Brand new to MMM. Soon to be college graduate. Need Help

[kovalchuk71]

Hello everyone!

I am 23 years old and will be graduating this May. Besides the obvious stress associated with finding a job, I am quite scared of graduating (I have no idea what I want to do with my life!). Thankfully, this site has helped me tremendously. My student loans will be pretty low coming out of school (~$17,000) and I have no other debt from CC's etc.

My main question is, where the heck do I start as someone fresh out of school? I'd love some advice from people that have hopefully been in my shoes. Are there any good website for approximating hypothetical budgets?

Thanks!

[Elaine]

Hey! Congrats on already thinking about this stuff! It's hard to give you a hypothetical budget since cost of living varies so hugely based on location and various needs. I would say live as cheaply as you possibly can and pay off that loan like your life depends on it. So rather than looking at a template for how much you should spend on an apartment or whatever, do lots of research and figure out what a good deal is in your area. I pay $750 a month, but where I live that's a great deal- I got it because I researched areas, laws on rent increases, etc. I spend under $100 a month on groceries, because I don't buy convenience foods and I make everything myself. I look at it as a game of living on as little money as possible so that I can save the maximum amount. Since you still have debt you will want to live as cheaply as possible to pay of that debt as fast as you can (and then begin saving). I would recommend tracking what you spend to establish a beginning budget, since you're just starting out it's good to know exact figures (I no longer use exact figures for every single category because my budgeting has become second nature). So find out exactly how much you spend on bars in a month, exactly how much you spend in gas (if you drive), in food, etc. Look at that budget and think, "If my life depended on it, where could I cut money?"  Best of luck and hope this helps! Also, you might want to check out the Journals section, people post detailed budgets there.

[FirePaddle]

In my opinion, saving for the "future", whether that is a long or short ways off, is 90% habit.  If you develop frugal habits early, it will be easy.  Budgets work for some, but in my experience, they hinder the development of useful habits.  Read all of MMM posts, and then keep reading other blogs and books as well.

I started to develop some bad habits over the last couple years, then discovered this community, and am currently retraining myself.  It is amazing how finances, health, and happiness are so related, and a good habit or change for the better impacts all those in positive ways.

Learn to love to cook healthy food for yourself on readily available common ingredients, learn to fix things the right way, learn to love riding a bike, consider the true costs of big decisions like where you might live in relation to your job, learn to track your progress so you can see where you are headed, find a partner you trust and that has similar goals, ignore all advertising, instead focus on what brings you happiness.

[Chuck]

Coming from a 25 year old who also joined the workforce at 23, (though because I left the military, not because I graduated,) my advice to you is:

When you get a job, and you start making "real" money, keep living like you're a college student at the whim of the 'burser:

Rent an apartment with roommates
Don't eat out, but learn to cook real food
Keep driving whatever car you currently have until it breaks
Don't upgrade your electronics on a fixed schedule like Apple want you to
Go dutch with your dates (the kind of women you want will be totally cool with this)

The remainder of your money, invest. Max out your 401k, Max out a Roth, and then get other taxable investments going as well.

If I had started doing all these things at 23, instead of 24... but regret is pointless.

[Petari]

On a non-financial note, depending on the relative stress levels of school and work, I found I gained a bit of a better idea of what I wanted to do with my life once I finished school, and had some mental space to think about it, and put more effort into different hobbies. You've spent the last few years dedicated to one specific goal, so see what you end up wanting to fill the time with once that is done.

On the financial side: read all of MMM first off. Rent, food, and transportation are typically three of the biggest expenses in life, so work on keeping those down. Also pay attention to things that are difficult to change: you can go buy cheaper groceries any day, but most people don't move every day: choose where you live wisely.

Above all, be happy! Think carefully about what makes you happy, and realise in the end that it's probably nothing you can buy.

[Ziggurat]

I'd strongly recommend setting up a budget (any budget to start with, and revise as you go).  I would have been much further ahead now if I had done that.

The YNAB software recently turned my thinking around on budgets. It's set up more around tracking what your income is FOR rather than where it is, and you "give each dollar a job", thereby setting up your relative priorities.

The mantra for managers is "Plan, Organize, Lead, Control".  If you want to manage your money well, that model makes sense too. The budget is the plan.

There are websites that have recommendations on what a budget should look like -- so much percentage to rent/mortgage, etc, but almost all of those are distinctly non-mustachian.  I'd say decide what percentage savings rate you want (see the shockingly-simple-math MMM post), then work out other spending around what is left. Makes some guesses, adjust as you go.