How to Make a Budget After College

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Kristen Kuchar

By Kristen Kuchar

November 21, 2019

Life after graduation is a drastic change from life in college. Outside of swapping class with an actual grown-up job, the biggest change is your finances. You (hopefully) are earning an income with your first job, but there are several costs that will inevitably increase with graduation, as well. The first step to is to create a monthly budget. 

How to Make a Budget

Step 1: Figure out what your monthly take-home income is. 

You’ll need to know how much money you are taking home every month. This means the number you actually deposit into the bank after everything is taken out – taxes, social security and insurance.

You may be able to find this information on your pay stubs. If you are paid on a biweekly basis, you will need to multiply the amount on one of your pay stubs by 26/12 to convert from biweekly to monthly amounts. 

Step 2: Calculate your expenses. 

You will have both fixed and variable expenses. Your fixed expenses are items that are the same every month, while your variable expenses can change.

Here are examples of expenses you might have in your budget. You can go through the last three months of your bank statements and credit card statements to see what your expenses are and how much they cost.

Examples of Necessary Monthly Expenses

  • Rent or Mortgage
  • Renter’s Insurance or Homeowner’s Insurance
  • Utilities (gas, electric, water, garbage, etc.)
  • Health insurance (premiums may be taken out of your paycheck)
  • Groceries
  • Toiletries (soap, shampoo, deodorant, etc.)
  • Car Insurance
  • Transportation costs (gas, bus, parking, etc.)
  • Household items, such as cleaning supplies and laundry
  • Monthly pet costs
  • Minimum debt repayments (student loans, credit cards, car payment)

Examples of Necessary Periodic Expenses

  • Out-of-pocket medical, dental and vision costs (medicine, deductibles, co-pays for doctor visits)
  • Vehicle maintenance
  • Vet bills
  • Car registration fees
  • Clothing and shoes
  • Home repair (if you own a home)

Examples of Optional Expenses

  • Cell phone service
  • Cable TV, satellite TV or streaming services (Netflix, Hulu, etc.)
  • Restaurants
  • Alcohol, Tobacco
  • Gym Memberships and Athletic Equipment
  • Entertainment
  • Hobbies
  • Travel
  • Household furnishings (furniture, appliances, decor)
  • Jewelry and watches

Step 3: Make the numbers add up. 

Once you subtract your necessary expenses from your income, you can see what you have left to put towards saving for retirement, extra debt repayments and optional expenses. 

If your expenses cost more than your income, you have to make a game plan. Figure out which expenses you can reduce or cut. You could potentially lower your student loan payments by applying for an income-based repayment for your federal loans and exploring student loan refinancing for your private loans. You can also try to increase your income by taking on a part-time job or finding ways to make extra cash. 

Keep in mind refinancing federal student loans means a loss in many benefits – income-driven repayment plans, any federal forgiveness programs, generous deferment options, and more.

Step 4: Decide what you want to do with the money after expenses. 

Ideally, you are in the situation where you don’t have any extra money. Determine your savings goals. Experts recommend saving at least 20% of your income. As far as an emergency fund, experts recommend having at least six months’ salary saved.

Need help creating a budget? Quicken is a budgeting software that allows you to connect your accounts and automatically categorize spending. Create a personalized budget and track and manage your spending. 

New Expenses After College

When you’re planning your expenses, there are a handful of new ones that are going to appear or increase now that you’re out of college. Here are some of the most common expenses that increase after graduation to plan for:

Student Loans

The average student loan borrower pays about $300 per month on their student loan debt. Take advantage of your grace period to start making payments and use the time to fully understand your loans – what exactly you owe, what your minimum payment will be and what the interest rate is. Once you have a steady income, you can consider whether refinancing your private student loans is a good idea. Depending on your situation, it can reduce your interest rate and monthly payment. Keep in mind for federal student loans, refinancing means a loss in federal benefits including income-driven repayment plans, generous deferment periods, potential for student loan forgiveness, and more.

A new apartment

You’re finally out of that college apartment. Besides the cost of rent and moving costs, plus security and utility deposits, you might want to buy new furniture, dishes and décor. You don’t have to buy everything at once. Base what you can afford to buy off of your monthly budget. Consider keeping your old stuff until you have an emergency fund built up and a firm grip on paying down your student loan debt.


The college years are synonymous with low-cost food and entertainment. There’s no more meal plan or student discounts now, and you’re probably no longer surrounded by super cheap options for take-out and restaurants. Keep food costs low by sticking to a food budget, using coupons, cooking at home and bringing your lunch to work.

Work attire

You might have thrown on a pair of jeans and hat to run to class, but in most cases, that won’t cut it for interviewing and your new job. While it might be tempting to throw a whole new wardrobe on a credit card, that’s definitely not the best way to start out this new chapter. Buy classic, basic pieces you can mix and match, so you’re able to create multiple outfits.

Attending weddings

It might not happen right after college graduation, but the average age people get married is between 25 and 30 years old with 27 being the most popular. While weddings are a fun time, it can cost you upwards of $700 to attend, according to Bankrate, with attire, a gift and other wedding events like the shower and bachelor or bachelorette party. Keep costs low by wearing something you already have and splitting a gift with a group. 

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