Creating a Personal Budget

One of the most powerful approaches to professional decision-making and personal empowerment is to have a personal budget that sets your minimum economic requirements to be happy and comfortable. This is a must. If not, our economic reality can cause stress, anxiety, and serious consequences if we are not able to make ends meet the way we need.

Thus, to be able to truly make career decisions that optimize your personal values, you’ll need to make sense of what you can/cannot do with what salaries / incomes.

Template Budget

Let me start by sharing this personal budget template that I have provided students (and I use myself). Shout out to my partner, Jackie Cameron, who originally helped me with this template. This gives you a skeleton that has some automatic calculations and gives suggestions of what categories to consider in your budget. For me, some of these numbers were very minimal when I was getting started (e.g., Fun/Hobbies was $100 and I focused on going to free events on weekends). Some of these categories may not be needed if you have parents that are willing/able to take care of certain expenses.

Remember to include all sources of income. This calculator does assume that health insurance is taken out of your gross salary so if that’s not going to be the case for you, then make sure you know your healthcare plan and add it.

Figuring out Student Loans

For many people the biggest expense that is looming is the cost of your student loans. Contacting whomever you borrowed from is the fastest way to be 100% accurate. Also, if your loans are all / primarily US federal loans, it’s worth noting that the maximum your monthly payment can be as low as 10% of your discretionary income [source]. The US federal government has more flexible repayment plans than most private institutions. However, in general this simulator can help you estimate your cost based on your total loan size, what interest rate was locked in, and what repayment period you have chosen (longer repayment periods usually allow for lower monthly payments, but more accrued interest). Another thing to remember is that if you work in a non-profit setting or as a teacher, the US federal government has mechanisms for forgiving some or all of your student loans after 10 years of making payments while working in non-profit.

Personal Preferences

You’ll need to consider how luxurious or frugal you want to live each year. Housing is the biggest variable usually. Having roommates is one of the easiest ways to lower costs. Also consider what work benefits you may receive including bus/subway passes, transportation support, or other perks that may reduce costs. These benefits may even be worth considering for a negotiation for, say, a job with lower salary but that you care more about. Ask them honestly, “can you give me a transit stipend or free parking” (for example). In some cases, getting a talented person is worth additional expense even if salary can’t be negotiated at entry level.

You may also want to speak with your parents as you finish your budget. For most people, doing this will be a cause for great respect and trust from your parents. Being able to honestly ask whether or not they can continue covering an expense for a period may be helpful for the first few years of work.
For most people the biggest costs of adult life are:

  1. Housing & Utilities
  2. Food & Basic Household Supplies
  3. Health Insurance
  4. Car / Transportation
  5. Cell phone plan

These things are kind of your “minimum.” Of course most people want/need more than this, but these are your big line items. Also, if these 5 are handled, you can at least have minimal anxiety about your basic ability to take care of yourself.