Learn me some finances!

Ok, next year is my last year of college. After that I'm off to grad school, with an expected salary of $22,000/year (lol) and of course, help from the parents.

I have no idea how to make a budget. Like, I did it a while back in high school, for a pretend life, but the scenario wasn't very realistic, and my budget for that project was twice what I'll actually have.

Most apartments in the area cost about $400 a month and cover about half the utilities in the rent.
I'll already have a car, and my parents will pay gas/insurance/maintenance on the car.
My health care is covered til I'm in my mid-20's, so I'm not worried about that either.

My concerns as far as money will be rent, food, clothes, utilities, and a cat. I have to have a cat.

So, about how much per month can I expect on food, utilities, etc? What's the general rule for mapping out this stuff?

12 x 400 = -4800 rent
Let's assume you pay 150/month in utilities. Obviously this will vary depending on your lifestyle, location, and any number of other factors, and includes internet, tv(?), etc. x 12 = -1800.
Cats can be pretty expensive. Let's estimate a year of litter and food at -$400.

So for those 'essentials,' you're down approximately $7k. For clothes, food, and various expenses you'd have 15k/12 = $1250 a month, or about $40/day.

Unfortunately I began looking up reviews (15 mins ago) for the places I found last month, and it looks like I'll have to pay upwards of $650-800 a month to get a place that's not full of drugs, murders, and burglaries.
It's so much simpler to find housing in a small town.

Ok so I'll do your math w/ new numbers:

$750 x 12 = $9,000 rent. Almost half my money, ouch!
Another $1800 for utilitites, etc.
I'll say $700 for the cat, since I have a tendency to splurge on pets. Plus their vet visits are expensive.

That's $11,500 spent, which leaves about 10k to do whatever.
Now, food.

I'm assuming I can buy $100 food/week and be fine, I actually feel that's a high number, so that's $400/month, which is $4800/year. That brings total expenses to $16,300/year.

Now, I feel like I'm missing something. Does having my parents pay my car and insurance really save me THAT much?!

Edit: Now I've started thinking. Clothes.
I actually don't spend a lot on clothes. I think I'd be surprised if I spend $500 in a year actually.

Plz tell me I'm doing this right.

What about:

books
entertainment
computer
furnishings & appliances
vacations
cleaning and other household supplies

There's always more, but those are the ones that come to me off the top of my head.

You'll have to live very frugally unless you can find another source of income. Things add up quickly, and it's easy to splurge on luxuries without considering the longer term implications.

It definitely does save a lot to have somebody else taking care of your auto expenses. I have $615/monthly car payments (the relatively small down payment and choice to pay it off over four years was a huge mistake).

Are your parents going to pay your tuition?

Taxes! Don't forget about taxes! I don't know if that $22K you listed is Gross or Net. If it's Gross, then figure about 15% for Fed taxes, plus 8% for FICA/Medicare, plus whatever %age necessary for State taxes. That comes off the top!

Utilities - make sure you've got them ALL accounted for. Electric, Gas, Heating Oil, Water, Sewer, Phone, Cable, Internet, Trash pickup, Recycling, Yard Waste. Have I missed any?

Entertainment--this can be anything from a $1 Redbox DVD rental to $20 for a bottle of booze to $$$ for concert tickets/road trips/etc...

Toiletries - not just makeup and TP, but any vitamins, Prescriptions, Birth Control, Femine Hygiene products, toothpaste, soap, deoderant, etc....

Miscellaneous - there are always expenses that simply don't easily fall into other categories. Renter's Insurance. Parking tickets. Stamps. The $10 you loaned a friend who never paid you back. The $5 bill that disintegrated in the pocket of your jeans while in washing machine. Stuff like that.

*Here's a suggestion*
write down EVERYTHING you spend for 2 months. No matter how seemingly insignificant. Buy a soda from a vending machine? Write it down! EVERYTHING. Then review, categorize, and summarize those expenses.

It'll at least be a starting point for you, and should provide some surprising insight into your spending habits...
"I spend HOW MUCH on D&D Dungeon Master supplies last month?!? You've GOT to be kidding!"

