people I see buying brand new cars right after graduation. You might get excited with your new paycheck and see that the car payment will fit in your budget. That does not mean you need it! If you have a working car, keep it. If you desperately need a car, get a used car at the very least. Cars are depreciating assets. If all you need is a vehicle to get you from Point A to Point B then get just what you need within your budget. Money spent on a new car is money that could have been earning interest in a savings or retirement account. Just don’t do it.

I sincerely hope that this information was useful, and if anyone wants more clarification on a topic let me know I would love to extrapolate. You can also read more of my finance tips here. There are so many things I know now that I wish I would have known just starting out. My hope is to help you all avoid some of my mistakes and start off on the right foot!

Have any additional tips for recent grads? Leave them in the comments.

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