Budget for College Graduates That Actually Works

Author
Grace Lemire
Grace Lemire
author

Grace Lemire is a freelance writer and editor with over five years of experience in the personal finance industry. She has been featured on a variety of publications, including NPR, CNN, FinanceBuzz, Dollar Geek, Pangea, and True Finance. Her work focuses on the intersection of personal finance and technology. In 2023, Grace was nominated for the Best Personal Finance Advice award in Debt.com’s FinTok Awards.

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Edited by
Daniel Kahn
Daniel Kahn
editor
Daniel is the co-founder and COO at Sparrow. Daniel is responsible for the day-to-day operations of a company, working closely with other members of the executive team to develop and implement strategies to support the growth and success of the company.
Daniel was a 2023 Forbes 30 Under 30 lister in the Education category.  Daniel was born and raised in Raleigh, North Carolina and graduated from Duke University in 2020.
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Reviewed by
Camden Ford
Camden Ford
reviewer

Camden leads Sparrow’s business operations – everything from product management to business analytics. After graduating Cum Laude from Duke University where he studied Civil Engineering, Camden worked as a Consultant for A.T. Kearney where he worked in their Strategic Operations practice. With a strong background in analytics, Camden strives to deliver data-driven conclusions and insights.

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Updated
January 25, 2024

Graduating college is the beginning of a new chapter in your life. You may be moving out of your parents’ house, landing an exciting new job, or heading to graduate school. Regardless, managing your finances post-graduation is crucial in navigating your new adult life. To help keep your finances in order, consider making a college graduate budget.

A budget is a financial tool designed to help you manage your income and expenses so you can stay on track to reaching your financial goals. Here’s how to create a budget as a college graduate.

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How to Create a Budget After Graduating College

Step 1: Get Real About Your Income

Life post-graduation will likely come with a full-time job, often earning you more than the standard part-time college gig. While exciting to have more income to work with, it’s important to understand how much you’ll actually have to spend on a regular basis.

Remember that your salary is the amount you earn before taxes, or your gross income. Your salary also doesn’t factor in other potential deductions, such as your 401k contribution or employer-sponsored health insurance.

For example, let’s say you make $60,000 per year. You decide to contribute 10% of your gross income to your 401k, or around $500 per month. If you live in Missouri, for example, you’d take home $39,911.93 after contributing to your 401k and after tax. This averages out to around $3,325 per month.

Step 2: Determine Your Fixed Expenses

There are a variety of fixed expenses you may incur post-graduation, such as:

  1. Living Expenses/Rent
  2. Utilities
  3. Groceries
  4. Student Loan Payments
  5. Insurance
  6. Transportation/Car Payment
  7. Phone Bill
  8. Pet Expenses

Fixed expenses are those that remain the same each month. Oftentimes, but not always, they are necessary expenses, as well.

Depending on your lifestyle, your fixed expenses may differ from the list above. For example, if you are living at home rent-free with your parents, your fixed expenses may be:

  1. Student Loan Payments: $250
  2. Transportation Costs: $100
  3. Therapy Appointments: $200
  4. Gym Membership: $40

Your fixed expenses will create the baseline for your budget, coming before factoring in any “wants.”

>> MORE: Compare student loan rates

Step 3: Calculate What You Have Left

Now, subtract your fixed monthly expenses from your monthly income. What you have left over will be what you can contribute to your savings goals and nonessential spending.

For example, if you earn $3,325 per month, and have fixed monthly expenses totaling $590, you’d be left with $2,375 for discretionary spending.

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Step 4: Determine Your Savings Goals

Before spending your remaining income, map out your savings goals and prioritize contributing toward them. Remember, you may have larger expenses coming up in this phase of life, such as:

  1. A down payment on a home
  2. Moving out/moving to a new city
  3. Furnishing a new home
  4. Buying a car
  5. A wedding
  6. Having children

Set a realistic timeline for each financial goal you have. Then, figure out how much you need to contribute toward each savings goal per month to achieve it. Subtract those figures from your remaining income after factoring in fixed expenses.

>> MORE: How to buy a house with $100K+ student loan debt

Step 5: Think: After Graduating College, What Does a Full Life Look Like to Me?

As a college graduate, for a budget to be successful, it has to support a life you truly enjoy living. While you’ll likely have several necessary expenses to put in your budget, such as rent or student loan payments, it’s important to prioritize “wants” as well.

Think to yourself: What does a full life look like to me? What do I really value that is worth spending money on?

Getting clear on what you enjoy spending on allows you to budget appropriately so you can effectively balance both “needs” and “wants.” It can also help you dodge the pressure to keep up with those around you, or spend on items or experiences you don’t value. For example, if you don’t value spending money on happy hour after work, but your coworkers do, it’s okay to order a less expensive beverage or skip out on the excursion altogether.

