The next step in adulting: setting a household budget

In just a couple of months, a new cohort of college graduates will leave behind their careers as students and start new ones as entry-level workers. And for many, regardless of age, that change brings a whole new financial landscape to navigate.

Gabby DelMonaco, a financial planning assistant in Silver Spring, Md., is set to graduate from college this spring. She began budgeting and covering her own living costs when she started college and feels financially prepared to leave school. But she's not sure her classmates are all in the same position.

"I think a lot of people are just unaware of the reality of how much it really costs to live on your own," says DelMonaco.

College graduation might mean you land a job and have more money to spend. It also might mean you now have to use that income to pay for living expenses like rent and groceries. And six months after school is over, you can also expect to start repaying any student loans you have.

As you think through how much your post-college lifestyle will cost, consider all of your expectations. Many expenses — from food and gas to rent and your first living room couch — are getting more costly due to inflation, making it a little bit more challenging to be a new graduate with limited income, says Andrea Clark, a certified financial planner in Fountain Hills, Ariz.

"You just have a better chance for financial success if you start out with a plan instead of starting out haphazardly," Clark says. Most importantly, making a plan will keep you from living beyond what you can afford, Clark adds.

To do this, you can start by estimating the fixed costs you'll need to cover and getting a handle on the money you have to work with.

UNCOVER YOUR FIXED COSTS

The first step in preparing your post-graduation budget is laying out your fixed costs, says Marcio Silveira, a financial planner at the same firm as DelMonaco. These are expenses that you can't forgo, such as housing and transportation costs, as well as any monthly debt repayments.

Pay attention to these costs because you can't reduce them once you commit, Silveira says. If you have a job lined up with an employer that offers a 401(k) match — a benefit where your employer matches a set amount of your contributions to your retirement fund — try to build this into your fixed costs, Silveira adds.

Student loans are another fixed cost that you probably need to consider. Currently, 65% of college students graduate with student debt, according to the Education Data Initiative. If this is you, add your student loan payments into your monthly expenses if you can afford it. If this won't fit into your current budget, take advantage of any grace period offered to you.

Grace periods begin after you graduate, and during this time, you don't have to pay your loans — but interest will continue to accrue. A grace period may allow you to do other things with your money — move, pay off a credit card or buy cheap furniture — but you'll always need to plan for its end.

BUILD HEALTHY HABITS

Maybe you built a budget in college and didn't always stick to it, or you made it through college with no budget at all. Either way, starting a budget now and tracking your spending can help build healthy habits so you're ready once you start your post-college career.

"Start tracking, start knowing where you spend the money," says Silveira, and if you commit to it, it can only take three months of spending within your budget to make it a habit.

If you have a job lined up for after you graduate, build a budget around your monthly take-home pay. And if you don't yet have a job, consider how long you can continue covering your expenses. Doing so can give you an idea of what next step to take; this might be taking the first job offered to you or moving back in with relatives or roommates where you can minimize your expenses.

Clark adds that if your parents or guardians are still covering any of your expenses, such as insurance or a phone bill, ask them how much longer they plan on doing that. If you can avoid any surprises in your budget, it'll help you keep your spending on track.