If you’re reading this, chances are you may have graduated high-school or college. If that’s the case, congratulations! If that’s not the case, you may want to stick around because this information will still prove useful. While this information is mainly for people who have just graduated high-school or college, it’s also useful for anybody about to take their first steps into the dark world of bills, payments, and what college graduates need to budget for.
These include the biggest things high-school and college-graduates need to budget for!
The cold, uncaring universe of budgeting is eager to strip you of your hopes, dreams, and dignities. Unless you have a large monthly income or landed into money by the ages of 18-22, forces beyond our understanding make adjusting to a life of bills and co-pays a tumultuous process.
So let’s get started!
Now for those of you already in the workforce and are responsible for certain bills—such as a car-payments, groceries, or even rent—this will be common knowledge. However, for those still living at home (or university-sponsored housing) it can be a shocking jump to account for bills added on top of what you’re already comfortable paying.
This is why it’s important to get the lay of the land for what you may or may not be paying if you finally move out…or if you happen to land a job outside of your hometown.
Rent.
The biggest, baddest money-sucker of them all is rent. There’s even the titular play Rent (1996) and film (2005) that have struggling to pay it as a thematic backdrop (even though they’re not actually about either of those things). How much you pay in rent is equally important of figuring out where your living-space is in relation to your workspace.
Thriving, cultural-center, destination, coastal cities (New York, Seattle, San Francisco, Los Angeles, London, Sydney, etc.) are going to be your most expensive. Smaller cities in the middle of the country—be they in the United States or otherwise—are generally going to be less expensive.
Services that list apartments include:
…and…you guessed it…
Knowing how much rent costs in relation to your salary—and trying to get a place that’s relatively livable and affordable—is one of the biggest battles up front. This is where having roommates come in handy; as do roommate-finding-services like roommates.com or roomster.com.
If you are going to be moving to housing that does not fall under the university-sponsored-umbrella, make sure you calculate how much you can pay for rent without destroying any income you may be getting before the big move.
Renter’s Insurance.
Included with Rent is usually renter’s insurance. Insurance will be cheap compared to rent. Even if your rent reaches low-to-mid-four-figures, you shouldn’t be paying more than $50-$75 for rent. If your rent is mid-to-high-three-figures, it should be less than $20.
Utilities.
Any living space provided outside of university-sponsored-housing is going to have a company that runs the heating and electricity. The more heat, cooling, lights, and water you use, the higher your bill will be, (Captain Obvious rules the seas here). Always check with the landlord or company to see what services are covered and which ones you will have to pay separately.
Some apartment complexes include water, trash, or even cable; others will charge their electric, water, and sewer services through a separate company. Always make sure you set aside payments for both rent and utilities.
Groceries.
This is the other 800-lb gorilla in the room for what college graduates need to budget. Figuring out which foods to eat, what foods to eat, and how to make those foods last can feel like a battle on par with invading Russia during the winter (i.e. it’s a war of attrition that ends in thousands of needless deaths).
In addition to buying foods to prepare, preparing them—and buying the necessary cooking ingredients to do so—is another battle requiring the strength of a thousand men (or women).
One-month-groceries for one person can easily eclipse $200 USD, not including cosmetics and toiletries like toothpaste, shampoo, body-wash, and face-cleanser. This is also a rough-estimate that includes higher-cost items like fruits, vegetables, and deli-meats.
Depending on where you live, food costs will be different but it’s important to remember that your food-and-cosmetic bill will net you anywhere between $180 USD (low-end) to $280 on the high-end.
For one person.
Gas and Car Payments.
Car payments are another killer. If you can’t pay cash for a cheap car in full, you could be looking at using that cash for a down payment…which of course will lead to monthly payments down the line. Even if you manage to secure a monthly car payment through getting financed; you must be wary of the interest rate.
A higher interest rate means a higher amount getting charged even after you make the payments. If you obtain financing—even if you end up using a co-signer for an auto-loan, always make sure to check the interest-rate in-relation-to the amount of interest you will be charged.
Internet and Cable.
Some apartment complexes bundle cable along with their rent but it’s rare for them to bundle internet as well. Always make sure you check with the office staff to see if you can cut the cable-bill out and only pay for internet. Also make sure you know which company you will be sending the internet and cable-payments to if they’re going to be paid to separate companies.
Student Loans.
The other behemoth that may even dwarf rent is student loans. Depending on where you went to school and how much you borrowed, student-loan-payments can start eating away at your monthly paycheck. If the interest rates end up being too high to start out with, I recommend trying to at least refinance to reach a lower monthly-payment if possible.
In a previous article concerning the differences between a Roth 401(k) and a Traditional 401(k), the website lendedu.com was featured. I will again recommend websites like lendedu.com, because they can provide information on refinancing services if you are looking for options.
And There You Have It!
There are no doubt other miscellaneous expenses that pop up but the nine items on this list will usually end up being the biggest items for what high-school and college graduates need to budget for. Are there any others that I missed? If there are, let me know in the comments below!
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Let’s crush our dreams together.
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