Simple Personal Financial Planning for Fresh Graduates

As fresh graduate, how are you going to utilize your first income after getting your first job? Below was my simple monthly budgeting guide when I was still a fresh graduate. In the list below, I didn’t allocate money for car or house instalments. As fresh graduate, you may not have the ability to commit for a car or a house yet.  If you do afford a car or house, then I must congratulate you!

-          Basic living expenses like meals and buying daily used stuffs -30%

-          Transportation like petrol or public transport fee – 10%

-          Bills or rental – 20% (some people may allot less than this percentage if living with family members)

-          Pocket money for parents – 10% (for those who stay with the family and don’t need to pay for rental, can allocate more for this category)

-          Buying a life and medical insurance with the minimum sum assured for yourself. -10%. (We definitely don’t hope we will have a chance to claim the insurance assured amount, but just in case any mishap happens, a reasonably sizable amount can be handy to settle the medical cost. Shortly speaking, we are buying a PEACE OF MIND.)

-          Cost for self-development such as buying books, attending course or activities -5%

-          Saving – 10%

-          Others – 5%

We need to have savings for emergency use. If we can tie with this good habit as early as we graduate, then this habit can hardly be shaken off for the rest of our life. As fresh graduate, you are not advisable to lock your savings in long-term investment tool like unit trust. Unless your income is high, then you may consider ‘locking’ another allocation of your money for long-term investment. If not, you need to assign at least three months of your living expenses in your savings account which has a higher liquidity.

Right now there are banks offering fixed deposit interest rate for those who deposit a certain amount of money monthly without withdrawing it. In this case, you don’t have to deposit a lump sum to gain fixed deposit rate, you can deposit monthly once you get your salary or commission. Even though you are forced to withdraw the money from the account during emergency, the interest rate of the savings will only bounce back to the normal savings rate without forfeiting any of your saving amounts. One of the examples is Ambank’s Family First Account (Malaysia).

What about entertainment? Oops….I forget to allocate money for this item because I never allocate a figure in my monthly budgeting for entertainment even until now.  For me, if I have to spend more for entertainment purpose in a particular month, then I will deduct a little bit from my savings. This method is only applicable if you have sufficient savings. Don’t ever think of advance money from your credit card, it will lead you to a pitfall if you don’t use it wisely. If you would like to know how did I fall into the credit card trap few years back due to my misuse of credit card, explore the story here.

I personally think fresh graduate shouldn’t be spending too much money for entertainment. Think more about your future is a more brilliant idea. There are lots more commitments after you step into another stage of your life, which is marriage. Personally, I think ‘life before marriage’ is a golden opportunity to rake in as much money as possible to be served as our financial support during our marriage or future life. Of course, we have to earn money using the right channels and also take care of our health. You can do nothing without optimum health.

As fresh graduates, it is important for us to practise a basic monthly budgeting. So that we won’t encounter the ‘shock’ when we step into another stage of our life. Be prepared and savvy in personal financial planning!

6 thoughts on “Simple Personal Financial Planning for Fresh Graduates

  1. Where the allocation for entertainment? Rent movies, go to theater etc? Or for religious things

  2. I am a rather thrifty person. When I was still a fresh graduate, I didn’t allocate a specific amount of money for entertainment purpose. As mentioned above, I would try to cut off part of my expenses at my ‘Basic Living Expenses’ category if I happened to spend extra for entertainment for that particular month.

  3. But as human, we do need to release stress. We do need to entertain ourselves once a while, but not everyday, unless we have become financially free one day. Ranu, thanks for reminding me about such an important item. I have revised my post above by adding 5% in the ‘Others’ category and minus 5% from the ‘Saving’ category. ‘Others’ category mainly represents those items that we do not regularly spend every month, like going to theater (I know some people do go every month, but I personally don’t), buy gifts for friends, buy facial and health products, buy new clothes, etc.

  4. Above was my monthly budgeting guide when I was still a fresh graduate, but now is different as there are more commitments coming in, such as housing loan . But it is still advisable to have more than 10% of our income to be stored for saving and investment purpose every month, so that we won’t be trapped in the financial crisis one day. If one doesn’t have much savings in the bank, it is advisable to reduce the entertainment expenses monthly. :)

  5. Religious things can be classified into ‘others’ category if these expenses are not committed monthly. If these are committed monthly, I think can be put in the category of ‘Self-Improvement’, same category as buying books, attending educational courses, etc. Anyway, different people will set different financial guides for themselves, as long as the amount we spend is appropriate and ‘not over’ for our respective purposes.

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