Ok let's see here. I hadn't thought of that. This is exactly what I need to think of. Long post, so I apologize, but I need to organize this somehow:

Books will either be covered by a grant through the PhD program (if I'm lucky enough) or paid by the parents, since they're insisting on helping with just about everything.
Entertainment I should put in $100 my first year to buy all of WoW's expansions, and another $15 monthly to play the game. I'll go ahead and throw in a $50 monthly allowance for miscellaneous stuff.
Computer My dad promised to cover this 3 years ago, and that promise still holds.

Furnishings and Appliances It's Honduran tradition to buy your children a house when they're ready to move out. The American economy doesn't work this way, so they'll be happy to settle for getting me furniture. Most apartments are only furnished as far as the kitchen, so I'd need living room and bedroom furniture.

I figure I'll move as much stuff from home as possible. In my bedroom I have:

• bed
• dresser
• desk, chair
• storage drawers
• paintings lol
• So all I have to get is a couch, TV, table, and a couple chairs.

Vacations I hadn't even thought of. I have no idea. Guess that'll come from whatever's left over.
Cleaning and other household supplies I have no fucking clue.

Help me out here, how much does it cost to keep a clean house?

As for personal hygiene stuff, that shouldn't cost much. What I've bought for college is about $60 per semester.

OH GOD DAMMIT TAXES!

Ok that's about 18.7k/year.

Ok so let's see...

The last budget before you and async posted sat at about $16,500.


Adding:

• $180/year for WoW
• $200/year for toiletries/etc
• $??? for cleaning supplies (no idea how much they cost)
• $600 for miscellaneous entertainment

That puts the budget right at the break-even point, once I add cleaning supplies.

Huh. That's rough.

I might not be able to get a cat!

Many apartments either don't allow pets, or charge extra for them.

Cleaning supplies - you may be able to liberate some from your parents' house. If not, you'll need:
- vacuum cleaner (find a used one)
- broom/dustpan
- assorted towels/dishclothes/sponges
- dishwashing liquid
- Windex
- all-purpose Kitchen/Bath cleaner spray
- Pledge/Endust
- Toilet Bowl cleaner
Honestly not sure how much that all costs, but just go to Wal-Mart or Target and you should be able to pick up most of it for relatively cheap. Once you've got an intiial supply, budget $5/month to allow for replenishments (over time).

My first bit of advice, much as it pains me (for I AM Rexfelis...) is: wait on the cat. Kittehs (or any kind of pet) have a way of turning into little money sponges. And Murphy's Law sez that the tighter your budget, the more prone to illness and disease shall be your kitteh.

Keep in mind the rule that every non-essential will cost twice as much as you think it will. It's weird, but true.

Not a country music fan, but I like the song title "Too Much Month at the End of The Money".

Truer words were never penned.

Heh. I remember just starting out. Being in your early 20s, when everything is still out there in front of you. I really can't top any of the advice already provided, but I'll add a couple things:

If you have a good friend in the same town, don't rule out a roommate. A two-bedroom apartment is usually quite a bit less than twice the price of a one bedroom--or even a studio. And you have someone to hang out with, do things with, and keep you company.

You don't have to have everything nice right away. Get stuff over the years. Hang onto one or two nice things you already have and make do with a card table and some plastic chairs or bookshelves made out of boards and milk crates. Then each year or so add something nice and give the old thing to Goodwill. Or sell it on Craig'sList. Which brings me to...

Be opportunistic. Not the same thing, but I've got a scrap pile in my garage. On more than one occasion as I was getting ready to make a trip to Lowe's I took a minute to rummage the scrap pile and found not only the dimension of lumber I needed for a project, but often a board that was already cut to the right length. When you've got a friend who is a cook or a waitress, don't hesitate to mooch food off them if they are throwing it out. If your neighbor just bought a new vacuum cleaner, see what she's doing with her old one. Instead of a coffee table, get an old trunk at Goodwill. It'll be cheaper, look cool, and you can put crap in it.

Get yourself some bookkeeping software. Quickbooks or Microsoft Money. I like Money myself. Then you can enter your receipts and checks into it and it will generate all kinds of cool reports that will help you track your spending and income. (I still use TaxAct to do my taxes too.)

