• About
  • Editorial Board
    • Staff Writers
  • Advertise
  • Join Us
  • Archives
The Wellesley News -
  • News and Features
    • Professor Phillip Levine Discusses “A Problem of Fit”
      Professor Phillip Levine Discusses “A Problem of Fit”
    • CS Department shifts CS 111 course structure
      CS Department shifts CS 111 course structure
    • WAMI and WRJ host discussion on criminalization of abortion
      WAMI and WRJ host discussion on criminalization of abortion
    • News
      • News in Brief
      • Nation & World
      • President’s Corner
      • Senate Report
    • Features
      • Alumnae Spotlight
      • Eye on Science
      • Faculty Focus
      • LGBTQIA+ Column
  • Opinions
    • Andrew tate: ending the cycle of toxic masculinity
      Andrew tate: ending the cycle of toxic masculinity
    • Turn it off: healing from news fatigue in the digital age
      Turn it off: healing from news fatigue in the digital age
    • Let them eat bread: the unequal effects of food price inflation
      Let them eat bread: the unequal effects of food price inflation
    • Staff Editorial
    • Letters to the Editor
    • The Elephant in the Room
  • Arts
    • The 95th Academy Awards Nominations: The Cool and The Controversial
      The 95th Academy Awards Nominations: The Cool and The Controversial
    • Lucy Dacus Brings a Minimal Yet Powerful Performance to Northeastern University
      Lucy Dacus Brings a Minimal Yet Powerful Performance to Northeastern University
    • “Glass Onion” Takes Shots at Easy Targets
      “Glass Onion” Takes Shots at Easy Targets
    • Arts In The News
    • Reviews
    • Music Peek
    • Books Before Boys
  • Sports and Wellness
    • Student-Athlete of October
      Student-Athlete of October
    • Athletics Update Oct. 19, 2022
      Athletics Update Oct. 19, 2022
    • The Case for Body Neutrality
      The Case for Body Neutrality
    • Athlete of the Week
    • Boston Sports Update
    • The Vegan Digest
    • The SHE Corner
  • The Wellesley Snooze
    • Rejected Snooze Articles for the Week
      Rejected Snooze Articles for the Week
    • Happy Valentine’s Day from Spog
      Happy Valentine’s Day from Spog
    • The Four Best Places to Loudly FaceTime Someone on Campus
      The Four Best Places to Loudly FaceTime Someone on Campus
  • Miscellanea
    • President’s Column: The Butterfly Effect
      President’s Column: The Butterfly Effect
    • Administrators shocked to learn that students dislike being left in dark
      Administrators shocked to learn that students dislike being left in dark
    • 50 Lies You Tell Yourself in Order to Survive Until Graduation
      50 Lies You Tell Yourself in Order to Survive Until Graduation
    • The Dose
    • The Olive Branch
    • Multimedia
      • Galleries
      • Infographics
      • Videos
By Ann Martel Cents and Sensibility, Features, News and FeaturesApril 8, 2015

Budgeting basics for Wellesley and beyond

How much rent can I really afford? How much can I spend on a night out without feeling guilty? For graduating seniors and those of who will be interning this summer, these questions are very real. While entering the real world includes the fun of finally earning a regular paycheck, it also includes the burden of learning how to spend it.

To budget efficiently after graduation or during a summer internship, Wellesley alumna, Harvard MBA, and money guru Manisha Thakor recommends dividing your income into four chunks:. The first cut of the pie goes to Uncle Sam, which we will round to 25 percent of your pre-tax income. The next chunk is for your needs — think rent, student loans, transportation, healthcare, and food. Aim for this total to be no more than 45 percent of your total income. Although this percentage might not be achievable initially depending on student loan amounts and your cost of living, think of it as a number to work towards over time. Next are your expenses for luxuries, which may include nights out on the town and shopping for that new work wardrobe worthy of Olivia Pope. This category is easily the most tempting category in which to overspend, so be sure to restrict yourself to spending no more than 15 percent of your income on this. Last, but certainly not least, is what you should be saving. Strive to bank 15 percent of your paycheck when possible and your future self will thank you for years to come.

Regular small expenses like coffee runs with friends can add up to large amounts over time. While often overlooked compared to big-ticket items like rent, these expenses can significantly erode your planned savings. There are a number of methods out there today to help you track your spending. Many commercial banks, like Bank of America, have online software that will break down your spending into rough categories. Personal finance apps like LevelMoney and Mint can also be downloaded for free and offer various visual ways to keep an eye on your spending habits.

Before you can think about building your retirement nest egg, there are a few other items that you might want to consider. Your student loans will mature soon after graduation. It should definitely be a priority to pay these off sooner rather than later. There will likely be minimums you are required to pay each month, but you always have the option of paying more. If you can afford to, do so, even if it’s as small as contributing an extra $30 a month. This will reduce the length of time on your debt and therefore the total amount of interest paid, saving you money in the long run.

Once you have made progress on paying off your loans, or if you were fortunate enough not to have them, start working to build an emergency fund. You never know when a significant medical expense might arise, a layoff might occur, or perhaps a tempting new adventure will present itself. This fund should ideally equal six months of your base salary. That might seem like a big number, but don’t feel pressured to save it overnight. Rather, direct a portion of your allotted savings to this fund each month, and in time, you will reach your goal. Once achieved, you can start saving for other items like a car or future down payment.

While saving might feel like a self-imposed tax at the moment, it will pay off tenfold in the future. The reality is that the best and easiest time to start saving for retirement is actually today — and yes, I really mean as a 20 year old. Each dollar you save this year will accumulate interest for 45 years, if you work until the current retirement age, and perhaps even longer. To have money in the future for big ticket items like a car, a down payment or even retirement, worry less about the size of your current paycheck and more about your willpower to save. While keeping up with the Joneses may have been the norm in Mona Lisa Smile, the new trend is fiscal discipline.

Photo courtesy of windowsphoneapk.com

Share on

  • Facebook
  • Twitter
  • Pinterest
  • Google +
  • LinkedIn
  • Email
Previous articleNurturing leaders to fight inequality
Next articleWellesley student plants seeds for a new generation of scientists

You may also like

Preserving our past: HistoryMakers archive reveals unheard stories of the Black experience

HistoryMakers and W.COLLECTIVE uplift Black trailblazers in fashion

Archives: Malcolm X Spoke at Wellesley College in 1962

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Email Newsletter

Sign up to receive our weekly digest in your inbox

* indicates required

Top Articles

  • Stone-Davis dining staff report mistreatment
  • Logos of social media apps such as Twitter, Tiktok, Netflix, Spotify, and Discord. Andrew tate: ending the cycle of toxic masculinity
  • The 95th Academy Awards Nominations: The Cool and The Contro...
  • A collection of a wide variety of foods in the colors of the rainbow Let them eat bread: the unequal effects of food price inflat...
  • Red envelope that contains money to celebrate the Lunar New Year. America’s cultural appropriation is a modern form of i...

Recent Tweets

Tweets by @Wellesley_News

The independent student newspaper of Wellesley College since 1901.

Sign up to receive our weekly digest in your inbox

* indicates required

  • About
  • Editorial Board
    • Staff Writers
  • Advertise
  • Join Us
  • Archives
COPYRIGHT © 2023 THE WELLESLEY NEWS
Back to top