The graduation parties are wrapping up, and your new grad has a diploma in hand and adventure on the horizon. And then – reality sinks in: “adulting” is hard! One of the top mistakes new grads make is not having a budget.
Here’s the average American’s monthly budget after college, using numbers from the Bureau of Labor Statistics’ (BLS) Consumer Expenditure Survey for 2014, with inflation calculated to represent 2018.
Housing ($1,536 per month)
Among households in the new-grad age group, 61 percent are renting. Obviously, this figure will vary widely based on location. The rest of the balance of housing money is devoted to utilities, household supplies, furniture, and appliances.
Transportation ($786 per month)
This includes monthly payments for the purchase of new/used cars, as well as gasoline, maintenance, insurance, and “other vehicle expenses.”
Healthcare ($235 per month)
Here’s where it really pays to be young. Healthcare spending is one of the only categories that consistently inches upward throughout life — even after you’ve retired. Of this total, the majority is used to cover insurance premiums, which likely means that employers are chipping in a significant percentage of the total cost of coverage.
Food and Entertainment ($799 per month)
This includes groceries, dining out, pets, hobbies and events. This figure does not include alcohol!
Education ($394 per month)
The average cost of student-loan debt is $37,000 with a 10-year term.
Other ($449 per month)
This covers a lot of different categories: clothes, alcohol, personal care products, cigarettes, donations, and even alimony payments.
The most important gift a new graduate can give to themselves is investing in their future retirement. Financial experts strongly recommend that young people start to set aside any extra money each month to contribute to retirement, and take advantage of compound interest. There are plenty of free monthly budget templates available online, so consider printing one out for your new graduate!