Live Like a College Student

after college
To many recent college grads, the often repeated financial advice is to continue to live like a college student. It makes sense, since a recent college grad is generally used to living a more frugal life. If you continue to live without inflating your lifestyle, you’ll save a good amount of money. However, even back when I was in college, many college students weren’t living like college students. Many took extra student loans and used credit cards to buy nice clothes, go drinking, go on spring break vacations and even buy fancy expensive cars. Apparently, they figured that once they graduated and received a steady paycheck, they would easily be able to pay off that debt. Unfortunately, most realize that once in the real world, with living expenses and lifestyle inflation, the debt just accumulates.

So rather than advising new grads to continue to live like a college student, let’s just tell them to live frugally. Billionaire Mark Cuban recently gave that exact advice to those in their 20s. He told them to live cheaply, and to use their 20s to pay off student-loan debt, avoid credit-card debt, and build savings. He explains that the cheaper you can live, the greater options you will have, whether you are building your own business or building a foundation for a successful career. He says that paying off debt and establishing a nest egg is far more important than buying a fancy house, car, and clothes. This is great advice, and your future self will thank you for following it.

Going from being a college student to a full-time worker, some lifestyle inflation is inevitable and understandable. You’re probably making much more than you’ve made in your life, though probably working more hours also. Spending that money might be awfully tempting if you don’t have a plan and financial goals. So what expenses do many new grads get caught up in?

Housing: This is probably the biggest expense in most people’s budgets. Sure, you might feel like you’ve had enough of living with roommates, and want your own apartment, but it’s much more affordable when you split the rent. Going back home to live with mom and dad may be an option for some and shouldn’t be discounted. I think after the 2008 recession, the stigma of living home with the ‘rents has subsided, though I’m not sure there ever should have been such a stigma.

Car: If you live in a city that has reliable public transportation, there may not be a need to even purchase a car. If you have a car from college, don’t rush to upgrade. I was driving my car from college 8 years after I had graduated. I had a friend from college ask me incredulously why I was still driving my car from college when he saw me years after we graduated. That didn’t bother me, though, as the car still ran fine and I didn’t have any car payments to make. Having a fancy car just wasn’t as important as not having any monthly payments to make.

Food: Eating like a college student doesn’t mean you should continue to subsist on Ramen and TV dinners. As a matter of fact, if you haven’t learned to cook by now, it’s probably a great time to learn. If I can learn to cook, you most certainly can as well. Cooking at home is much more affordable and healthier as well. To save on groceries, read my post with tips on that. And for tips to save money when eating out, read this.

Entertainment: You’re in your 20s, who I am to cramp your style and tell you to live like a hermit. You’re young. Have fun and enjoy life! Just make sure not to go overboard. There are plenty of things that you can do that won’t wreck your budget. Honestly, my best memories from my 20s are experiences hanging out with friends and family. More often than not, it didn’t matter what we were doing. And also remember that “shopping” should not be a form of entertainment. By getting rid of the consumer mindset early in life, you’ll save yourself a lot of stress and money.

By not taking on debt and having a healthy savings rate, you give yourself options and set yourself up for a financially bright future. Money, or the lack of it is often a hindrance when making decisions or when facing obstacles that life tends to throw at you. Having no debt and a good amount of savings gives you choices. Taking risks in your career or in your personal life is much easier at this point in your life, but not having money will be a huge impediment. Have a great idea for a start-up and want to quit your job to fulfill this dream? Not happening without some savings. Stuck in a rut and suffering from wanderlust? You can’t travel the world if you’re broke. Hate your job and want to take a risk by jumping into a different career track? It’s a lot less risky if you have an emergency fund.

Did you continue to live like a college student after you graduated?

37 thoughts on “Live Like a College Student

  1. Income Surfer

    Nice post Andrew. Fortunately, my wife and I have pretty basic standards. While probably not actually college level, we certainly live well below our income. After graduating my mom let me move in for 6 months to build up my savings. The timing with the housing boom/bust was dubious, but I saved a nice emergency fund.

