What does it cost to be you? (your personal budget)

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Timothy from Indiana State University asked:

I just graduated with a degree in Psychology.  How much do Psychology majors make? I need to know how much I will make so I can be sure I can pay my bills once I am “off my parent’s payroll.”

Hi Timothy –

Reality time, right!  Mom and Dad will only cover your bills for so long. Eventually, you have to bear the cost of being you, and you need a job that will help you do so.

How much do Psychology grads make?

Well … that depends upon what they choose do when they graduate.  Those that go into business typically start off making more money than do those that go into social services, non-profit work, government or education.  And, some don’t go directly into the workforce – they go into graduate school. Not all Psychology grads do the same thing upon graduation, and what you choose to do will directly impact how much you can expect to earn.  When it comes to compensation, the economics of supply and demand prevail!  You can expect to earn whatever the market is willing to pay for someone with your combination of education, experience, skills and qualities/characteristics.

What you believe you should be paid matters less than what the job market believes you should be paid.  How do you find the sweet spot?

Answer the following three questions:

How much you need to make?  What do you need to pay your bills?
How much do you want to make?   What standard of living do you aspire to/wish to maintain?
What will the market bear?   How much can you expect to earn given: (a) your education, experience, skills and qualities/characteristics and (b) the fields you are considering for employment?

To me, this all begins with that first question – How much do you need to make?  To determine that, I recommend the following budgeting exercise:

What does it cost to be you?

Let’s assume that you are just trying to maintain your current lifestyle. Factoring in all of your monthly expenses, what will you need to earn in order to maintain your current standard of living?

Click on the image to download and use the “What do you need to make?” personal budget worksheet as your guide. Go through every line, inserting an amount that you feel is representative of your monthly expenses.

BudgetAt the end, the worksheet will annualize your monthly expenses and calculate the Federal Income Tax due to estimate the approximate gross annual income required to maintain your current standard of living.

Run the numbers. Find out what it costs to be you.  Then, see if the career paths you are considering offer income potential in line with your desired standard of living.

Some goals aren’t compatible, some are!

It’s not complicated. You probably aren’t going to be a school teacher AND living in a big house, drive a fancy car and vacation regularly in the tropics UNLESS you marry well, have a trust fund or win the lottery.

No employer is going to pay you what you believe you are worth unless your perceived market value is in line with what the market will bear for someone with your education, experience and skills.

It’s the basic economics of supply and demand.

So take my challenge.  Run the numbers.  Find out about the extent to which you can afford to live your currently lifestyle.

I hope you are pleasantly surprised!

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One response to “What does it cost to be you? (your personal budget)”

  1. […] With summer upon us, recent graduates are busily searching for career opportunities and the Campus Career Coach offers a variety of valuable free resources to assist in their efforts! This recent post from the Coach provides hands-on compensation and budgeting advice helpful for any major – check it out! […]