How to Budget as a Recent Graduate

Amory Thorne Aug 6, 2020 Filed to: News Last Update on Aug 28, 2020

Learning how to budget as a recent graduate can be tough! Especially for recent graduates facing obstacles like finding a job, moving to a new city, or looking for a new apartment.

It's easy to feel overwhelmed with big life changes. But, it’s important to develop a budget to live within so you don’t overspend and end up in debt, especially if you already have student loans to pay off.

Understanding how to make a budget is one of the cornerstones of “adulting”, and a lot less scary when you break it down into parts. 


There is no one size fits all when it comes to making a budget and there are no hard and fast rules about what you spend your money on. But there are guidelines you can follow to make sure you are spending and saving in a way that works for you. 



Breakdown the pie chart

The 50/30/20 rule, made popular by US Senator Elizabeth Warren, breaks down your after-tax spending and savings into 3 parts of a pie.

  • 50% towards fixed expenses, things like rent, groceries, bills, etc. Things that you have to pay to live. 

  • 30% towards wants, such as a night out with your roommates, concert tickets, or a glamorous beach vacation 

  • 20% towards future expenses, things like an emergency fund, investment accounts, student loan debt, etc. 



Read our article about how to save money as a recent college grad to stretch your budget further.



Write it down

The first step in figuring out what you can afford is to write it all down. Analyze what you are spending your money on in your recent bank statements. Start by filling out a budgeting spreadsheet or downloading a budgeting app. These tools allow you to see if your current spending falls into the 50/30/20 rule. If it doesn’t, you can assess where you are overspending and adjust accordingly.

Finding that dream apartment…with your reality budget 


One of the biggest mistakes recent graduates make is committing to an apartment where the rent exceeds their budget. If the price of rent and bills exceeds the 50% fixed expense rule, then it is out of your budget and you need to keep searching.


This can be a hard reality to deal with, especially if you have to live in a city with high rent and you’re not making much from your entry level job. However, it is important to search for an apartment that is within your budget because failing to make rent can lead to eviction and debt. 




Offset your apartment costs

Having roommates is a wonderful way to avoid overspending on housing. Roommates offset the cost of an apartment by lowering the rent, splitting utility bills, and contributing to buying toiletries and kitchen goods. Read this article about how to handle roommate conflicts.


Another huge expense to consider when looking for a new apartment is the cost to furnish it. Furniture, even second hand, can cost hundreds of dollars.


Consider Co-living

Companies like Tripalink offer fully furnished apartments with roommate matching, utilities included, and weekly cleanings to help offset some of those initial money hurdles. You get the benefits of roommates while still having the privacy of your own room when you need it. 


Keep Your Head Up


Thinking about money and creating a budget can be stressful, especially if you aren’t making much straight out of college. However it’s important that you face the facts and manage your spending. If you avoid the fact that you might not have a high enough income to support your ideal lifestyle, you’ll just end up in more trouble down the line. Taking control and responsibility for your finances is part of growing up, and it can feel empowering if you approach it with the right mindset.