Home > Personal Finance > Budgeting for Your First Summer After Graduation

Comments 0 Comments

Without the college experience you once took for granted — dorms, prepaid meals, parental bailouts, etc. — recent graduates are left to brave the tightrope of financial responsibility without a safety net.

Post-grad life is as liberating as it is marked by destitution. For one, shortly after commencement, the burden of loan payments, bills, and daily expenses is quickly thrust upon unsuspecting 20-somethings. This, paired with the fact that entry level jobs are as rare as spotting a senior in the library, culminates in a significant disparity between financial input vs output.

According to CNBC, nearly 70 percent of recent grads were either unemployed or working in a full-time non-professional job during the summer after graduation. The older generation is quick to blame Millennial apathy, but consider the current state of job hunting: an increasingly competitive job market, which asks applicants to have work experience and an education, unfairly pigeon-holes inexperienced grads in career limbo.

You’ve tossed the cap, but class is still in session — here is a lesson in budgeting for recent college graduates.

Reassess Your Lifestyle

You’re not in college anymore, which means evaluating your income (or lack thereof) and adjusting life’s luxurious accordingly.

It might be time to pare back eating out, subscription services, and yes, sorry to say, alcohol. Here’s a sobering fact: a moderate weekend at the bars can add up to a monthly cost of $500, or more, in alcohol costs alone.

It’s time to take a hard look at yourself in the mirror and confront whether it’s sustainable to live a college lifestyle given a recent graduate’s income.

Get a Job (or Two)

It’s not uncommon for graduates to carry over bad habits from college, but one pattern you can no longer afford is taking summers off. All good things must come to an end, and chief among these is lounging around during the summer.

Even if your career J-O-B is TBD, you should still fill summer hours with work where you can. This could be a temp position, part time job, freelance work, or mowing lawns like the good ol’ days. Now is not the time to be prideful about your fresh-off-the-press degree — a job that pays is a good job.

When you do get a chance to enjoy some fun in the sun, you can rest assured that your checking account isn’t in a drought.

Create a Budget and Stick to It

While in college, you might have gotten away with poor budgeting, but those days are over. Many students are able to skirt around an official budget by supplementing late night pizza, impulse purchases, and unplanned trips with excess student loan funds.

Unfortunately, the borrowed buck stops here.

Start by recording your regular income and comparing it to regular expenses. Segment life’s expenses into necessities, luxuries, and the rest. Non-negotiable costs include rent, utilities, groceries, and debt. Only after accounting for these items can you begin stretching your paycheck to other costs.

Limiting frivolous spending, and adhering to a strict budget, is one of the best ways to protect your income and work toward establishing savings. Which brings us to our next point…

Delegate Funds to Savings

Saving isn’t fun — there is really no way around it. Parting with hard-earned income can feel like pulling teeth. But, while it might sound cliche, you will thank yourself later. There are many practical reasons for saving money: retirement and working toward large financial goals such as buying a house are some key reasons to pinch pennies.

However, some of these milestones can seem abstract and far away when you’re newly out of college. If saving seems like an activity to delay until your 30s, consider the short term benefits of saving money.

For example, in lieu of an emergency fund, extenuating circumstances must be billed to your small checking account reserve. Not only can this put a halt to long term financials goals, but can affect essential payments like rent or groceries. Planning for the unexpected, and growing an emergency savings account, helps savvy savers from the detriment of unexpected costs.

Establish Credit

While you might not feel like it yet (or ever for that matter), you’re an adult now. And being an adult means having credit.

More than ever, young people — made skittish by the Great Recession of their formative years — are opting out of debt. Millenials are avoiding car payments, mortgages, and even credit cards in an effort to “live within their means.” While, this might sound like responsible budgeting at first blush, there are actually serious drawbacks to avoiding credit that become especially apparent later in life.

What this generation fails to recognize is that credit is an important indicator of financial responsibility that is used for many purposes. Want to take out an auto loan? You need credit. Want to rent an apartment? You need credit. What about getting a job? Even then, sometimes, your credit score is queried.

Here’s what this all amounts to: without credit, you significantly limit your mobility as a consumer. In the event you want to graduate from a small apartment to a small house, you need a long-standing record of on-time loan payments in order to receive mortgage approval.

Start small — get a credit card with a small limit and pay it off each month. From there, work up to a small personal loan. Car loans are popular, safe lending that can be used as a stepping stone to better credit.

Incrementally, you will increase your credit score and better establish yourself as a viable borrower. Improving credit scores will be a lifelong journey, and as a recent graduate you’re in an especially advantageous position. At best you have a positive history of on-time student loan or credit card payments. At worst, you have no credit. Either way, there is room for improvement, which is a great spot to be in.

If you want to know more about your own credit standing, check your three credit reports for free once a year. Get your free Credit Report Card from Credit.com — an easy-to-understand breakdown of your credit report information.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team