Asking, “how much money should I have as a post grad” is one of the most common (and probably one of the most stressful) questions recent grads ask. Others include, “how much money should I have saved?” or “Am I financially behind?” or “Did I mess up by not caring about my finances earlier?”
The truth is, there is no objective universal amount of money that a post grad should have. There are various factors that are unique to each individual, especially at this point in your life. And I think a lot of online financial advice skips that part.
Why does this question haunt me?
Graduating from college is one of the first moments in life when you’re hit with financial awareness face-first. There is no classroom, no syllabus, and no real guide on the timeline that is specifically right for you.
You glance at articles about emergency funds, retirement, salary negotiation, and student loan debt. And you are simultaneously surrounded by others who seem to know what they are doing, which might make you feel behind. But it’s an uneven playing field – everyone is starting at a different point.
Some people are supported by their parents or family members, some are able to easily move back home because there is more than enough room for them. Some can take an unpaid internship because they are being financially supported by someone else. Point being, appearances do not tell the whole story, and you shouldn’t compare yourself.
But also, don’t fret. More than likely, most post grads around you are also still just figuring it out for themselves. No one is born understanding student loans, starting salaries, and ever-rising housing costs.
Personal finance websites aren’t geared towards post grads
Many personal finance websites tell you that you should have a certain amount of expenses saved for an emergency fund, a certain amount of money invested, and no debt.
This assumes that anyone reading has a stable job and income, predictable expenses, no student debt, and a lot of time to focus on their finances.
However, that’s not the case for today’s post grads. It assumes that we haven’t just lived through several recessions. It assumes that starting wages are not constantly declining, and that they are keeping pace with rising housing costs. It assumes we don’t have to send money back to another country to our families.
So instead of asking “how much money should I have as a post grad?” Ask the more reasonable question: What can my money be doing for me right now?
The phases of post grad money
Post grad, finances are usually in one of three phases. There’s the stabilizing phase, the buffering phase, and the building phase.
While stabilizing, you’re covering basic expenses, paying the minimum payments to your debt, not relying on credit cards to cover your basic needs. You’re doing just fine, even if you don’t have any money saved yet.
In this phase, having ANY little bit of savings matters more than the amount.
While buffering, you start to breathe a bit. Maybe have a good thousand or more saved up. Slowly growing an emergency funds and paying down debt.
You’re not “ahead” by any means. But you’re not one expense away from complete financial ruin, and that counts for something!!
The building phase takes time to come around. You have a consistent salary or gig, some money saved up, and are thinking about investing or business goals.
Most people don’t get to this phase until a few years after they graduate. Especially if they are graduating with student loans or focusing on their careers.
A specific savings amount is out. Nuanced questions are in.
Instead of ruminating on how much money you think you should have saved, look at more nuanced factors to determine your financial phase:
- Am I paying my bills without stress?
- Do I have any savings at all?
- Am I actively paying off any high-interest debt?
- Am I taking steps to learn about managing my money?
As a post grad, if the answer to just one of those questions is yes, you are right on track. Money management is a skill that you learn over time, just like the subjects you studied in school.
A real answer
If you are REALLY looking for an answer, here it is. If you have enough money or income to cover your monthly expenses, a small emergency fund, and are actively planning to improve your finances over time – you’re doing everything exactly right.
But if you don’t have those things yet, that’s okay too. This is exactly what the stabilizing phase is for.
Wrap-up
In sum, if you’re asking how much money you should have after post grad, you’re on the right track. Awareness is the first step.
Thank you so much for reading this article. I am not an expert by any means, I am just someone who wants to slow down and understand the basics before taking any steps! Follow my journey if you’d like by subscribing with your e-mail address!
Check out the rest of the blog for personal finance guides, tips, and more!