New Grad: Am I Budgeting Outside My Means?

**disneysteve** · 10-14-2012, 03:01 PM

Originally posted by 23andConfused View Post

Takehome pay per month: 2400/month
Rent and utilities (including internet): 950/month
Food: 500/

My question: does this seem sustainable?

No, this is NOT a reasonable budget. Your rent would be about 40% of income. The guideline is to keep it under 28% so you're way high there. You either need a roommate to share the costs or you need a cheaper place to live.

As for the food budget, how many people are you feeding? If it is just you, I think $500 is rather high and could easily be trimmed back.

**23andConfused** · 10-14-2012, 03:04 PM

Hi Steve,

Thanks for the reply! I am living alone...I tried to overestimate the expenses for food, etc. a bit so that I would have a little bit of a cushion.

**humandraydel** · 10-14-2012, 03:21 PM

Originally posted by 23andConfused View Post

If I did sign on it, my plan would be to live here for a year before possibly moving somewhere cheaper where I can save more.

This statement alone should answer the question. Moving is expensive, so why would you pay moving costs twice? Move to the cheaper apartment now, not in a year.

That being said, the budget does seem to be lacking. What about car maintenance? medical costs? car insurance? car registration? Christmas presents?

**disneysteve** · 10-14-2012, 03:41 PM

Originally posted by humandraydel View Post

That being said, the budget does seem to be lacking. What about car maintenance? medical costs? car insurance? car registration? Christmas presents?

I'm guessing that's covered by Miscellaneous of $320/month.

**sblatner** · 10-14-2012, 05:52 PM

What about car insurance? I recommend you look through your bank account for the past year to see if you are missing any major expenses. How much exactly is the rent?

**Kenbo** · 10-14-2012, 07:59 PM

I think %40 of your take home is out of line. You have put yourself in such a great position financially, you don't want to head down the wrong road once you leave home. I think you can stretch it to 35% of take home, especially if it includes utilities. So you are lloking at $840 you can afford. Maybe you can find something in a nearby town that is not so hot & trendy. I mean, your 23, have no debt and a nice savings account. If you do this right you should be able to put 15% into your retirement and still save for a house or wedding or whatever. You'll either be able to retire early or retire at 65 with millions in the bank.

You probably will be able to spend less on food, but humandraydel and sblatner are right. You will need to do a more detailed budget to make sure you don't miss anything. That's another reason you don't want to handcuff yourself with a high rent bill.

**marvholly** · 10-15-2012, 01:21 AM

Other problems I see in this budget
No entertainment/fun money - do you NEVER go out w/friends
No vacation savings
No clothing costs - You prob NEED business attire, college worn/torn jeans do NOT do it
No personal expenses - birth control, hair cuts.............

that msc 320/month will be eaten alive by the above expenses.

**BMEPhDinCO** · 10-15-2012, 09:00 AM

I think you should break down your budget more. Car costs? Gifts? Personal (ie, clothing, hair, fun money)? Pets? Boyfriend?

You mentioned you will be able to max your IRA for this year - great! What about a 401k? Are you putting 15% gross into retirement? With the savings amount you have posted, you can't max the IRA for 2013... that would be an issue.

How much is your commuting cost? How would it change with the new place? What about your boyfriend's living situation? What would the drive to see him be? Would he move in with you? How about looking 20 minutes away from work?

Hope you can get this worked out before you sign!

**siggy_freud** · 10-17-2012, 03:17 PM

Your food costs appear way high, unless you're dining out a lot. For groceries, my GF and I spend about $300 per month.

Is there a middle area you can move to that will cut down the commute, but be out of the "trendy area?" FWIW my drive is 1 hour each way. It sucks, but have been doing it for 2.5 years because living downtown where I work would cost $1500 a month in rent.

**crazyliblady** · 10-20-2012, 10:51 AM

New Grad - Budgeting Outside Means

I agree that the budget is not sustainable. One thing I have noticed, though, is that I did not see anything for transportation. Whether you have a car (think car payments, maintenance, gas, tax, license, insurance) or some alternative method (bus, bicycle), that will need to be figured into your budget. Even walking to work wears out shoe leather.

Perhaps you should talk to your new coworkers. Maybe someone is looking for a roommate or has something to rent. Also, try looking outside the trendy area of town.

Congrats on graduating and the new job. Your savings accounts look pretty good considering you are just coming out college.

**Tree0164** · 11-06-2012, 12:11 AM

You have done a great job saving money while living at home.

Food budget-I spend $600-$700 a month for a family of 5 including 1 teen boy and 2 preteens who eat me constantly. Are you including eating out?

What utilities are included in the $950? if all of them including heat, hot water, electric, phone and internet? your rent should be within 25-28% of your budget

You need to break out your budget more

**Bades** · 11-07-2012, 12:01 PM

@23andConfused,

I'm somewhat of a recent grad myself, as I have been in the "real world" for a little over a year now.

I would for sure look for a roommate. My rent is similar to yours but split in half! I'm paying about $550-575 on rent/utilities.

FOOD - Also a lot of people on here I find are very cheap on food, and that's okay, they have families to feed. But if you want a realistic response, your food budget isn't that off.

Let's be honest here, as a young professional, and by your income seems like you have a pretty decent job, you'll be going out to eat, going to bars, happy hours etc. I love cooking don't get me wrong, but when you have no family and obligations, you're going to spend more time out, and on the finer things in life, and at this age enjoy it with friends and b/f while it lasts.

Renter's insurance - seems a bit high - if your car insurance is still on your parents plan, have them open a renter's insurance plan too. You need to save money by combining policies. $35 a month is really high, I pay about $14/mn

MISC
It's difficult(but can be done if you want to micro manage) to break down a budget for things like, clothes, haircuts, an occasional movie ticket, etc., because these are things you do not do every month, sometimes only a few times a year. I did the same as you did, After I budgeted all my obligations, what I had left over was basically for whatever I wanted. If I have $300 in misc, and I spend $20 on haircut and a new Xbox game for $50, you need to know at all times how much money you have left in your MISC fund for that month, just be smart about it.

It takes awhile living on your own before you really see any trends in your spending habits, it took me about 6 months before I could really get a good picture. Especially since your utilities fluctuate with the seasons too. You have a great start with loads of cash saved up.

Bottom Line:
Perform your due diligence with your saving goals and retirement funds first. After that it's easy

Finding a roommate will split your rent in half!
Shop around for insurance and make sure it's combined with your auto.
Don't worry too much about the food budget (just don't go overkill), you're young, my brother and sister rarely ever go out to dinner because they have kids, they're jealous! Enjoy it now!
Hopefully with a shorter commute you won't need to spend $250 a month on gas, that's a lot mileage!

New Grad: Am I Budgeting Outside My Means?