Graduating from college and getting your first job is a huge accomplishment, but it also starts you on a path toward financial independence, whether you’re prepared for it or not. Cashing in that first paycheck can be exciting but scary once you see how quickly it gets eaten up by rent, food, gas, utilities, and student loan payments. You might be making more money than you were in college, but you’re probably having to spend more money too.
To help you out now that you’re living on your own, here are eight tips for managing your expenses, so you can cover your bills, stay within your grad budget, and still have some spending money left over to enjoy.
How to Make It on Your Own
1) Know what you need.
If you’re still interviewing for jobs, get a rough estimate of what your cost of living is going to be. Use a budget calculator that goes beyond just the basics and allows you to punch in detailed income and obligations like salary, savings, taxes, insurance, living expenses, and monthly payments for your car, credit cards, and student loans. This way, you’ll know what salary range you’ll need to look for in order to be able to cover all your monthly expenditures.
*In-Case-of-Emergency Rule: Don’t forget to factor in a monthly allowance that you can put toward an emergency fund to cover unexpected expenses like car repairs or doctor’s visits.
2) Lower your student loan payments.
Student loans can take a big piece of your paycheck each month. By consolidating your federal student loans, you could get up to 20 more years to repay and cut your monthly payments in half. You can also call your lender and ask about alternative repayment options: Extended, income-sensitive, and graduated repayment plans could lower your monthly payments.
*Pay Later Tip: If you’re in a jam and having trouble making your student loan payments, even on a reduced-payment plan, call your lender ASAP. Ask about your deferment and forbearance benefits, which may allow you to temporarily postpone your payments altogether — without your credit taking a hit.
3) Make sure you’re covered.
Once you’ve graduated, you’ll most likely have only a limited amount of coverage time left under your parents’ insurance plans. You want to make sure you’ve got health insurance, car insurance, and renters insurance; you can use sites like Insurance.com, eRenterPlan, and eHealthInsurance to compare policies. A couple hundred bucks a month is a small price to pay to make sure that if you end up in the hospital, in a car accident, or having your apartment broken into, you won’t be left without wheels, belongings, or with tens of thousands of dollars in medical bills.
*Keeping-It-in-the-Family Tip: When you start insurance shopping, call your parents’ providers first to see if they can offer you a simple and affordable transition into your own plan, along with a family or referral discount.
4) Monitor your minutes.
If you’re transitioning from your parents’ cell phone plan to your own, you may actually have more coverage than you really need. Check with your provider to see if you can drop down to a less expensive plan with fewer minutes.
*Texting Tip: If you text a lot, it may be more cost-effective to sign up for an unlimited text messaging plan to avoid paying overage charges.
5) Make your own meals.
You may not like to cook, but add up how much you spend each week when you eat out, and you may realize where all your money’s going. The $15.00 you spend on two large sandwiches at Quizno’s, for instance, could buy you enough ingredients to make your own subs at home for a week. Bringing your lunch to work will save you time and money, and you’ll probably end up eating healthier too.
*Splurge Rule: Allow yourself one dinner or lunch out a week, whether it’s with friends or your significant other.
6) Make your own cleaning products.
Save money on pricey household cleaners by making your own from common pantry items like baking soda, vinegar, lemon juice, and hydrogen peroxide.
*Go Green Tip: Besides being a lot less expensive than commercial cleaners, natural homemade cleaning products are more eco-friendly, free of harsh and toxic chemicals.
7) Buddy-buy in bulk.
What worked in college will still work now: Team up with friends or family who have a Costco or Sam’s Club membership, and make monthly trips to buy groceries and household necessities in bulk. Split the cost, split the goods, and save big.
*Two-for-One Tip: Your trip to a warehouse chain can double as a free meal if you take advantage of all the food samples.
8) Shop discount.
Thrift shops, outlets, and stores like Big Lots, Ross, and TJ Maxx are great places to get clothes and household and personal items at discounted prices. You can also find deals on used furniture and electronics online at sites like Craigslist and Overstock.com.
*Library Rule: If you chuck it, check it out. Instead of paying to buy or rent movies, video games, books, or magazines that you’ll end up reselling, returning, or recycling, check them out at your local library for free.
How to Make It on a Budget — Without Hating It
When you start keeping track of every single thing you buy in a week — your daily coffee, the soft drinks you get from the vending machine at lunch — you’ll be surprised at how easy it is to spend a lot of money on little things. The trick to living on a budget is to find a balance and cut back on the extras without giving up everything.
Use your newfound savings to treat yourself to little joys every once in a while: In addition to your weekly meal out, allow yourself one small monthly reward for sticking to your spending plan — a night out at the movies, a new outfit, a baseball game, anything that feels like a present to yourself.