Look for opportunities to accumulate stocks. When I was born my Aunt gave me a share of General Mills stock. That has split a whole bunch of times, as well as spinning off other stocks. Because of that one General Mills share I now own a like number of shares of Darden Restaurants (Red Lobster, Olive Garden, etc.) and I could own shares of Kenner Toys (the "Star Wars" line, among other things) if my Aunt hadn't sold it for me when I was young. When I was in college, because I lived in a town, I was eligible to buy shares of the local power utility. That's done very well for me as well.

Any of these stocks that you get, if you can, set them up with a Dividend Re-Investment Plan (DRIP). That way, each year instead of getting a check for $9.95 in dividends, you get .57 shares of the company. So the next year instead of getting $9.99 in dividends you get another .58 shares of the company. Over time you wind up getting a lot of shares without any investment or effort on your part.

The other thing, when you get a couple grand (I think that's the minimum right now) call up (or go online) Vanguard. They're an investment firm that has done fairly well for me because they keep their costs way down. Get a Roth IRA with them and set aside as much as you can manage to contribute to it. You probably won't be able to max out the $5,000 a year, but shoot for that. If you DO manage to max out the IRA, get yourself a mutual fund to sock some money into (you can also usually buy more into the stocks you're holding without a broker or having to pay commissions). I like "No Load Index Funds" like the Vanguard Life Strategy Growth Fund. I've lost some money in the short term with it, but over time it has done quite nicely for me. Vanguard will send you all kinds of stuff on what these terms mean. Or I can explain them if you'd like. The other thing to look for in a mutual fund is a "balanced fund". That means it holds investments in stocks, bonds, and other securities, so that if the bond market is crappy the stocks it holds will offset it (and vice versa).

When you're ready I will reveal to you the magic of compound interest and dollar-cost averaging, young grasshopper.

OK. I can't really explain compound interest, except that it is an exponential/geometric growth model. The bottom line is if you start saving as a 20 year old, you can put away a relatively small amount for 20 years and retire a millionaire whereas if you wait until you're 35 to start saving you wind up having to set aside a lot more money every year and do it for a lot longer to make your million. Dollar-cost averaging is very cool though and it is really like magic. If you use it you will look like a financial genius to your friends and it requires absolutely zero thought.

Pretty sad that inspiring PhD students have to pay taxes.

You can have a cat. Where I live "pet rent" is $25/month per cat.

Cleaning supplies can cost more or less nothing if you do it right. If you buy brand name cleaning supplies in the store (Febreeze, Dawn, etc.) you can expect them to cost a lot. Make your own or at least use baking soda with some frequency.

Is the $650-800 quote for a studio? Do you intend to live with roommates? Does anyone in the area rent out a house/part of a house? Renting from an individual rather than a complex is usually good because it's easier to break a lease, they'll be more understanding (depending on the landlord), and it's cheaper.

I'm done with roommates. There are far too many retards for me to rent an apartment in another state with a person I've not met. I'm willing to take a hit on rent if it means having some privacy.
I did find some $600+ 1-bedroom apartments, so I wouldn't be in a 300-square-foot studio (that I absolutely refuse to do). In fact I have found some decent places with decent square footage.

As for stocks, don't be surprised if I PM you in a couple years, Volpone. I'm very interested in getting a few, relatively low-risk investments going.

And I'll definitely keep a savings account, which I'll fill with untouchable money. Let the interest do the work, etc.

Get Renter's insurance! It's not that expensive, and most homeowner's policies (the landlord's) do not cover a renter's possessions, nor likely will your parents' policy if you're living elsewhere while in school (although have them double-check that first). But it's a small cost to have your stuff insured against fire/theft/whatever...

IIRC, my renter's insurance was like $100/year. 'course that was quite a while ago, but still....

I have no idea what this means.

Several things:

1) Nautica's suggestion in post #6 is excellent! Do it. Then, when you find yourself getting short next year (it will happen) do it again! You're a good enough scientist already to understand and apply the principle that you can't set up a reasonable hypothesis without hard data. A budget is a "hypothesis" of what expenses will be like.

