explains how you can start budgeting after student life once you get a real job. How to budget after graduating from college and university.

Straightforward Tips on Budgeting Pictures, Images and PhotosHi all!  This is a staff post by Teacher Man from My University Money.  Enjoy!

So your big day has come and gone, you wore the cap and gown, stood line for hours while 1000 other people had their 10 seconds in the spotlight, and now you finally have your big university/college degree/diploma.  You have reached the end of one journey and are now ready to enter the light at the end of the proverbial tunnel, after all, now you get the well-paying job and disposable income that you have forgone all these years since high school as you pursued higher learning right?  Uh… kind of.  Welcome to the world of bills and expenses (you were introduced to this while in school, but now it really starts to kick in) and those sweet student loan cheques that used to signal a celebration when they arrived in the mail?  Yah, those need to be paid back too.

I Don’t Know You, How Do I Know What Fits You Best?

There is no “one-size-fits-all” advice to help guide people through the budgeting process when they go from “starving student” to “affluent working stiff.”  The reason being is that everyone had different experiences while in school, and will now be in a different set of circumstances upon beginning their foray into the working world.  If you lived at home for your entire post-secondary career, and your folks are now kicking you out, then obviously you’ve got some pretty substantial changes to consider.  If on the other hand, you were living by yourself or with roommates and were working your way through school, then you might be pretty well prepared for what’s about to come.  Regardless of the specifics of your situation, there are a few universal lessons or choices that the vast majority of graduates encounter when adjusting their finances to go from student to “bread-winner.”

The Evil Lifestyle Inflation

The great temptation that I’ve seen for recent graduates is to look at their first paycheque and let loose on all the consumer spending they deprived themselves of as students.  This can get expensive in a hurry.  See the thing about material possessions is that you can never have enough of them.  Especially when your neighbour has more.  This has been especially tough for me the last couple years as many of my buddies randomly came from the Faculty of Geology.  Guess who is making more money, the guys taking oil and gold out of the ground, or the public school teacher?!  If I tried to keep up with these “Joneses” I would be several thousand dollars in debt before you could say “Two Degrees and a 150 credit hours.”  Think about what you’re doing and if you really need these consumer items before you give your credit cards a workout.  Consumer debt usually carries crazy interest rates and can hamstring your budget before you really develop the financial survival skills you’ll need going forward.

I’m Special Because The Nike Commercial Says So

Of course marketers and advertising gurus don’t help the situation.  They have tapped into this recent movement of, “I am so worth it.”  To put it bluntly, this is a bunch of a crap.  The whole idea of rewarding yourself exclusively through buying material stuff is an idea that has been put in your head from someone else (I guess most ideas are like this… but these people got paid to put it there!), and definitely is not a positive lifelong strategy.  By all means, go out to eat every couple of weeks, or buy that new shirt, but let it stop there.  When did completing a course of study automatically qualify people to buy new vehicles or take on $400,000 mortgages?  Don’t succumb to this whole marketing ploy of, “You’re so special, you deserve this, reward yourself.”  You won’t feel special when you are living at parent’s place after you’re shiny new car and house have been repossessed and you are drowning in debt.

Budgeting… Man, Being a Grown-Up Sucks

The flip approach to this consumer spending orgy is to remember what life was like as a student.  It wasn’t that bad right?  You were able to survive and thrive on Ramen noodles and Kraft Dinner.  You likely had very little disposable income (I consider alcohol part of the “necessity budget” while in school) and yet I would bet you were pretty happy.  This is a useful starting point for creating your budget after you have a decent income coming in.  If you were happy with life without all of that consumer spending, how much of a difference will these luxuries really make?  Remember how big that first pay cheque looks, don’t let yourself get complacent and start eating away at your monthly income with umpteen payments and begin staring into the black hole known as interest.  Instead, remember how much money that really is, and use it to your advantage.  As a student you had a built-in lesson on how to live frugally, now make use of this hard-won knowledge and experience!

