If you’re about to graduate from a post-secondary program in a few months, prepare yourself: the entry-level salary discussions are coming.
Specifically, the ones where (hopefully!) an employer calls you up, tells you that you scored the job, congratulations and here’s your new salary. Personally, that happened to me in the middle of a tutorial, and I felt rude af leaving the room to answer my phone, but also incredibly grateful because they offered me more money than I ever thought I’d earn as a marketing grad.
So obviously, I didn’t do any of the things I was supposed to do, like negotiate or ask for more. Nope, I said thank you as quickly as I could, and thanked my lucky stars for landing any job in a city not necessarily known for its marketing careers.
However, the year that followed was a crash course in how much money real life costs, and how to manage all of it on a decidedly entry-level salary. Since I lived to tell the tale, with no credit card debt and very few packs of ramen noodles, I know you can survive your entry-level salary too – as long as you’re smart about it.
If even one person reads this and avoids credit card debt or hunger in their new grad years, I’m a happy camper.
#1. Hustle is a good thing.
If there is one thing I wish someone had told me as they handed me my diploma, it’s
“You are not above taking a second job just because you landed a 9-to-5.”
Whether it’s a freelancing side hustle or a part-time retail gig, I can’t stress this enough: the extra money will make your entry-level life a lot easier.
You have the luxury of a steady paycheque that, if you plan it right, will cover your basic necessities. Give yourself a bit of leeway on how you want to earn that extra cash, but go earn it. I wish I had back then, beyond just signing up for overtime shifts when they were available because I needed new running shoes (true story.)
#2. Living at home is not a death sentence.
It’s not an option for everyone, but if your parents are being gracious enough to offer you below-market rent and a warm bed, there is no shame in taking it. It is a privilege to have family who are in the position to support you like that, and in the city you’re living in, to boot.
This is a real option. Not a punchline.
#3. If you need to put it on a credit card, you can’t afford it.
Feeling like you can’t afford the life you want is tough. It’s really, really tough. Like, burst-out-crying-because-you-ripped-your-one-pair-of-nice-jeans-and-can’t-afford-to-replace-them tough. I know from deeply personal experience, because that’s a real thing I did.
But you know what else is tough?
Especially the kind of debt that comes with a 20% interest rate and eats up hundreds of dollars, just to make a minimum payment.
If you find yourself thinking, as a new grad, that you want to buy something, but you don’t have the money?
Then you don’t have the money. Do not put it on a credit card and hope for the best. Because you still don’t have the money.
As hard as it may be at the time, if you can’t pay off that credit card at the end of the month, don’t buy it. Your future self will thank you so hard, all the time.
#4. Where and how you live matters as much as your salary.
Some places are more expensive than others.
This seems like it shouldn’t have to be said, but paying attention to this fact will make your entry-level life a lot easier. If entry-level salaries are, by and large, comparable between different cities, but one city’s average rent is through the roof? You’re going to have a harder time making your money stretch there.
I’m not saying don’t move there, or stay there.
I’m just saying be aware of the choice you’re making, and how much it will cost you.
Until expensive cities start paying new grads $75,000 a year for entry level roles in your field, you should consider this factor before moving to them.
And before you put the entire move on your credit card.
PS. This article, about a man who makes a six-figure base salary and “can’t afford” to live in Vancouver is my jam. Dude is wise, and makes the point that “No one has a God-given right to live in a particular place. We all have to tailor our expectations to our income.” Preach.
We all have to tailor our expectations to our income.
I’m going to cross-stitch that and put it on a freaking pillow.
#5. Don’t expect to be out of an entry-level role in a year.
Listen, a year is a pretty reasonable amount of time to do an entry-level role.
When I got out of school, I had no idea how much I still had to learn, and I relished every second I was paid to learn it. Trust me when I say that my on-the-job learning still hasn’t plateaued, and I don’t see that happening anytime soon.
If and when you’re expected to stay in a role for a year or more and learn the ropes before advancing, you should be grateful for the opportunity, and not bank on a $20,000 raise in the first six months.
If your salary over that year won’t support your life, see point #1, or reconsider whether the job is a good fit for where you are right now and the choices you have made. It might not be.
But don’t take it as an unreasonable situation.
#6. When you get your salary offer, make a budget before you make big decisions.
Here’s a quick gut-check budget you should do on your first full-time salary offer. It’ll take you all of five minutes, tops.
Sure, the offer you just got might be more money than you’re making now by a factor of 10, because you’re still a student. You still absolutely need to check your expectations against the reality of the life after graduation, and this two-step budget check is a great way to do that.
First, go put your salary and location into the Simpletax tax calculator. It’ll give you a rough estimate of your yearly take-home pay, after taxes. Divide that by 12 for now, to estimate your monthly take-home pay.
Second, calculate a rough budget based on percentages of that take-home pay, like the ones in the One-Minute Budget, which advises
- 30% of your income goes to housing
- 10% goes to food
- 15% to transportation
- 10% to fun and life
- 20% to savings
- 15% to debt repayment
Let’s say your take-home pay is $2,000 a month (which is not that much less than what I earned post-grad). That gives you…
- $600.00 for housing (this includes utilities, internet, rent, etc. This is not just rent.)
- $200.00 for food (buying your own groceries is and always will be A+. I love food and I think you might too.)
- $300.00 for transportation (this includes a bus pass, bicycle repairs, and anything you spend on a car. Spoiler alert: you might not be able to afford a car and a bus pass. Or a car payment and car insurance and gas.)
- $200.00 for fun and life (That’s clothes, happy hour with your friends, technology, travel, pet care, hobbies, gym membership, etc. The great part? You can do whatever you want with this money. The downside? You probably can’t do everything you want. It’s still only $200.)
- $400.00 for savings (at this point, save for what matters to you most, but keep reading for point #7 about emergency funds, please please please.)
- $300.00 for debt repayment (if you have debt – if not, feel free to allocate this elsewhere. But try to send a bit of it to savings.)
Even if you tweak the categories, doing a quick calculation like this will help you make better decisions, like where you can afford to live and how you can maintain your ability to buy your own groceries.
Combining this budget with a tiny bit of research on the city you’ll be working in, and your options when it comes to things like rental apartments and transit passes, will give you a great guide about how affordable – or not – your choices are.
Because nothing says “I’m an adult” like buying your own groceries.
You want to be able to buy groceries. Trust me.
#7. You need an emergency fund. Even a tiny one.
In the above example, there’s $200 allocated to savings each month. If I were that new grad – and I was – I’d throw some of that money into an emergency fund. Not only will it make getting fired way better, it’ll give you peace of mind.
When you’re just starting out, there can be a lot of little emergencies, especially if you’re figuring out how to be in the world as an adult for the first time.
Which ok let’s be real, is all of us, and me to this day. Who knew you had to renew your license plate every year on your birthday? Adults, that’s who, and none of them ever told me about it.
Even if your emergency fund is teeny – like, $20 teeny – it might be the difference between paying the deductible on your medical benefits and getting the treatment you need, or suffering through something in silence.
Have a $20 emergency fund. Grow it from there.
But have one. You will not regret it.