CommonBond Guest Post, June 27, 2014
A Little Here, A Little There— How New College Grads Can Survive Off a Small Salary
Blaming unemployment on the bad job market is no longer a cop out, but rather a scary reality to many recent college graduates. A recent article by ABC News explains how despite college student’s optimism and confidence that they’ll find a decent job when they graduate, the continually slowed (yet slightly better) economy is still offering fewer job openings and more competition, especially in high-tech industries.
Due to this heightened competition, many recent grads have resorted to accepting jobs that don’t quite fit their ideal job description, or, perhaps more importantly, their ideal salary. Some are even accepting internships due to lack of other options.
Slate Magazine claims that for the graduating class of 2014, over 60 percent will have over a starting salary of less than $45,000, and around 20 percent will actually make under $25,000.
Moving into the real world on such a limited budget is no easy feat, especially if you have student loan debts to pay off— 71% of graduates will have student loan debt, each owing an average of just under $30,000.
Learning how and where to spend your finances takes time and experience for first time employees. There are a few tried-and-true financial tips, however, that can make a huge difference when it comes to making every penny count.
- Don’t overpay for rent. Even the government agrees: since rent is one of the biggest expenses for young people, it’s not an area where most can afford to splurge. The best rule of thumb is to spend no more than 30 percent of your annual income on rent. An easy way to see your monthly rent cap is to take the combined salaries of you and your roommates (if you have them), and divide this number by 40.
- Decide what’s worth the splurge, and save on the little things. Is the off-brand cereal $3 cheaper? What about making your own coffee versus the morning Starbucks run? These may seem like insignificant differences, but you’d be surprised at how quickly even the smallest of expenses begin to add up. Consider what’s worth investing more heavily in, such as high-quality, long-term items, and things that aren’t, such as daily meals, coffee, and overly-trendy clothes that will be out of style in a year.
- Set a budget, and stick to it. Online services such as Mint allow you to easily keep track of your expenses by dividing them into categories, such as rent & utilities, food & restaurants, travel, gas, shopping, and so on. You can set up short and long term goal budgets for each category, and the app will even alert you if you go over budget in a certain category. All hail the piggy bank.
- Figure out how to spend less on your daily commute. Whenever possible, utilize services such as public transportation, carpooling or even walking to work if you can. Gas prices are continuing to be ridiculously high, and it doesn’t look like they’re getting lower anytime soon. Looking into alternate transportation options can save you at least around $100/month in gas.
- Make a long-term plan for your student loan expenses. Although there is typically a 6-month grace period after graduation, he best time to begin paying off student loans is as early as possible, mainly to help combat interest fees. One way to save on expenses is to try to cut back on the amount you owe by consolidating and refinancing your debt. Services such as CommonBond connect graduates and students with appropriate lenders to help them fund and refinance student loans. They provide a powerful network of students, grads, alumni, and accomplished professionals who help each other get to where they want to go.
The real world is no easy place to adjust to. As long as you’re smart about your where you’re putting your money, however, you don’t need to start panicking just yet.
For more information on how education can be accessible, visit CommonBond.