Every new graduate needs to know the basics of budgeting.
It’s the first step you should take in your new role within the “real world.”
Budgeting Basics: Your First Step to Financial Freedom
Congratulations graduate, and welcome to the real world! If you practiced having a budget while studying, good for you! If not, then this is something you should learn right away.
Take a look at this infographic to help point you in the right direction:
When you graduate from college, you need to start a budget. This will help you keep your spending under control as you venture out into the real world. Not sure how to get started? Start off by finding your total income and deciding what areas you want to divide your money into.
Starting a Budget
There are certain aspects you have to consider for your budget. One is knowing how much you have to allocate for each expense. Here’s a recommended percentage guide to get you started:
- 40% – Housing and Utilities
- 20% – Debt Repayment and Savings
- 15% – Food
- 10% – Clothing and Entertainment
- 10% – Transportation, Including Car Loan
- 5% – Car Insurance and Personal Expenses
After organizing your monthly spending, you need to set-up three financial accounts:
- Checking Account – This is for short term expenses like your rent and groceries.
- Credit Cards – This will help you establish good credit history. Don’t use your credit card for expenses that you can’t pay off monthly.
- Savings Account – This is for long-term savings. Add money to your savings account when you’re saving for a specific thing or you’re saving for something like retirement.
Long-Term Financial Goals
1. Choose a Career
Work toward a successful career path at a young age.
2. Start an Emergency Fund
Save money in an emergency fund. This should be the equivalent of three months worth of expenses at any given time.
3. Focus on Repaying Your Debt
Start payment plans to repay your debt each month.
4. Add to Your Retirement Fund
Start adding a small amount of money to this fund regularly. Over the months, it will add up.
That’s really all there is to start a budget. Having a sound plan and the determination to follow through will make all the difference.
Start living independently after your graduation and take the first step to reach your goals.
Have you already started a budget? If you have any other budgeting basics you live by, don’t hesitate to share it in the comments below!