Now that I'm back to grad school after some years of experience, I had to drastically cut down on my expenses, but I can share how I used to manage my net income (after tax and health insurance) as a single young professional. This of course might not work for many, but this was the breakdown of my spending:
- 8% of my salary went to a savings account I would totally forget about.
- Another 3% to put aside for life emergencies/medication (it's also a good way to remember we're vulnerable, and stay grateful for good health, family and whatnot).
- Transportation: This clearly depends on many factors but for a stable lifestyle, I usually think of somewhere around 15%, which should include insurance, gas, parking, ridesharing, etc.
- Groceries and house needs: Around 15% looked reasonable to me.
- Health/fitness: Whether it's yoga, gym, dancing, .. I always keep a 3% of my salary for physical activity.
- Housing: I like to stick to a maximum of 40% for rent/mortgage payment.
- Investment: This is useful to always remember to generate wealth and not rely only on current income. You might not be tempted to invest when you're burdened with debt, but it's always a way to keep thinking ahead of time and developing one's creativity/motivation. I set it at 3%.
- Leisure: For expenses on fun activities, outings, etc, I did my best to keep it under 15%.
- A systematic 1% to charity (The way I like to see it is that our income is not all ours; we're able to prosper as individuals also because we live in a community that allows it, so let's not forget to be empathetic and remember those in hardship by donating a tiny meaningful bit). Plus, it's proven that giving helps to develop a deeper sense of happiness, and for sure what goes around comes around. So even "capitalistically" speaking, it's a good investment.
I was lucky to not have any loans to pay off, so this worked for me to maintain a healthful, balanced and stress-free lifestyle. It takes lots of discipline though, and it was hard at times to stick to it, but most important to me was consistency over time.
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Talha Rifaai S.M.ASCE
Austin TX
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Original Message:
Sent: 06-06-2019 14:41
From: Luis Duque
Subject: Managing Your Income After Graduation
After graduation, many new engineers will find themselves in a great job with new responsibilities and with the task of managing their income. I have met so many people that do not know where their money goes that it is scary, especially right out of college and in debt (hopefully not too much).
I am definitely not an expert, in fact, I have a debt of my own due to living circumstances, transitions, and others. I was blessed to go through college without owing a dime, but I knew I had to take control of my money. I created a very "complicated" excel sheet to keep track of every cent that came in and out of my household. It has helped me feel in control rather than ending the month without knowing where the money goes.
What is your advice for younger engineers that will enter the workforce to manage their new income and make sure they are set for life?
I would say, get a budget (I will be happy to share mine with you) and more importantly, stick to that budget. Make sure you are not splurging your new income as this may be the most money you may have had earned in your life so far (at least it was for me).
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Luis Duque EIT,A.M.ASCE
Structural Engineer
Broomfield CO
<maskemail>luis@...</maskemail>
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