Create A Budget Before College For Life After College
April 2, 2009 – 10:11 am
Kids should create a budget for their life after college based on their desired job, area of study, expected city they think they will live in, etc.
Kids rarely understand how much it costs to run a household, so teaching them these concepts, one area at a time, would be quite valuable in my opinion.
Below are a few (rounded) starting salaries from a 2005 Money/CNN article:
- Chemical Engineer: $54,000
- Computer Science / Computer engineering: $51,000
- Other Engineers: $51,000 (mechanical) to $43,000 (civil)
- Business: $37,000 – $42,000
- Liberal Arts: $30,000
So let’s say you’ve got a kid that dreams of living in NYC and studying history in college. $30,000 per year is $2,500 per month gross, or ~$2,200 net. And of course that’s before any state taxes, city taxes (which NYC has by the way), student loan payments, and any health insurance premiums.
If you grab a few roommates, find an apartment in deep Queens or Brooklyn, maybe you can get by with $600/month in rent. Maybe. Add in some utilities, food, and a few nights out on the town and you can probably squeak by. But it’s not going to be pretty. And you probably won’t be doing much with your degree, but just having a degree will help you find a job.
Move to Texas or Colorado though, and that $600/month in rent will go a lot further. You may not even need roommates, and you’ll likely get more space and be in a newer apartment building. You’ll need a car in most of those cities, but you’ll also pay less in state and local taxes. You’ll also pay less for insurance, food, clothing, and probably everything else you might want to buy (besides flowers and manicures, which are abundant and inexpensive in big cities).
Alternatively you could try to amp up the salary, either by studying for a different degree or getting experience that will make you more valuable to an employer. $30,000 is the average for a liberal arts major, but I’m sure there are people who make $0 and people who make $80,000. You have to figure out how to get to the outer edge of that pay curve.
Either way you want to go, I think it would be valuable to have every high school senior work out a budget before they choose a major and pick a college.
Image Credit: Kaldoon
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