Step 6: Look at Your Spending from Previous Months

To determine how much wiggle room you have to spend on “wants,” look at your spending habits in previous months. Find the average of what you’ve spent in different categories, and use that information to set guidelines for your budget after graduating college.

For example, let’s say you spent $200 on eating out in March, $300 in April, and $150 in May. On average, then, you spend around $216 per month on eating out. If that amount feels reasonable to you, use it to set your limit for that budget category.

This is also a great time to see where you can cut back. If you find yourself overspending in certain categories, be realistic about what that means for your overall budget. For example, if spending $500 per month on entertainment means delaying reaching your financial goals, it may be worthwhile to scale back your spending in that category.

Step 7: Map Out All Your Budget Categories

Once you know what your fixed expenses are, how much you need to contribute to your savings goals, and what you’d like to spend the remainder on, you can set your budget categories.

As a college graduate, some common budget categories are:

  1. Rent
  2. Gas
  3. Insurance
  4. Public Transportation
  5. Student Loan Payments
  6. Car Payment
  7. Entertainment
  8. Groceries
  9. Restaurants
  10. Shopping
  11. Subscriptions
  12. Gym Membership
  13. Self Care
  14. Medical Expenses
  15. Donations/Charity

Pick whichever categories are relevant to you and your lifestyle. Then, assign a spending limit to each category, ensuring that all expenses, including savings goals, add up to your total monthly income.

>> MORE: Student loan refinancing: how to pay off your student debt faster

College Graduate Budget Example

With an income of $3,235 per month, your budget may look something like:

Budget Category

Amount Alloted

Spent

Left Over

Rent

$1,500

Transportation

$100

Student Loan Payments

$250

Therapy Appointments

$200

Gym Membership

$40

Emergency Savings

$500

Restaurants

$220

Entertainment

$300

Groceries

$125

Credit Card Payment

$90

Total

$3,325

As the month goes, periodically examine your spending. For example, if after one week into the month, you’ve spent $100 of what you budgeted for groceries, you may need to cut back in other categories for the remainder of the month to ensure you can cover grocery expenses going forward.

Likewise, total up your overall spending at the end of the month. This will allow you to see where you may have underspent, allowing you to direct the remaining amount to another expense such as your savings goals.

Student loan rates from our partners
lender Ascent logo
Ascent
Minimum credit score
Varies
Fixed APR
Fixed APR

Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills, or DR Bank, each Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs. Rates are effective as of 11/1/2024 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest rates require full
principal and interest payments, the shortest loan term, a cosigner, and are only available for our most creditworthy applicants and cosigners with the highest average credit scores. Actual APR offered may be higher or lower than the repayment examples above, based on the amount of time you spend in school and any grace period you have before repayment begins.

3.69 - 15.04%
Variable APR
Variable APR

Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills, or DR Bank, each Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs. Rates are effective as of 11/1/2024 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest rates require full
principal and interest payments, the shortest loan term, a cosigner, and are only available for our most creditworthy applicants and cosigners with the highest average credit scores. Actual APR offered may be higher or lower than the repayment examples above, based on the amount of time you spend in school and any grace period you have before repayment begins.

5.66 - 15.16%
lender LendKey logo
LendKey
Minimum credit score
660
Fixed APR
Fixed APR

1 – Terms and Conditions Apply

Loan products, terms, and benefits may be modified or discontinued by participating lenders at any time without notice. Rates displayed are reserved for the most creditworthy consumers who enroll to make automatic monthly payments. Your initial rate will be determined after a review of your application and credit profile. Variable rates may increase after consummation. You must be either a U.S. citizen or Permanent Resident in an eligible state and from an eligible school, and meet the lender’s credit and income requirements to qualify for a loan. Certain membership requirements (including the opening of a share account, a minimum share account deposit, and the payment of any applicable association fees in connection with membership) may apply in the event that an applicant wishes to apply with, and accept a loan offered from, a credit union lender. If you are not a member of the credit union lender, you may apply and become a member during the loan application process if you meet the lender’s eligibility criteria. Applying with a creditworthy cosigner may result in a better chance of loan approval and/or lower interest rate. Loans for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not available via LendKey.com.

2 – Cosigner Release

Some lenders participating on LendKey.com may offer the benefit of cosigner release. Cosigner release is subject to lender approval. In order to qualify, the borrower, alone, must meet the following requirements: (1) Make the required number of consecutive, on-time full principal and interest payments as indicated in the borrower’s credit agreement during the repayment period (excluding interest-only payments) immediately prior to the request. Any period of forbearance will reset the repayment clock; (2) The account cannot be in delinquent status; (3) The borrower must provide proof of income indicating that he/she meets the income requirements and pass a credit review demonstrating that he/she has a satisfactory credit history and the ability to assume full responsibility of loan repayment; (4) No bankruptcies or foreclosures in the last sixty months; and (5) No loan defaults.

3 – Autopay Rate Reduction

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments.