Different Strokes For Different Savers

There are 1001 ways to budget.  Some people love creating detailed spreadsheets and tracking every penny they spend.  Others focus on putting money into all kinds of different accounts in order to save for specific items or expenses.  Personally, I just live by a few cardinal rules and let the rest take care of itself.  Find out what works best for you.  I have a fairly self-disciplined personality, so my lazy style of budgeting works for me, whereas other people who are most susceptible to impulse buys my need a little more structure built in.  It all starts with the golden rule of, “SAVE 10%!!”  No doubt you have heard this before, and it really is that simple.  Oftentimes people will rephrase this commandment into “Pay yourself first” or a similar snappy credo, but the basic idea is always the same.  Getting rich, or at least very comfortable (everyone’s definition is different) is so easy if you actually obey this rule.  In fact, if you look at how little you spent as a student, I believe most people with a post-secondary education can do much better than this little commandment.  If you crave financial freedom and getting out of the rat race like I do, then saving 20% or more is a very achievable goal, and one I would recommend.

Automate, then Dominate

The other two areas I focus on and that are proven winners for everyone I’ve met is to make things automatic, and to prioritize spending.  When you first get out of school really stop and think about what you want out of life and then prioritize your spending accordingly within your budget.  My brother sat and listened to my spiel on compound interest and thought about it for a few weeks, then came to the conclusion that he knew he was giving up a substantial amount of future earnings, but he would like to spend the majority if his current savings on a trip.  That is his priority, and he made an informed decision.  We have different priorities, so each of our decisions is right in its own way.  Finally, the most effective way to budget is to set up automatic payments, and savings plans that get taken straight from your main bank account (that your paycheque gets deposited into).  “Expert” after expert has said that by using this automation technique we eliminate the pull of advertising and consumer luxuries on our savings.  It also guarantees no late penalties on your basic bills (and just much less hassle).  Overall, it’s a great practice to get into as you get out of school.

If you focus on what you find most important, save AT LEAST 10%, and automate your major savings plans/expenses, you will be ahead of most of your co-graduates.  Don’t fall into that consumer goods/keeping up with the Joneses lifestyle inflation trap!  If you can live something similar to your “student lifestyle,” yet earn a “grown-up” income, it doesn’t take that long to build wealth and achieve financial independence.

Article comments


After struggling through my first few years of university I managed to pull together quite a respectable income during my final year by working three part time jobs – upon starting my first ‘real’ job I tried to continue living off of my student income for as long as possible and save the rest. While I’m now spending double what I was as a student, the habit of saving has stuck with me and I don’t miss the large proportion of income I save because I was never used to spending it

Teacher Man says:

That’s a great story FI. Congrats on establishing some wealth-building ideas from a young age.

Good post. I agree it definitely is a transition, even for the mature. Ideally, it something that we’re eased into, but sometimes it can be downright intimidating if someone isn’t adventures and somewhat self-reliant. I like your automation suggestion as well as your quote! “Automate and dominate”

Joe says:

Just make sure you find a partner who can contribute to your bills. Also, work hard to increase my income. This allowed me to keep my % of savings the same, whilst (1) living in a nicer apartment (a two bedroom with ensuite laundry, stainless steel appliances, a granite countertop etc), and (2) saving a larger nominal amount of money from each paycheque. Lifestyle inflation can be terrible, but if you structure your life properly it’s not as devastating as it sounds.

SavingMentor says:

Avoid lifestyle inflation is SOO hard and I think your advice about remembering your happiness level and corresponding lifestyle in university is very solid. It’s a simple proof that money and material things don’t buy happiness!

young says:

@SavingMentor- I’m struggling with this too and having anxiety about babies and families etc. I guess it’s something that is normal so hopefully normalizing life style inflation won’t make it hurt so much.

The biggest difference was where I was living — I used to live in an apartment where many neighbours were on welfare and I could smell the pot all the time. Nonetheless I actually liked it since the area around was pretty nice, the apartment was clean, and there was not much crime or violence as far as I could tell.

krantcents says:

I am a savings advocate because it is the main reason I was able to achieve financial freedom. I started early setting up a payroll deduction to have enough money for the annual expenses such as property taxes and insurance. I got used to living on less and increased my deduction to sock money away for retirement. A disciplined approach helps you achieve what you want.