Starting Point - Average College Grad

Flikr - GotCredit.com

Starting out can be tough, you've been doing all this studying and jumping through the societal hoops to prove your a valuable. You get this college a degree a fancy new job but you don't have the house, or the nice car, and your parents are asking about when your planning on having kids. Everyone is pushing you to keep up with the Jones' and the Jones' kids.

So lets dig into it.


Average starting Salary is around 50,000 dollars
Average starting Student debt is 30,000 dollars
Average credit card debt is 500 dollars


We really get money per month and it also goes out per month so that Salary is going to get hit with taxes, now tax brackets can change over time so do the math yourself with the current numbers. On 50 k your looking at in tax so you get a total of which is a total of 3,411.88 dollars per month.

Housing
One Bedroom 1,200 per month

Debt
305 student loan

Health insurance
160 (through a job)

Transportation
 $742 per month

Food
$553 per month
$243 is spent on eating out
$310 that is spent monthly for food at home.

Entertainment and Clothes
$600 per month

The average spend is 3,560

Do you see a problem there? The average start is 3,411.88 and the average spend 3,560.

YOU CANNOT KEEP UP WITH THE AVERAGE

This is the danger of the Jones' they can't even keep up with themselves. We look at one coworker with a nice house and we want that, another has a nice car so we want that, and another eats out so of course we want that avocado toast as well.

In order to get ahead you have to be above average in below average spending.

	Average (Failing)	Reasonable (65 yr Retirement)	Goal (Path to FI)
Housing	1200	800	500
Debt	305	305	305
Health Insurance	160	160	160 (In a HSA account)
Transportation	742	478	378
Food	553	500	300
Entertainment and Clothes	600	200	100
Savings	-148.12	968.88 (23% savings rate)	1,668.88 (40.5% savings rate)

To take things from Average to reasonable we are really going down a bit in the housing, away from gated communities with a pool and more towards something closer to work. We are also going from a new car to a used car. In the entertainment department we are cutting out the drinks and the movies. Note that 'normal' people tend to have a 15% savings rate to be considered awesome so that entertainment budget is higher than 200.

To take things from Reasonable to our goal of a 40% savings rate we are going to a situation where we have a roommate, our car is still used but we are really aiming to live close to where we work to cut down on that gas portion of transportation. We eat out once a month and we are a bit more intentional on our entertainment and clothes purchases with most of that $100 going towards clothes as we build up our work wardrobe.

Now if you've looked around the web you will see people with 50, 60, 70 % savings rates.  All that really is is taking this base cutting out that Debt, not sucking at work and banking those raises.

That 40% savings rate also means you can take advantage of 401k's, Roth IRAs and other before tax savings that will LOWER how much you pay in taxes putting more money in your wallet.

Numbers are based on other peoples work
http://time.com/money/4777074/college-grad-pay-2017-average-salary/
http://time.com/money/4214521/average-americans-annual-budget-college-grad/
http://time.com/money/4287524/new-college-grads-money-financial-guide/
https://www.nasdaq.com/article/credit-card-debt-statistics-cm393820
https://jalopnik.com/the-average-used-car-payment-is-now-378-per-month-1828725332