    Cuban is right, but I am surprised such a party boy gave the advice. Hope you three are doing well. Take care buddy.
    -Bryan
    Income Surfer recently posted…The Two Sides of Our PortfolioMy Profile

    Reply
    1. livingrichcheaply@gmail.com Post author

      Hey it’s okay not to live like a college student when you’re married and have a kid! We’re still frugal but not sure I’d want a roommate. I’ve read a few of Cuban’s thoughts and it really changed my opinion of him. I originally thought he was party boy who got lucky with some software company but he’s a very interesting read if you check out his blog.

      Reply
  2. Dividend Empire

    “Apparently, they figured that once they graduated and received a steady paycheck, they would easily be able to pay off that debt.”

    This is EXACTLY what I thought when I was in college. Unfortunately it didn’t work out that way. It took me many many years to climb my way out of my college credit card debt.

    You provide sound advice in this article. Just wish I would have read it in my 20s.

    Ken
    Dividend Empire recently posted…Dividend Growth Stock Ranking Results – June 2015My Profile

    Reply
    1. livingrichcheaply@gmail.com Post author

      Yep, I think there are many in that same boat! At least you’re on the right track now.

      Reply
  3. Amanda S @ Passionately Simple Life

    There are days where I feel like I’m living like a college student still, and other times can feel the inflation just knocking me on my back. The biggest one was purchasing a car, however, it has helped me be more mobile and independent, which is a plus. Yet, I still enjoy watching the sunset outside and choose a book over going to the movies, so I guess some things are still the same.
    Amanda S @ Passionately Simple Life recently posted…May Expenses and the Start of a June BudgetMy Profile

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    1. livingrichcheaply@gmail.com Post author

      It’s great when you have simple hobbies that you enjoy which doesn’t cost a lot. It’s okay to have some lifestyle inflation…it’s absolutely normal. But some people take it to the extreme which leads to financial trouble.

      Reply
  4. Tonya@Budget and the Beach

    This totally make sense because as I’m discovering now having a roommate who is currently sleeping in my living room temporarily (thank god!), once you get used to a certain way of living it is very hard to downgrade later. I would say when I graduated I was yin/yang. I lived in a very cheap part of the country (michigan) and had roommates, and had hand me down furniture and whatnot, but I did spend a lot on concerts and CD’s.
    Tonya@Budget and the Beach recently posted…Money Talk!My Profile

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    1. livingrichcheaply@gmail.com Post author

      Yea, I don’t think I can have a roommate now that I’m married and have a child! Leaving in a low cost of living area definitely helps.

      Reply
    1. livingrichcheaply@gmail.com Post author

      Thanks! I think the new grads nowadays are more cognizant of their spending because of the news of unemployment and the economy but it’s inevitable for new grads to feel the lure of spending when they get their steady paycheck.

      Reply
    1. livingrichcheaply@gmail.com Post author

      Thanks! Having discipline and diligence is tough especially when you’re young, but you’re right the power of compound returns really is incredible.

      Reply
    1. livingrichcheaply@gmail.com Post author

      Yea I’m a fan of Cuban too. It’s hard when you see your peers inflating their lifestyles but it really pays off in the end.

      Reply
  5. DC @ Young Adult Money

    I got married within 10 months of graduating from college so I inevitably had to get more “living space” and leave my ultra-cheap rent at a house in the ghetto. I think houses are the biggest area where recent college grads can save money. I know many people who are around my age who bought the $400k+ house. While I think that can be affordable, I don’t think it’s necessarily the best place to park your cash. Buying a smaller home is a better choice long-term.
    DC @ Young Adult Money recently posted…5 Personal Finance Books on my “To Read” ListMy Profile

    Reply
    1. livingrichcheaply@gmail.com Post author

      Yea, housing is always one of the biggest expense. I think it makes sense to buy a smaller home…especially when you’re young. It’s just the two of you! Although if it makes sense, buying a bigger house and renting portions of it out works too.

