I hope you were able to watch my first ever Facebook livestream with my sister Sarah on how to navigate life and money after graduation. If not, I’ve posted it on YouTube so you can check it out (or just click below). I’ve also made it into a special podcast episode if you just want to listen to it, so make sure to subscribe to my show on iTunes.
We had so much fun chatting about how she managed her finances as a university student and how she was able to graduate debt-free (something I wasn’t even able to do).
Seeing as this is such a pivotal time of my sister’s life, I thought I’d breakdown some of the most important things post-grads need to know about money before spending their first “real job” pay cheque or moving out of their parents’ basement.
1. Calculate How Much Money You Need Before Moving Out
This was a big question my sister had right after graduation. Even I wasn’t sure if I had enough money when I moved out. For the record, I didn’t. All I had was a few hundred dollars, my Macbook and a full-time job I hadn’t even started yet. It’s a miracle I didn’t run back to my parents asking for help, but at least I can make sure my sister is well prepared.
So, how much money should you have in the bank before moving out on your own? Honestly, it really depends on where you want to live and your circumstances (sorry, there’s no magic number).
That being said, to give my sister an example of how much she may need to save up, I’ve pulled a few numbers for her to check out. These numbers are very general and based on living with a roommate in Vancouver.
What Costs to Expect When Moving Out for the First Time
|What You Need||Cost|
|Emergency fund (3 months’ living expenses)||$4,000.00|
|First month’s rent||$750.00|
|First month’s utilities||$100.00|
|Monthly transit pass (1-zone)||$90.00|
|Month’s worth of groceries||$150.00|
To be more accurate, you really need to figure out how much your rent and utility costs will be, how much money you’ll need for groceries and transportation, and how much it’ll cost to buy furniture and housewares.
What I suggest is downloading my free moving out checklist to give you a better idea of what you may need for your first place. Then, instead of just going to Bed Bath & Beyond and buying everything new, see if you can get anything second-hand via Craigslist, Kijiji or even Bunz.
Almost everything I owned when I first moved out was second-hand or from IKEA. Yes, it’s not ideal, especially when you’ve fantasized about making your first place your dream home. Unless you get a really high paying job right out of school, you’ll just have to be patient. You can make your place nicer over time as you continue to make and save more money, but don’t be surprised or discouraged if your first place is a crap hole.
If you want to get a firm handle on your finances right out the gate, you need to make a budget stat! Luckily, I also have a free downloadable budget spreadsheet to make things easier. I’m telling you, using a budget template will save you time and give you a good idea of what you should do with your first pay cheque.
Remember, the rule of thumb is to pay yourself first. That means that you shouldn’t just save whatever money is left over after paying rent and bills. First, decide how much money you want to save, then whatever’s left is how much you should spend on rent and bills. This will help you figure out how to cut unnecessary expenses (like your daily Starbucks or cable) so you can make saving money a priority.
To give you an idea of what my first budget looked like, here it is in all its glory.
What My First Budget Looked Like
Back in 2010, I was making a very low salary, living in one of the most expensive cities in the world, and despite the odds I was still able to make saving a priority. I’m so glad I did too because fast-forward 6 years and I’m able to smile every time I look at my savings accounts. Seriously, start saving as soon as you can and as much as you can. Your future self will thank you!
3. Don’t Stop Living Like a Student for as Long as Possible
I remember when I got my first real job after graduation. The idea I had in my head of how life would be was a bit ridiculous. I thought that making a salary and living on my own meant I could finally stop living like a poor student. Oh, how wrong I was.
Don’t Keep Up With the Joneses
Sure, I could have tried to keep up with some of my friends and spend all my money on eating out, buying new clothes and going to concerts every weekend. But I knew that as much fun as it would be to spend my money freely, it wouldn’t help me get to where I wanted to go.
After paying off my student loan less than a year after graduation, I vowed to myself that I would never get into debt again. I hated the feeling of owing money, and I wanted to make sure moving forward I would have the cash if I needed to buy something.
Being Frugal Doesn’t Mean You’ll Miss Out
That meant living like a student a bit longer. Well, more like 3-4 years longer. But honestly, I wasn’t less happy for it. I didn’t miss out on that much. I was just a bit more creative when it came to finding ways to have fun.
Instead of going to the bar and spending $50 on drinks, I’d invite friends over and spend $10 on a bottle of wine. Instead of spending money on checking out the latest film festival, I volunteered so I could get a free pass. Instead of spending money on lunch during the week, I was vigilant in bringing my homemade lunch to work every day.
Not only did this help me stay out of debt, it also helped me rapidly grow my net worth. Honestly, if I hadn’t lived so frugally all those years, there’s no way I could have afforded my 3-week trip to Thailand or moving across the country to get a higher paying job. And for those reasons and more, I’m so glad I lived like a poor student for a big chunk of my 20s.
4. Don’t Quit Your Part-time Job
Although my sister has graduated university, she’s still in the job hunting process. Luckily, she still has a part-time job so she can continue to make money while looking for her first real job. But if there’s one bit of advice I could give her, it would be to keep that part-time job even after she lands that career job.
That’s what I did, and it was one of the best decisions I could have made for myself. When I was job hunting after graduation, I got a side gig as a teleprompter operator for the news. It paid $20/hour, which was way more than I was making at my full-time job. For that reason, I kept that side gig for over 3 years, which helped me save more money than I could have had I just worked one job.
It may not sound like the fun thing to do in your 20s, but now that I’m in my 30s I’m telling you — work as hard and as often as you can while you’re young. It’s not easy juggling two jobs, but it’ll absolutely help you save more and live better down the road.
5. When You’ve Got Debt but Also Want to Save, This Is What You Should Do
Last but not least, this is the question I get the most from people I know, readers and podcast listeners. A lot of people struggle with this one because they have debt to pay off, but they also want to be smart and start saving as soon as possible. That and they want to make sure they have the right amount of cash on hand so they don’t get into further debt if an unexpected expense pops up.
This is another one where it really depends on your circumstances. Personally, since I am very anti-debt, I’m all about crushing that debt hard! At the same time, I don’t believe you should be putting all your money into paying off debt. You should find the right balance for you so you can pay off your debt as fast as you can, while also having enough to put away for emergencies.
It really comes down to calculating how much you need to put down on your debt so you can get it paid off by the date you want. And if that means that you need to find a second stream of income to crush that debt and save some on the side, then do it!
What money tips to do you have for today’s new post-grad?