Budgeting for Graduates

Budgeting for Recent College Grads: How to Start

Now that the glow of graduation is fading, let’s step into the ‘exciting’ world of budgeting!

Graduating from college is a huge achievement — congrats if you’ve recently received your diploma! However, along with the pomp and circumstance, lay a few more serious responsibilities to pay attention to. That includes your budget.

Many students don’t think too seriously about their budget during their college years, either because they’re usually flat broke, or because they spend the money they do have on what they need (and save a little for partying) but don’t have to worry about loan payments, bills (if they live on campus), or savings.

Graduating changes that. For many, finishing school triggers repayments on your loan. Becoming independent requires more bills to look after, such as water, power, internet, and pet fees. Plus, your early to mid-twenties is the time to start thinking seriously about saving for the future.

Today, we’ll walk you through a few steps you can take to get serious about budgeting after college. Follow these steps and see what works best in your life.

Track Your Expenses

Before you can make a realistic budget that reflects the way that you spend money each month, you must get a bird’s-eye view of your regular monthly expenditures. You can do this in a few different ways:

  • If you regularly use a credit or debit card for day-to-day expenses, you can easily log into your bank or credit card’s online portal and review your expenses over the past few months. Some credit card companies actually break down your monthly spending into a few distinct categories, so you should definitely make use of that if you see the option.

  • If you regularly use cash — or just a confusing mix of different cards, phone-based payments, and cash — it can be more difficult to get an idea of how much you spend. If you still have them around, look through old receipts and put together your spending history.

  • Failing those two options, you may have to just be diligent to track next month’s expenses. Keep a log of the various things you spend money on to categorize them. You can also download apps that help you with tracking expenses, too. Then, at the end of the month, take inventory of the costs you accrued over the month.

It might shock how much you send in some categories. Your morning coffee probably isn’t costing you as much as some people warn, but your weekend bar tabs just might be. If you notice any problem areas after tallying up your regular expenses, you know where to start cutting back — or you might see whether you need to pick up a side hustle.

Some expenses just cannot be avoided, however. Gas, groceries, and doctor’s office copays, for example, all come under the necessary expense category. Creating a spending plan will provide help in controlling your wants while minimizing your needs.

Plan Spending Ahead of Time

A spending plan shows the portion of a budget that you expect to spend on certain areas. For instance, you might decide that $300 each month will go toward groceries or $200 toward gas.

You can start your spending plan based on the idealized version of your past month’s worth of expenses. By “idealized version,” we mean the most financially savvy spending plan that still takes into account all of the regular expenses you expect to rack up. Below, we explain what that might look like:

  • First, decide how much of your budget will go toward unavoidable expenses. Rent, utilities, bill payments, loan payments, transportation, and medical expenses should all go in this category. This is money you know you’ll have to spend no matter what.

  • Next, make a category where things can be more flexible. Depending on your tastes, you can find and purchase groceries pretty cheaply. Tofu, rice, and beans for dinner a few nights a week can save you tons of cash — steak every night will start to add up quickly. Clothes also fall into this category. Decide roughly how much you want to spend on groceries and other flexible-but-still-necessary items, and try to stick to that amount.

  • Lastly, allocate a bit of money toward the fun stuff. It’s important to focus on this aspect of your budget. It can be easy to feel peer pressured into going to a concert you may not be able to afford this month. By using your spending plan, decide with confidence whether you can afford to go.

A spending plan should not use up every dollar brought home in a month. You should regard savings as equally important.

Save, Save, Save

Many young adults do not consider saving money a high priority. They have the mindset of waiting until their mid-career years, when they can earn substantially more money, to start worrying about savings. However, saving is actually important no matter your age. The three main reasons below explain why:

  • Everyone needs emergency savings. A sudden job loss, car accident, unexpected medical bills, or other unexpected expenses can cost you a small fortune. Aim to save between 4 to 6 months’ worth of expenses of cash in a savings account for emergency savings. Cash is a liquid asset, meaning you can easily and quickly access it. It’s perfect for use in emergencies.

  • Save for life events. Major life events such as marriage, purchasing a car, home, or starting a family, demand a lot of time, energy, and money. Life can get pretty expensive, and without cash reserves on hand, the possibility of winding up in debt with a poor credit history increase dramatically.

  • It’s never too early to save for retirement. Too many young adults ignore or put off investing for retirement. Sadly, that often means that by retirement, people don’t have enough money available to maintain the quality of life one might hope to achieve in retirement. Compound interest is a powerful thing. By investing early and aggressively, a comfortable retirement becomes a real possibility.

Budgeting as a new graduate can seem difficult, and sadly, not enough schools require classes in personal finance. However, by setting up a solid budget, you can get yourself on track to have a financially healthy and successful young adulthood.

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NOTE: This sheet is to inform new or returning clients about our services, records, fees, and limitations that may affect you as a consumer of our services. This form also discloses how we might release your information to other agencies and/or regulators. If you do not understand a statement, please ask a Debt Reduction Services (DRS) counselor for assistance.

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To provide our financial education and credit counseling services, we collect nonpublic personal information about you as follows: 1) Information we receive from you, 2) Information about your transactions with us or others, and 3) Information we receive from your creditors or a consumer reporting agency. We do not share this information with outside parties.

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You hereby authorize DRS, when necessary, to share your nonpublic personal, financial, credit, and any information that you provided (including any computations and assessments produced) with the following entities in order to help DRS provide you with appropriate counseling or guide you to appropriate services: third parties such as government agencies, your lender(s), your creditor(s), and nonprofit housing-related and other financial agencies as permitted by law, including the U.S. Department of Housing and Urban Development.