      Reply
  6. Shannon @ The Heavy Purse

    Good advice, Andrew. One thing I’ve noticed when I talk to recent graduates (often at their parent’s request because hearing the exact same advice from someone you don’t call Mom and Dad makes it better. LOL!) is that they don’t have realistic expectations around their immediate salary potential and what it costs to live by themselves. So even though they are earning more than they likely have ever before, it’s not as much as many anticipated earning. It’s why I advocate parents to sit down with their college-age kids to review those costs regularly to help them prepare for reality.
    Shannon @ The Heavy Purse recently posted…Summer Vacation Planning and Saving Tips #InfographicMy Profile

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    1. livingrichcheaply@gmail.com Post author

      It’s great that you get to speak to recent grads and influence their financial futures. I think many new grads don’t realize the expenses they face when their parents no longer pay the bills.

      Reply
  7. Jayson @ Monster Piggy Bank

    I am glad that I was like that college student, you defined previously. It had been so easy to stay frugal later on, but I admit that at the start when I had my first series of salary, I was kinda spender, buying clothes here and there. But, I am innately a saver, so that short habit stopped after some realization.
    Jayson @ Monster Piggy Bank recently posted…Looking Into Amazon SellingMy Profile

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    1. livingrichcheaply@gmail.com Post author

      Yea, I’m innately a saver too so I also lived frugally even when I started my first job. But, hey it’s natural to spend a little more when you have a consistent paycheck. It’s okay, but glad you realized that the lifestyle inflation was not worth it.

      Reply
  8. Fervent Finance

    I wouldn’t say a college student, but definitely closer to a college student than many of my peers. I like to think I live like I did on about half the income that I make now when I first graduated college. Eating Easy Mac and turkey sandwiches nonstop wouldn’t suit me well now :)
    Fervent Finance recently posted…Asset Allocation – Part OneMy Profile

    Reply
    1. livingrichcheaply@gmail.com Post author

      Yea, it’s alright not to live EXACTLY like a college student. It’s a different stage in your life…and yea I wouldn’t want to eat T.V dinners and ramen all the time!

      Reply
  9. Done by Forty

    Mark Cuban, like all yinzers, is exceptionally bright and gives great advice.

    For whatever reason, I think it’s tricky to actually take this advice in your 20’s, when it would be the most helpful. There’s something about actually making financial mistakes, that provides the proper motivation to actually take finances seriously.
    Done by Forty recently posted…Linear Assumptions are BullshitMy Profile

    Reply
    1. livingrichcheaply@gmail.com Post author

      So true! Many have to go through their own personal experiences to learn. Although there are some who can avoid making the big financial mistakes.

      Reply
  10. Shannon @ Financially Blonde

    I wish I lived like a college student after I graduated! Unfortunately I got a great job with a great salary working in investment banking and immediately raised my lifestyle the second I graduated. Now I advise my clients to keep a healthy gap between their income and their lifestyle. It’s so tempting to increase lifestyle with increases in income but when you keep that gap, you give yourself a better shot financially.
    Shannon @ Financially Blonde recently posted…Music Mondays – One Step at a TimeMy Profile

    Reply
    1. livingrichcheaply@gmail.com Post author

      Yea, it’s tough to avoid lifestyle inflation when you make good money and probably work long hours. Work hard, play hard right?

      Reply
    1. livingrichcheaply@gmail.com Post author

      I’m with you on that…now that I am married and have a kid, it’s much hard to live like a college student.

      Reply
    1. livingrichcheaply@gmail.com Post author

      Ahh youth…I remember the good old days when we didn’t have many bills!

      Reply
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  12. Abbey

    Hmmn…live like college students? No way.
    At first, you would be tempted to continue living like students, but you get caught up in a whole lot of new expenses. Best thing is to be frugal.

    Reply

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