How to Save and Make Money Right Out of College

Here are some tips on saving and making money right out of college from a Free Money Finance Reader. She left the following comment to my post titled How to Save on a Small Income, Part 1:

I think the most important thing to do is to make a budget and be willing to adjust your lifestyle. Many college students don't realize that the "spending money" they have in college provided by their parents or extra loan money is considerably more disposable income than once they are out and having to pay all their own bills. If you try to maintain that lifestyle on a 20 or 30-something thousand salary, you will oftentimes get into debt. Having roommates is the #1 way (IMO) to save money on a low income out of college. It can be tempting to finally live on your own, but it is SO much more expensive, especially because you're not splitting utility bills, etc. Also doing everything you can to avoid a car payment, which is often equal to or close to your rent payment when you're young, is important, even if that means driving an old car, sharing one, or even just riding the bus or a bike for a little while.

Also, when you're young and in a new job, it's often not as demanding as jobs you will have later in life (ie: you really can only work 40 hours a week and be just fine), so now is a great time to pick up a second job to meet new people, have fun and occupy extra time, and of course, make extra cash to save. Even 10 hours a week in a retail store at $7 or $8 per hour will get you an extra $300ish per month - a lot more than your average twenty-something is putting into his/her savings account each month.

There's some good stuff in here. My thoughts:

1. I did have a budget when I was right out of college though it was a very "rough" one. ;-)

2. My challenge was to NOT change my lifestyle. My suggestion to college students today is to try and live like you're been living -- as a poor student -- for the first few years out of college so you can pay off bills and get some money saved in the bank. At least this worked for me. Of course, my parents didn't fork over tons of cash while I was in college.

3. Yes! Yes! Yes! Roommates can save you a TON of money. I saved a boatload this way...

4. ...then I spent the savings on a new car. Paid sticker price (nearly.) Big mistake. Learn from me -- don't do it.

5. I actually had LESS free time right out of college than I do now. But at that point I was a new MBA, single, and out to lay the foundation for my career. So I was ALWAYS at work -- much more than I am today.

Comments

[Anitra]

Roommates are a great idea, and I recommend them to every college and post-college kid I know - but some people just can't live that way. I'm an only child, and I had 5 different sets of roommates (college & first year out) before I realized that I was more than willing to pay the extra money to live on my own. My husband is the only "roommate" I've ever had that I could live with.

The real key is realizing that when you make a choice that costs more (living on your own, newer car, etc.), that money has to come from somewhere else in your budget. If you make a choice that costs less, that gives you more disposable income to play with.

[Edmund]

"I actually had LESS free time right out of college than I do now. But at that point I was a new MBA, single, and out to lay the foundation for my career. So I was ALWAYS at work -- much more than I am today."

That's where I am at right now :)

[broknowrchlatr]

I was able to save money right out of college, but it was not becaseu i ws a good long term saver. It was becasue I wanted to have a house and not pay on it forever. For a while, that tied up all my $$ so I couldn't affford to waste money on things.

[Teri]

I guess the point is everyone's experience is different. I lived on a shoestring budget in college and I maintained that lifestyle the first couple of years out of college (means I could still live on $10k, but saved $20k/year. Even another $1k-$2k to play with - like a 10-20% cash raise - left me plenty to save and enjoy without upping my lifestyle much). I also worked far more my first couple of years out of college than I have since. I built a good foundation, but got a little burned out. But gave me flexibility to work less once I built that foundation.

I am with you on #2 & #3. I never saw making a higher wage as a reason to up my lifestyle considerably. Kept driving the old clunker and stayed with roommates so I could more quickly save on a down payment on a house. Now at 30 I live quite well and spend a lot closer to what I make, but it was they way I appoached things out of college - slow and steady - that built a foundation for an easier lifestyle in my mid-20s. I just bought my first newer car that was more than a few thousand dollars, but I really enjoy my lifestyle, have a nice home, etc. I guess this all my testament to point #4. But we all make mistakes and learn from them. I made my own mistakes, but starting out young has left me considerable room for error and plenty of time to fix said errors. ;)

[cami]

I don't think that roommates are always a huge money saving proposition (I actually started a post on this the other day, but I haven't finished it yet). Part of it depends on lifestyle differences, part on responsibility. I have a roommate for the summer and I wouldn't be surprised if some of my non-fixed utilities end up close to double what they were this spring (electricity comes to mind). Also, if you have roommates that don't chip in for household items, stiff you on rent, and let their friends eat all your food you probably won't save yourself a lot of money and you'll have plenty of headaches.

[Jo (Single Female in Search of a New Job)]

Remember also the small things add up and you don't need everything. I didn't get a land-line phone when I got out of school and just used a cell phone, that saved me $20+/month. I still only use a cell phone, and it's just fine (plus, no telemarketers!!). Also, cable and internet are unneccessary for most people. If it's okay with your employer you can use the internet at work (I stay late or come in early if I know I will be on it for a long period of time for personal stuff). Also, the local library usually has internet. Plus, there's friends and family who may let you use their computer. I use to have cable when it was included in my rent, but now I just have 2 fuzzy channels and a ton of movies. If you are a big TV watcher, buy a good antennae and invest in some favorite movies...just as good. I know none of these are neccessarily huge expenses but depending on where you are at it can save you $70-$100/month.

[Sara]

True... Cable TV plus internet can cost $100 - $120 per month, at least around here. You could cut that out and spend $17 per month for Netflix, so you don't have to really even sacrifice entertaiment options but save a lot of money.

I am currently trying to figure out a way to cut my internet bill, which is $40 per month from Time Warner Cable. It seems like such a rip-off, but I'm reluctant to cancel it entirely. The connection also drops pretty frequently so I have to reset my router a lot which is annoying for what seems like an expensive service. Does anyone have any suggestions for alternative services? I have already called my cable company and asked them to reduce my bill, which is saving me some money, but not as much as I'd like.