I graduate in a week and will start working in a month and a half. Up to this point I have been draining my parents bank account so although I know I will be able to work within a budget, I'm not entirely sure what expenses I need to take into account. I know the major ones (rent, food, gas, car insurance, utilities) but I am sure that there are a bunch of small things that will add up that I am not thinking of right now. If people older and wiser than me could point out some of the things I'm missing it would be greatly appreciated.
I am in the beginning stage of living on my own for the first time and there are a few things that I noticed that you should account for: Furnishing your new place. Furniture costs money, and a decent bedroom set, living room set, kitchen setup will run you a good $2-3,000 total. Now add in all the little things like dining room stuff, guest bedroom furniture/office stuff, small appliances, linen, ELECTRONICS, etc. This runs you a good chunk of change that will throw a wrench into your gears if you didn't plan for it ahead of time. 0% financing is a godsend for this, and seek out the deals, use amazon/overstock/slickdeals.net/fatwallet.com. (A word of caution, pay down your debts before the 0% financing period runs out, the ensuing interest hits you like a ton of bricks) Cell phone bill. If you're like just about every person in the 1st world, you'll have a smart phone with a smart phone data plan. Unless you're running off your family plan, then this is another $100/mo. Transportation. If you plan on buying a car, or if you already own one, then you'll have to pay it down, pay for repairs, oil changes, tires, GAS, etc. A good $200/mo if you factor in repairs spaced out over a year. Credit cards. Pay them off, do not run debt from month to month, it hurts in the long run and there's interest, but credit is mandatory in today's world. Erroneous purchases. Stuff like eating out, going to bars, social events, weekend trips, movies, on-a-whim purchases, etc. Have some self control and don't do these things if you can't afford them, even if that means some ridicule from your friends. I'm not the best at budgeting, but I currently run no debt that I can't pay down right now (I only have some because 0% financing is basically free money, plus my car loan was 2% interest) and I have decently nice things. My paycheck is standard for a 26yo male living on his own, and I have a bit of money in savings, an IRA, a govt retirement account, and an investment.
I recently added up everything it cost me to own my house; gas, electrical, sewer, trash, cable, internet, water, pest control, lawn guy etc and it totaled about $450 a month.
The thing about a budget is that you realize pretty damn fast what's important and what isn't. Paying $200/month at 0% down for a new whatever-the-fuck-cheap-car-you-bought might seem like an awesome deal, but once you factor in maintenance, gas, insurance, parking, it's probably a lot closer to $500/month. Can you afford that, or is it more practical to get a bus pass or a bike? I cannot recommend this woman's website enough. She's smart and she knows what she's doing when it comes to a) helping people get out of debt, b) keeping people from going into debt, and c) helping you do the most with the money you've got. A good starting point at building a budget is her budget spreadsheet.
Here were the budget categories I used when I finished school. You'll probably want to use fewer than I did, and some of these may not be applicable outside of NYC. Spoiler category after-tax revenues EXPENDITURES retirement ben pmt rent parking gym insurance cell phone landline clothing metrocard entertainment + misc food gas satellite cosmetics contact lenses withholding for health ben laundry total expenditures surplus (deficit) It costs a lot to get every little stupid thing for your first house. I elected to buy the cheapest version of everything, and then get nicer stuff (if I really wanted it) one item at a time. There were two main advantages to this. First, I had no personal attachment to my possessions, so it was easy to toss them and move, and I was less concerned with clumsy guests, break-ins, etc. Second, it meant more cash in reserve to save or spend, i.e. more options.
The single biggest expense you'll have is taxes. Aside from the joy of filing, you also have the fun of being tapped for everything you do, anytime you do it. Enjoy.
I'll add in wardrobe, you didn't mention what line of work you are in, but if this is your first professional job then you will need to look the part. This can add up quite quickly.
Most overlooked thing in my experience: toiletries and cleaning products. While not make or break I guarantee that the amount of money you're about to spend on general maintenance shit like toilet paper and trash bags is going to blow your fucking mind.
If you own a car and expect it to run well, it will need regular maintenance. That can add up. But it's better to do the regular maintenance than to let shit hit the fan and wind up with a much bigger repair. Oh, and never take out a pay-day loan, no matter how much you need the money. You're better off selling your mouth on the corner or going to loan sharks.
