You’ve just graduated and you are about to start your career. Whether this is your first full-time job or your tenth, the transition from a student’s income to a salary can be tricky. Here are some tips to help you as you create a new budget:
- Values: Start by considering your values. When you are in school, it can be really difficult to match your spending with your values because you are trying to live as frugally as possible. Now is a great time to think about how you want to spend, save, and share your money. What are the things that matter most to you? Family? Giving? Saving? Travel? Make sure that your budget reflects these values and priorities.
- Financial Goals: Create a set of goals that reflect these values. You will want to set up short (2 years or less), mid (2-5 years) and long range (5+ years) goals. If you really value family, make a short range goal of going on a family vacation, a mid range goal of saving for a family-oriented purchase like a camper, and/or a long range goal of saving for your children’s education.
- Savings: Graduate school can be hard time to save money. Now that you have a job, make savings a priority. Begin by building an emergency fund, experts recommend that you have about six months worth of living expenses saved. You will also want to save for retirement, it is never to early to start. Some employers will set up and contribute to a fund for you or have opportunities for matching funds, take advantage of those. In addition to these, you may want to set up additional savings funds according to the goals that you set.
- Debt: More than likely you are coming out of graduate with either student loan debt, credit card debt or both. Look at the total amount owed and make a plan to pay it back. Begin paying these off as soon as possible. Include these payments in your budget right from the beginning, don’t just wait until your loan’s grace period is over. If you can afford to pay more than the minimum, do so! If you are at all confused about what you owe, contact your lender.
- Giving: Some people choose to give regularly during school, others do not. Now that you have a regular salary, consider giving more regularly to organizations that you care about. Automated giving is a great way to do this. Even if you start small, this a great habit to form.
- Lifestyle: When someone gets a full-time job, especially if it is their first one, they often consider lifestyle changes first rather than the items above. If you lived a very frugally in graduate school more than likely you will have more money for regular expenses such as groceries, rent, and shopping, even if you are taking the above into consideration. Enjoy it, but don’t go overboard! Take a few months to get a feel for your budget before making any large purchases or lifestyle changes.
Join the Conversation: What advice do you have for recent graduates moving from a student’s income to a salary?