4 – AutoPay Discount & Lowest Interest Rate

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised APR is only available for loan terms of 10 years and is reserved for the highest qualified applicants, taking into consideration the applicant’s credit and other factors.

3.99 - 12.61%
Variable APR
Variable APR

1 – Terms and Conditions Apply

Loan products, terms, and benefits may be modified or discontinued by participating lenders at any time without notice. Rates displayed are reserved for the most creditworthy consumers who enroll to make automatic monthly payments. Your initial rate will be determined after a review of your application and credit profile. Variable rates may increase after consummation. You must be either a U.S. citizen or Permanent Resident in an eligible state and from an eligible school, and meet the lender’s credit and income requirements to qualify for a loan. Certain membership requirements (including the opening of a share account, a minimum share account deposit, and the payment of any applicable association fees in connection with membership) may apply in the event that an applicant wishes to apply with, and accept a loan offered from, a credit union lender. If you are not a member of the credit union lender, you may apply and become a member during the loan application process if you meet the lender’s eligibility criteria. Applying with a creditworthy cosigner may result in a better chance of loan approval and/or lower interest rate. Loans for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not available via LendKey.com.

2 – Cosigner Release

Some lenders participating on LendKey.com may offer the benefit of cosigner release. Cosigner release is subject to lender approval. In order to qualify, the borrower, alone, must meet the following requirements: (1) Make the required number of consecutive, on-time full principal and interest payments as indicated in the borrower’s credit agreement during the repayment period (excluding interest-only payments) immediately prior to the request. Any period of forbearance will reset the repayment clock; (2) The account cannot be in delinquent status; (3) The borrower must provide proof of income indicating that he/she meets the income requirements and pass a credit review demonstrating that he/she has a satisfactory credit history and the ability to assume full responsibility of loan repayment; (4) No bankruptcies or foreclosures in the last sixty months; and (5) No loan defaults.

3 – Autopay Rate Reduction

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments.

4 – AutoPay Discount & Lowest Interest Rate

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised APR is only available for loan terms of 10 years and is reserved for the highest qualified applicants, taking into consideration the applicant’s credit and other factors.

5.98 - 13.74%
lender Earnest logo
Earnest
Minimum credit score
650
Fixed APR
Fixed APR

Student Loan Origination (Private Student Loan) Interest Rate Disclosure:

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 3.94% APR to 16.74% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.87% APR to 17.10% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan origination loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.
Earnest Private Student Loans are made by One American Bank, Member FDIC, or FinWise Bank, Member FDIC. One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Finwise Bank, 756 East Winchester, Suite 100, Murray, UT 84107
Earnest loans are serviced by Earnest Operations LLC, 535 Mission St., Suite 1663 San Francisco, CA 94105, NMLS #1204917, with support from Higher Education Loan Authority of the State of Missouri (MOHELA) (NMLS# 1442770). One American Bank, FinWise Bank, and Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by agencies of the United States of America. © 2024 Earnest LLC. All rights reserved.
3.69 - 16.49%
Variable APR
Variable APR

Student Loan Origination (Private Student Loan) Interest Rate Disclosure:

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 3.94% APR to 16.74% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.87% APR to 17.10% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan origination loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.
Earnest Private Student Loans are made by One American Bank, Member FDIC, or FinWise Bank, Member FDIC. One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Finwise Bank, 756 East Winchester, Suite 100, Murray, UT 84107
Earnest loans are serviced by Earnest Operations LLC, 535 Mission St., Suite 1663 San Francisco, CA 94105, NMLS #1204917, with support from Higher Education Loan Authority of the State of Missouri (MOHELA) (NMLS# 1442770). One American Bank, FinWise Bank, and Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by agencies of the United States of America. © 2024 Earnest LLC. All rights reserved.
5.62 - 16.85%
lender College Ave logo
College Ave
Minimum credit score
Mid-600s
Fixed APR
Fixed APR

College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

(1) All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation.

(2) As certified by your school and less any other financial aid you might receive. Minimum $1,000.

(3) This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 11/1/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.

3.59 - 17.99%
Variable APR
Variable APR

College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

(1) All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation.

(2) As certified by your school and less any other financial aid you might receive. Minimum $1,000.

(3) This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 11/1/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.

5.34 - 17.99%

Bonus Step: Automate Your Budget

If managing your budget manually sounds tedious, consider using a budgeting platform such as YNAB or Mint. Both platforms will allow you to set budget categories, then sync your account with your bank. Then, your expenses will automatically be tracked and categorized, simplifying the process quite a bit.

Managing your finances can be complicated, especially if it’s your first time giving it a go. So, as you begin utilizing your budget, remember to be gentle with yourself.

Sparrow aims to give you the tools and confidence you need to improve your finances. Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

The content displayed on this page is intended for educational purposes only and should not be taken as financial advice. Please consult a professional for personalized financial advice.

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