Second that. The good thing is that, with a few exceptions, most office environments use "business casual" as their standard. I can't really speak for the ladies, but for the guys, there are some ways you can acquire a decent wardrobe without breaking the bank. - Stores like TJ Maxx and Marshalls usually have decently priced dress shirts that are name brands and will be cheaper than buying from a "name" department store. Yes, they are usually "irregular" but whatever defect they have is something that in no way is noticeable to anybody that doesn't work in the garment industry for a living. Skip a couple of trips to the bar and instead use the cash to stock up. You will look better than your same age co-worker who wears the same polo shirt to work that he hits the golf course with over the weekend. You don't need to look like a cover model from GQ magazine, but people WILL notice that you are trying to dress professionally, and it will reflect positively on you. The one caveat to this is looking at how some of the higher ups at work dress. If everybody is in polos and khakis, then have at it. If not, then pay a little more attention to how you dress. - If you are not going to be in an environment where you need to wear a suit all the time, but may need to for certain occasions, you should not need to have more than two or three at your disposal. Jos A. Bank, while a "higher end" clothing store, often runs great sales (buy one suit, get two free). If you hit one of those sales, which run frequently, you can walk in there and spend $250 - $300 for one basic suit and walk out with three. Stay in shape and you won't need to buy new ones for a long time. If you are lucky to get some cash from relatives as a graduation gift, earmark some of that money for this purchase. Go back to TJ Maxx or Marshalls to get ties to wear with the suits (real ties, not the trendy skinny ties. Skinny ties are for guys that have jobs they don't need to wear a tie for, if that makes sense). - You can go to any "shoe outlet" type store and find a good, comfortable pair of dress shoes for $60. Get a black pair, they go with almost anything. Take care of them and you'll only need one pair and they'll last for years.
Unless you are in a field with a high demand for new, inexperienced workers (ie, porn and prostitution), you probably won't make a lot of money right out of the gate. Some things that helped me out immensely: 1. Roommates who also work. I split a three bedroom house with two other guys who were NOT in school and was able to live for about $350/month with utilities. The only caveat to this is that sooner or later, someone will bail and the worst case scenario is that you have to foot the bill for the entire place by yourself for a month or two. Get roommates, but also have two month's worth of expenses socked away in case someone leaves you holding the bag. However, shared responsibilities helped out a lot with things like cooking, cleaning and if you find yourself in need, you've got some help right there. 2. Your job will not care that you are poor, or that you were recently a student. Dress, smell and act the part. Places like Marshall's, TJ Max, etc. are great places to start building a professional wardrobe cheaply. Don't stop building until you can go to higher-level job without having to buy new clothes. Have three suits (yes, three) for interviews that look like they fit you well. If possible, ask for this as a graduation gift, or use grad money for this. Do NOT spend exorbitant amounts of money on them, because you will likely fuck them up or lose/gain weight to make them useless (nothing more expensive than Brooks Brothers). Also, make sure you have everything you need for hygiene in good supply. You'll feel really stupid not wearing deodorant for a week because you were too poor to buy that AND have six beers on Thursday. Don't skimp, don't skip and don't slip: just because you see others come into work smelling like ass, in rumpled clothes and unshaven, don't think you can. If you have an office or a locker, put everything you need to shower, shave and dress for work in a bag and leave it there. It will save your life at least once. 3. Save your money. My first job paid shit, and I didn't buy anything superfluous until I had squirreled away the equivalent of three paychecks. You can Goodwill enough dress clothes to get you by for a month or two, that's why those places exist. Aldi, Dollar General, the dreaded Wal-Mart, coupons and shopping for necessities online will eat up your time, but reduce your expense. Choose the latter for the first three months, until you're sure this job will work and you've developed a routine that you're comfortable with. 4. Whatever you depend on, have a backup plan. If you need a car to get to work, know what you will do if it breaks down. If you need your computer to get paid, have a second option. If your shower is broken, where will you get ready for work? Power goes out, what can you do? If the answer to these questions involves a more expensive AND less convenient option, you're doing it wrong. 5. Know when you'll have fun and how much it will cost you. If you go out, take cash and when the cash is gone: go the fuck home. No one likes the asshole who can't prioritize well. In my first job, I spent a lot of time at home after work, reading, playing xbox and working out because they are cheap, fun and don't leave me hungover or broke afterwards. You'll find yourself doing shit like going to libraries, parks and museums instead of bars, concerts and parties for those same reasons. Enjoy that kind of thing while work is new, then go back to the bar scene after you've developed a routine and socked away some cash.