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Debt Reduction Services, Inc. complies with the privacy requirements set forth in the HUD housing counseling agency handbook 7610.1 (05/2010), including the sections 2-2 Mc, 3-1 H(2), 3-3, 5-3 F, and Attachment A.5. At all times, we will comply with all additional laws and regulations to which we are subject regarding the collection, use, and disclosure of individually identifiable information.

  1. Services: DRS provides the following housing-related services: counseling that includes Homeless Assistance, Rental Topics, Pre-purchase/Homebuying, and Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase); Education courses that include Financial literacy (including home affordability, budgeting, and understanding use of credit), Predatory lending, loan scam or other fraud prevention, Fair housing, Rental topics, Pre-purchase homebuyer education, Non-delinquency post-purchase workshop (including home maintenance and/or financial management for homeowners), and other workshops not listed above.

Please refer to DebtReductionServices.org for details of our services.

  1. Limits: Our services are limited to our normal weekday business hours. We do not provide individual counseling or education services after hours or on weekends, although our education courses are available 24/7.
  2. Fees: We do not charge fees for our financial management counseling and education. However, if you use them, you may have to pay for our Debt Management Program, Student Loan Counseling, Bankruptcy Certificate Services or certain financial education courses (homebuyer education, rental topics, fair housing, predatory lending, and post-purchase-non-delinquency including home maintenance and/or financial management for homeowners).
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Disclosure to Client for HUD Housing Counseling Services

Debt Reduction Services, Inc. and its financial education arm, Money Fit by DRS, offer the following housing counseling and educational services related to housing, personal finance, and bankruptcy certificates to consumers:
  • Housing Education Courses: DRS offers many online self-guided education programs classified as Financial, Budgeting, and Credit Workshops (FBC), Fair Housing Pre-Purchase Education Workshops (FHW), Homelessness Prevention Workshops (HMW), Non-Delinquency Post Purchase Workshops (NDW), Predatory Lending Education Workshops (PLW), Pre-purchase Homebuyer Education Workshops (PPW), and Rental Housing Workshops (RHW). These courses help participants increase their knowledge of and skills in personal finance, including home affordability, budgeting, and understanding the use of credit, as well as predatory lending, loan scams, and other fraud prevention topics, fair housing, rental topics, pre-purchase homebuyer education, non-delinquency post-purchase topics including home maintenance and/or financial management for homeowners, homeless prevention workshop, and other workshops not listed above relating to personal finance and housing. Course details are found below under “Housing Workshops.”
  • Home Equity Conversation Mortgage (HECM) Counseling (RMC): Via telephone and virtual platforms, we offer the required HECM counseling nationwide in addition to in-person counseling in Boise, Idaho. We also offer in-home counseling options in thirty counties across southern Idaho for an additional fee to cover our travel and additional staff time costs.
  • Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase) (FBC): Clients receive counseling and materials on the proper maintenance of their home and mortgage refinancing. Clients can find help and resources by phone, in our Boise office, or virtually on all topics related to stabilizing their long-term homeownership.
  • Services for Homeless Counseling (HMC): Clients receive phone, virtual, or in-person (Boise) counseling to evaluate their current housing needs, identify barriers to and goals for housing stability, establish a path to self-sufficiency, and connect with emergency shelters, income-appropriate housing, and/or other community resources (e.g. mental healthcare, job training, transportation, etc.).
  • Pre-Purchase Counseling (PPC): Clients receive counseling through the entire homebuying process. Assistance may involve creating a sustainable household budget, understanding mortgage options, building their credit rating, and putting together a realistic action plan to set and achieve homeownership goals.  Additionally, clients will receive materials and resources about home inspections and other homeownership topics relevant to successfully maintaining a home.
  • Rental Housing Counseling (RHC): Via phone, in-person appointments (Boise, ID), or virtual platforms, clients receive housing counseling relevant to renting, including rent subsidies from HUD or other government and assistance programs. Topics can also address issues and concerns having to do with fair housing, landlord and tenant laws, lease terms, rent delinquency, household budgeting, and finding alternate housing.
DRS also offers the following services:
  • A Debt Management Program (DMP) for consumers struggling to pay their credit cards, collections, medical debts, personal loans, old utility bills, and past-due cell phone accounts;
  • The Budget Briefing and Debtor Education Certificates that are required during the Bankruptcy filing process;
  • A Student Loan Repayment Plan Counseling and application service.

Relationships with Industry Partners

Through such services, DRS has established financial relationships with hundreds of banks, credit unions, and creditors such as American Express, Bank of America, Barclays, Capital One, Chase, Citibank, Credit One, Discover, Synchrony, US Bank, USAA, Wells Fargo, and others.

No Client Obligation

The client is not obligated to receive, purchase or utilize any other services offered by DRS or its exclusive partners to receive financial education or housing counseling services. Alternatives: As a condition of our counseling services, in alignment with meeting our client services goals, and in compliance with HUD’s Housing Counseling Program requirements, we may provide information on alternative services, programs, and products available to you, if applicable and known by our staff. Alternative DMP services include negotiating better repayment terms directly with your individual creditors, paying your debts as agreed, or, in extreme cases, filing for personal bankruptcy. Alternative credit and education services can be found through MyMoney.gov or the Jump$tart Clearinghouse of online financial education resources. Housing counseling alternatives can be found through HUD at www.hud.gov/findacounselor.
Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.

Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

RentalFair HousingPredatory Lending / HOEPAPost-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. creditbudgetinghomeless preventiondebt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).

Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

RentalFair HousingPredatory Lending / HOEPAPost-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. creditbudgetinghomeless preventiondebt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).