Start Your Financial Life Right

A little discipline and new graduates can pay off debt within a year and still stash cash away while maintaining their lifestyle

Holly Cook 9 July, 2010 | 1:23PM
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New graduates entering the working world are welcomed with a salary, quickly followed by a host of expenses that make the new-found earnings seem much less impressive. Covering student loans, credit card debt, retirement savings, and living costs is a balancing act, but learning which to prioritise and mapping out monthly expenses will make meeting your financial obligations more manageable.

Let's take a look at how a hypothetical new graduate (based on 2009 national averages unless otherwise noted) should allocate her money to see how all the demands play out. Most real graduates won't neatly fit the mold of the student composed of averages, but this outline can be tweaked to help you think about how to handle your own situation.

How Much Money Will You Take Home?
Let's assume our graduate has a salary of £25,000, the average starting salary for the class of 2009 according to the Association of Graduate Recruiters. After tax, National Insurance and student loan repayments, our graduate's disposable income, or what she actually takes home, equates to just under £1,524 per month--so she's already 'spent' more than 25% of her hard-earned income even before she receives her pay cheque. Note that this take-home figure doesn't include monthly payments into a corporate pension scheme, health or dental insurance schemes, subsidised gym membership, travelcard loan, or any other perks that may come with securing full-time employment.

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Holly Cook

Holly Cook  is Manager, Morningstar EMEA Websites

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