3 Ways I Lost Money Each Month After Graduating

I didn’t realize how large of a burden repaying my $53,000 in student loans would be until I actually began repaying them each month. When I took an accounting of my monthly expenses, I realized I wasn’t as thrifty as I thought I was.

On reflection, there were 3 careless ways I lost money every month after graduating college:

1. Housing

I spent 47% of my monthly net income on housing.

I never really “paid” for housing until I graduated from college at 22 years old in 2012. My parents paid for my housing while I lived with them through high school, and while I was in college in Los Angeles, I paid for housing with student loans.
In college, I paid about $1,200 per month to share a room and upon graduation, I signed a lease for more than that. I didn’t consider shopping around or getting creative to decrease this cost because it just seemed normal to spend that much on housing.
At my first job out of college, I signed a lease at an apartment complex and spent roughly 47% of my monthly income on housing.
Only when my student loan repayments kicked-in a few months after signing my lease did I fully understand my need to bring my housing costs drastically down.
After my 12 month lease ended, I moved-in with a buddy and my housing decreased to just 17% of my monthly take-home pay!
Ever since I’ve had this housing wake-up call, I haven’t spent more than 20% of my monthly after-tax income on housing. This has enabled me to save, invest, travel, and give much more freely than I could have before.

2. Food

As a single guy, I spent $700 on food per month.

Shortly after I graduated from college and started my new job, it took me a while to adjust to the rigors of working Monday thru Friday. In school, I didn’t have class on Fridays, so I had 3-day weekends every day for 2 whole years. Going from that to starting at 6AM Monday through Friday was quite an adjustment.
I found myself making excuses like “I’m too busy to cook” and “I’m too tired to cook” so I spent $700 per month on food – roughly $500 on eating out and $200 on groceries.
Looking back, I smile at how lame these excuses were. I was not “too busy” or “too tired” to cook. I was simply undisciplined and unorganized.
Fast forward a few years and I placed a recurring reminder in my calendar to check the ads for my 4 local grocery stores so I can capitalize on their weekly deals and meal plan accordingly.
There’s also great recipe books with cheap and healthy meal suggestions.
This led to me spending $400 per month on food – roughly $250 on groceries and $150 on eating out. Not only was this cheaper, but much healthier with less of the added-sodium often found in fast food and restaurants.

3. Discretionary Spending

Without a budget, I spent $300 – $600 per month on unplanned purchases. Despite having a large percentage of my money going toward housing, food, and repaying student loans, I still spent a lot on miscellaneous things.

Whether it was a friend’s birthday, a cousin’s marriage gift, or an out-of-town football game, I spent $300 – $600 per month on unplanned purchases.
Of course, none of these purchases were “wrong” or “bad”, but my lack of intentionality led me to spend much more than was prudent given my other financial obligations.
Now, I have a recurring calendar reminder on the 28^th of each month to plan-out the next month’s budget. Things do come-up, but that’s why I allot some “miscellaneous” money each month.
Creating and sticking to a monthly budget hasn’t allowed “life” to surprise my bank account and has enabled opportunities to save, invest, spend, and give more.

Key Takeaway

If I could rewind the clock and give myself some advice, I would say 3 things:

Make sure your monthly rent is no more than 25% of your take home pay. It can be done…even in the San Francisco Bay Area where I live.
To save money & eat healthy, review your grocery ads each week and cook 3 days per week.
Create and stick to a monthly budget!

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