This. When you're in college, being broke doesn't really matter. They have meal plans so you'll never go hungry, you don't have bills to pay, etc. You can literally spend every last dollar the bar / smoking weed and be okay. This changes dramatically when you get out into the real world. If you get drunk and toss your last 400 bucks at a stripper, you're going hungry. Or you're going into debt. Or you're going to have to sell some of your shit. You don't need to spend money to have a good time. It's not as glamorous as going out to party, but there's shit to do in every town. Make that cheap stuff part of your lifestyle and the partying the exception rather than the other way around.
Re: partying. While I agree going to the bar every week is flat out stupid, there's no reason to be a shut in and not go to house parties and such. I mean, you're probably 21-23 and have some prime years left in you to let loose. I'm not saying that's what downandirty and Omega were suggesting, but I just wanted to mention this. And for the record, myself and most of my friends, even the frequent bar goers, have many more memorable stories from $15/thirty pack beers at house parties than $50-70/person nights at the bar.
I'd suggest a gym membership. I know its an added expense, but if you maintain a healthy lifestyle it will improve other areas of your life. Its super easy to eat like shit and fall into a somewhat lazy routine. But if you force yourself to be healthier, food shopping will cheaper because you won't be buying tons of shit that is bad for you. On top of that, since you are paying for it, that can be motivation enough to get off your ass.
Save any partying you have to do for the weekend only. You now know why they call it a "weekend". As long as you have the next day to shake the shit out of your head, have fun. But take your job seriously even if you don't like it, and never let drinking and other debachery have an effect on it. Bills come first. Always. Never miss any payments, even if it means paying minimums. If you have to consider whether or not you can afford to buy something, don't buy it. Don't go outside your disposable income, and if you want to go on vacations it's much easier to save up for them long term. They end up turning out more fun because you usually end up with more cash to blow. Never give money to anybody who comes to your front door. Ever. Not even if it's an addict holding a gun, just use that sweet Swayze move where he kicks the gun out of Jimmy's hand right before he kills him the Old Fashioned Way.
Holy shit yes. If you live in a decent sized city, it's really easy to fall into the trap of "Eh, it's late, I'll just order something from Seamless." Then all of a sudden you've gained 15 pounds and are spending three times as much on food as is reasonable. Not that I would know anything about that.
Along the same lines how close you live to a takeout place is positively related to how often you "won't have time" to cook. If you're in the city it's kind of hard to avoid, but if you're in a suburban area opt for the place closer to the grocery store and gym instead of the restaurants, you will use them more, I know from experience.
One way to avoid this is to plan out the week's menu on the weekend before grocery shopping. Cook a little bit more and you've got lunch for the next day (brown bagging will you a small fortune), or a cooked ingredient for a quick supper another night. For example, if you plan on making chicken and cheese quesadillas, plan that for later in the week and plan another chicken dish for earlier in the week and simply cook an additional breast to use for the quesadilla. A big pot of soup is cheap and can go along way if you individually freeze single portions. Invest in good Tupperware. Shop the supermarket flyers and go to the one with the best deal for what you need/want that week and clip coupons from the Sunday paper. You'd be surprised how much you can save by investing a little amount of time planning.
This is good advice regardless of your situation, the wench and I both love to cook but can't be bothered doing it every night, we will plan out the meals we are going to have and Sunday night is the cook fest where we will make a Cannelloni, Lasagne, Ragoo etc type dish that will be good for 3x2 meals. One other night during the week one of us makes something that's good for 2 meals and the we either chef up on Friday or go out to dinner, weekends are unplanned. This sounds boring but it means we have excellent food and only one of us "has" to cook during the working week, which we alternate. Been doing this for a few years now and our general grocery bill is at least 50% less than what it was. If you’re in the US buy a house, seems to me that the repayments will be less than you'd be paying on rent, get a housemate in and you'll be killing it. Brew your own beer, not only is it an awesome hobby, but you can have an unlimited supply of premium craft brew cheaper than you can buy bottled water. Use the money you are saving on beer and food to buy a car you really like, cars are fucking expensive, you might as well have one that makes you happy.