Tips for Budgeting As A New Grad

[u/Tunoryx]

Hey everyone! I'm not graduating any time soon but I wanted to get a feel for chemical engineering salaries/budgeting and such. How do y'all budget to live with a typical bachelor degree only salary out of college with debt and such? And how is the salary in more urban areas for new grads? Overall any tips on budgeting would be appreciated whether it comes from someone with only a bachelor's degree or someone more experienced! Thank you!

[u/YogurtIsTooSpicy]

It very much depends on where you live, your debt levels, etc. For me, my budget for take-home pay looks something like:

25% housing

25% retirement saving

25% other bills

25% discretionary

but if I lived in a HCOL area, housing could easily eat up 60% of my take home pay. My student loan payments are also very manageable and I don’t have any other significant expenses like kids, medical bills, family that needs help, etc.

I would highly highly highly recommend investing in your retirement accounts as aggressively as you can possibly stand though. In your early 20s, you can reasonably expect every dollar you smartly invest in a broad basket of stocks to be worth 32x by the time you hit 65. That multiplier shrinks FAST as you get older.

[u/AzriamL]

whatever heuristics you want to use, and no matter how high or low your salary, remember: live and spend below your means.

cashflow is king; you can make $120k out of college, but you're going to be cash starved for savings/investments if you're strapped to a $4k rent out in NYC with the highest income and sales taxes around.

housing and car will likely be your highest recurring expenses. figure out ways to live comfortably while keeping them reasonable.

[u/Tall-Amount-142]

https://moneyguy.com/guide/foo/

[u/Thelonius_Dunk]

More of an r/personalfinance topic but I'm fine with it.

I'd focus on making sure your housing costs can be managed as much as possible if you can as that'll be your biggest expense.

After housing, I'd recommend working on saving up to a 6 month emergency fund to cover bare minimum living expenses (housing/food/internet/phone/car payment).

Simultaneously I'd also work on contributing to your 401k and IRA, and HSA if your job offers one. If you can swing it, I'd max out all 3 as that'd be pretty good cost savings.

If you have student loans, I'd honestly just pay the bare minimum for now and only spend more if you really reallly want to. The emergency fund and retirement savings are more important imo.

After that, contribute money to whatever upcoming savings goals you may have, like housing or car down payment, or wedding, or even a new business investment.

And after that, idk, go wild.

My overall financial philosophy is to spend what's leftover after priorities are met, but to make sure you have rigid priorities. Housing costs I'll estimate at 1500/month is 18k/yr. Maxing out 401k+IRA+HSA(solo) is ~35k/yr. Student loans might be something like 5k/yr if it's in the 400/month range. Emergency fund based on 2k/month living expenses is 12k/yr. So thats 18+35+5+12= 70k.

Obviously this is a super conservative case, but you kinda get the picture. Maybe you don't max out retirement now, or maybe you get roommates and find a place at 700/month, or maybe you decide to take 2 years to build up an emergency fund because if SHTF you can always file for unemployment. There's all these levers to pull, but it's a good idea to organize what your "ideal" financial case and go from there.