How to Budget Like a Post-Grad

Stop letting your financial uncertainty define your mental health.

The biggest misconception about budgeting is that no matter how well you do it, your wealth status won’t change.

Having a reasonable budget doesn’t mean you’ll be able to afford more. It will, however, change your motivations, change your lifestyle, and positively impact your mental health.

When you begin to keep up a sufficient budget, you’ll find that you are able to adopt a more minimalist lifestyle. You’ll be able to live like a post-grad while having ironclad financial security, without needing a soul-sucking job to pay the bills.

When I finished my degree, real expenses began to stack up quickly. Eventually, I came to two options — get serious about budgeting, or live in consistent depression and fear of money for the rest of my life.

The choice seems obvious, but at the time, I had no idea how to go about budgeting correctly, and it was intimidating. Luckily after plenty of trial and error, I have changed the way I look at money, and my financials have never been healthier, thanks to following these steps.

Step 1: Write down everything

When I first sat down to build a budget, I tried a variety of different approaches. The problem I always found though was no matter what I did; my numbers consistently came out inaccurate.

Frustrated and poor, I took a new approach. I was no longer going to half-ass my records, but instead, I was ready to make the leap and become a budgeting freak.

I began recording every single transaction into a google budget excel template. When I started, I assumed I wouldn’t be able to keep it up, but one year later, it is now a pillar of my lifestyle.

Not only will recording transactions help you become organized, but it forces you to become accountable for your spending.

Writing down forty dollars each weekend with the description “Jager Shots” is a pretty easy way to see the damage it’s doing to your bank account.

The trick in sustainable budgeting is choosing where to record everything. Find something that works for you, not some software anyone else tells you to use. The goal should be to look at your budget every single day for about five minutes, that’s all it takes.

Step 2: Always assume the worst

When I reluctantly had to replace the tire on my car for the first time, my Dad gave me some advice. He said I should always assume there would be an unplanned expense for each month. Unfortunately, he is right, and to be prepared, you can do two vital things.

1) Keep a healthy amount of savings

The classic rule people use concerning their savings is to keep at least three-months salary saved.

Most people don’t follow this rule, instinctively throwing leftover money at debt, but there is so much foresight in creating this savings cushion.

The bad news is that many things will go wrong in life. This money will make or break how you handle those situations. Getting laid off is a lot easier to stomach when your first thought isn’t how you are going to pay next months rent.

2) Set money aside each month for miscellaneous expenses

Always assume you’ll have to have some obtuse expense to deal with every month.

For example, recently, my cell phone broke, the software crashed entirely out of nowhere. My cellphone didn’t care if I could predict it would break or not, it just broke. You may think you are immune to these expenses because you play it safe, but that isn’t how life works.

Similar expenses will never be predicted, so instead, beat them, and predict their general happening by budgeting for them each month.

Step 3: Learn quick money management tips

When building your budget, you can go about it in a variety of ways. It really comes down to whatever you think is best.

With that in mind, some practical tips are helpful to follow.

1. Following the 50/30/20 rule. Popularized by Elizabeth Warren in her book “All Your Worth: The Ultimate Lifetime Money Plan” this is a general guideline to how your budget should look. You want to have fifty percent of your budget going towards needs, such as food, rent, and things like that. Thirty percent goes to wants, such as going out and other luxuries. Lastly, you save twenty percent, either going towards debt or a savings account. This is a strong foundation for knowing where to put your money.
2. Be flexible as the month goes on. Your monthly budgets are not written in ink. If you realized you spent a lot in gas and transportation halfway through the month, understand that you can move money around to accommodate this expense. It’ll make those expensive nights out seem more manageable.
3. Overestimate and underestimate. Whenever you earn money, round down, and whenever you spend money round up. It doesn’t have to be a lot; it’s just to create yet another cushion. It’s easy to miss a transaction every now and again, and this rule accommodates for those mistakes.

Step 4: Understand the logic behind minimalism

Many people believe minimalism to be a lifestyle choice, identical to what kind of music you like, or to your favorite color. People think that minimalism is a simple preference, some people like it, and some people don’t.

Minimalism is much more than a preference; it’s a science to being happier.

Sure, there’s a spectrum. I’m not saying moving into a twenty square foot house with two outfits is going to make everyone happy instantly. People get joy out of what they own, but it is always, to a certain extent.

After months of budgeting, you begin to understand this fact.

You’ll see where your money goes, and understand what purchases are bringing value to your life. This is how you start to budget like a post-grad, as you become painfully aware of how much you are putting into material items, and the little happiness returns some provide.

Buying material goods that don’t give you extended happiness aren’t worth the money you shell into them. Getting caught up in the marketing capitalist material world we live in, it’s hard to realize the lack of happiness our money is buying us.

It’s tough because you’re always being told that buying things is the answer, but I’m happy to say to you that it is a bold-faced lie.

If you get anything from this article, understand that to budget like a post-grad, purchases can’t be your answer to happiness. Start a budget, stick with it, and follow these steps. Once you get into a sustainable routine, you’ll wonder how you ever survived without it.