budgeting basics

Budgeting Basics for Your First Post-College Job

Trying to figure out the budgeting basics for your first job post college? This post will answer some of your most burning questions!

budgeting basics

Life after college comes with a whole new set of responsibilities, and one of the biggest is managing your money. There is so much I wish I knew about money when I started working full time.

Whether you’re excited about your first paycheck or feeling overwhelmed by the idea of budgeting, don’t worry—I’ve got you covered.

As your fairy-grad-mother, I’m here to guide you through the essentials of budgeting so you can honor God with your resources and start off on the right financial foot.

Budgeting Basics for Your First Post-College Job

Understanding Your Income

Gross vs. Net Income

First things first: let’s talk about your income. It’s important to know the difference between gross income (the total amount you earn before taxes and deductions) and net income (the amount you take home after taxes and deductions). Understanding this will help you plan your budget more effectively and ensure you’re being a wise steward of what God has entrusted to you.

  • Gross Income: This is the “wow, I’m rich!” number on your offer letter.
  • Net Income: This is the “okay, now I need to budget” number on your paycheck.

Action Step: Review your pay stub to see how much you actually bring home each month. This will be your starting point for budgeting.

Creating a Basic Budget

Identifying Essential Expenses

Once you know your net income, it’s time to create a budget. Start by identifying your essential expenses—these are the things you absolutely need to pay for each month.

  • Tithing: Consider giving the first 10% of your income to your church or charitable causes as an act of worship and trust in God’s provision.
  • Rent/Mortgage: Your biggest expense, so budget accordingly.
  • Utilities: Electricity, water, internet—these keep your home running.
  • Groceries: Essential for survival, and yes, coffee counts.
  • Transportation: Whether it’s gas for your car or a public transit pass.
  • Insurance: Health, car, renters—don’t forget these!

Allocating for Savings and Discretionary Spending

After covering your essentials, it’s crucial to allocate money for savingsdiscretionary spending, and giving.

  • Savings: Aim to save at least 20% of your income. Start with an emergency fund (more on this in a bit). Proverbs 21:20 reminds us, “The wise store up choice food and olive oil, but fools gulp theirs down.”
  • Discretionary Spending: This is for non-essentials like dining out, entertainment, and hobbies.
  • Giving: Beyond tithing, consider setting aside additional funds for spontaneous acts of generosity or supporting causes you care about.

Action Step: Use a budgeting tool or app to track your spending and adjust as needed.

Building an Emergency Fund

Why You Need One

An emergency fund is your financial safety net and possibly one of the most important budgeting basics. Life is unpredictable, and having money set aside for unexpected expenses can save you from stress and debt. Proverbs 6:6-8 advises us to be like the ant, preparing for future needs.

How Much to Save

Aim for three to six months’ worth of living expenses. Start small—saving even a few dollars a week can add up over time.

Action Step: Open a separate savings account for your emergency fund. Automate transfers from your checking account to make saving easier. I recommend Ally Bank because it is a high yield account which means you make money on your money!

Handling Debt

Student Loans and Credit Cards

Debt can be a major source of stress, but it’s manageable with a plan. Focus on paying off high-interest debt first (like credit cards) while making regular payments on your student loans.

Strategies for Paying Down Debt:

  • Snowball Method: Pay off your smallest debts first for quick wins.
  • Avalanche Method: Pay off debts with the highest interest rates first to save money on interest.

Action Step: List all your debts, their interest rates, and minimum payments. Decide on a repayment strategy that works for you.

Saving for Future Goals

Short-term vs. Long-term Savings

Set clear savings goals for both the short-term (like a vacation or new gadget) and long-term (like buying a home or retirement). Prioritize based on what’s most important to you.

Setting Realistic Goals

Be realistic about how much you can save each month. Even small contributions can make a big difference over time.

Action Step: Use a savings calculator to determine how much you need to save each month to reach your goals. Adjust your budget as needed to accommodate your savings.

Avoiding Lifestyle Inflation

Maintaining Financial Discipline

When your income increases, it’s tempting to start spending more. This is called lifestyle inflation. Instead, focus on maintaining your current lifestyle and putting extra income toward savings or debt repayment.

Benefits of Mindful Spending:

  • More financial security and less stress
  • Greater ability to reach your financial goals

Action Step: Each time you get a raise or bonus, decide in advance how much will go toward savings or debt and how much you can spend. This way, you can enjoy a bit of extra spending without derailing your financial plans.

Additional Tips for Budgeting Success

Track Your Spending

Tracking where your money goes is a crucial budgeting basic. Use budgeting apps like MintYNAB (my favorite), or even a simple spreadsheet.

Action Step: Spend a week logging all your purchases. Review your spending patterns to identify areas where you can cut back.

Review and Adjust Regularly

Your budget isn’t set in stone. Life changes, and so should your budget. Review it monthly to make sure it still aligns with your financial goals and situation.

Action Step: Set a reminder to review your budget at the end of each month. Adjust as necessary to stay on track.

Celebrate Your Wins

Budgeting can be challenging, so celebrate your successes! Whether it’s sticking to your budget for a month or paying off a debt, give yourself a pat on the back.

Action Step: Plan small rewards for hitting your financial milestones. This keeps budgeting fun and motivating.

Budgeting Basics Conclusion

Budgeting might seem daunting at first, but with a bit of planning and discipline, it can become second nature. Remember, everyone’s financial journey is different, and it’s okay to make adjustments along the way. By starting with a basic budget, building an emergency fund, and managing your spending wisely, you’re setting yourself up for financial success. You’ve got this, and your future self will thank you!

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