2) There are always ways to cut. I don't know what your family situation has been like, but maybe you've had it fairly easy financially and not had to learn to look for bargains and do without. But with your background in Honduras, I bet you did that far enough back. It can be done. The stories I could tell you about living on a tight budget (not now, but in years gone by)...!

3) Cat's cost money, but they don't have to cost that much money. Remember, a cat is a wild animal. They just think they were born to be pampered and have people provide all the best and fanciest for them. They don't have to have it. If they're taught from the time they're little that they'll get simple cat food and like it, they'll get along fine. There can be vet costs, though, or other things.

4) Having to scrimp when you're young isn't fun, but it is an experience no one should be deprived of. It will make you much more adaptable when you get older. I hate to be a wet blanket, but bad times will come. They always do, one way or another. Life's like that. And if you learned young to "do without" because the money simply wasn't there for what you wanted to do, you can adapt to such periods without going into a tailspin that sends you into a depression and makes a temporary bad spell into a life-wrecker.

Those were separate statements, in case it was unclear.

If you really want a cat, you can have one. The expense is there, but not so great as to be cost prohibitive, especially if it would improve your quality of life.

As for what pet rent is, they just tack on $x/month to your rent for each pet you own. The place I live charges $25 per pet, and you can only have two. Some places don't charge this, but around here almost all of them do (if not all). Personally I'd prefer (and it would make more sense) to just pay a damage deposit and get my money back if my pets don't fuck anything up (which they won't), but apartments like making money. Children do more damage to apartments than cats. And pet rent is another argument against renting from a complex.

I felt the same way about roommates when I graduated. I keep telling myself how much money we could save, but again, quality of life comes in to play. If you can afford to avoid it and it's a priority, then do.

Awesome! I can be cheaper than that, then. Whew!

Keep in mind that student loans are not bankruptable. I left college because I don't believe debt was worth it in my situation. Consider that the average college student is literally a slave to their loans.

What I'm getting at is live as frugally as possible. America will tell you you deserve everything. The truth is, you can't rob Peter to pay Paul.

Oh - also if you're in what I think you are (inorganic Chemistry) there are many firms that will do coops. In other words, you work a semester, go to school a semester - and they'll pay you and pay for school.

If you buy groceries the right way they're not that expensive.

I think some of you guys don't know how PhD programs work, so let me explain what I know.

My money will come from research grants and teaching assistanceships, meaning that I'll be a full-time student AND worker at the university where I'm hired to do my PhD.
I will have my tuition waived entirely, and I will get a salary on top of that.
I will also refuse to attend a grad school that doesn't pay me at least $20,000/year with a full tuition waiver. I'm applying all over the country in similar programs and I'll go for whoever gives me the most money vs. cost of living.
That's why I'm estimating a $22,000/year budget - because instead of paying for school, I will be paid that much.

I mean, it's shit pay, but it beats having to pay for your degree.

Stupid is he who goes into a PhD program and pays their college.

I know how a PHD programs works. My GF is entering one in the fall and I will be marring her no later than the following spring.

Also, she has had a fellowship while working on her masters.

Half my family has Masters degrees, and half of that half have PHD's.

Then why in the world would you tell me to go on co-op to pay for it?

I'm glad we have the HOPE program here in Georgia - residents go to college free. My son is loving it - tech/community college but it's still education!

I get free college (books, everything) pretty much anywhere because I'm a combat veteran.
Transportation is the only thing preventing me right now (college my kid attends is 15 miles for example). But there is another comm. colege only 5 miles away, and that's bicycle riding range.

I plan on finishing my Associate Degree (stop laughing!) so if my company is bought out and I have to re-apply for my own job, I have a leg up on the competition. All I need is a couple of math classes to go. I think since I get 56K a year I should at least have an actual formal Associate Degree under my belt regardless.

Oldfella1962, nothing is free. GA's HOPE scholarship is payed for by people stupid enough to believe the lottery is their best chance at having a retirement.

Ha! I heard that on the radio a few days ago.