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Breaking Down the Cost of Living on Your Own

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Nathan has more than 10 years of personal and professional investment experience.


At the end of the Spring semester draws near, many college Seniors have only a couple weeks before graduating into the “real world” and living on their own. As one of those Seniors, I find myself blissfully unaware of how much it really costs to pay your own bills.

For a single college grad, where does $46,000 per year (the average starting salary in 2011) or $3,833 per month go?

Taxes, Insurance & 401(k)

Uncle Sam’s going to get his hands in your paycheck before you even get it. After sending 5% to your retirement plan (which you should do) and paying for health insurance premiums, Uncle Sam's going to dip his hands into your paycheck. The Government automatically takes out Federal taxes, Medicare, and Social Security before you even see a penny. If we assume 5% for state and local taxes (will vary by state), the monthly take-home total drops 33% from $3,833 down to $2,568.

Ouch! No wonder your parents complained about taxes!


The Bible tells us to give 10% of our income back to God. Even if you're not a Christian, giving will help you focus less on what you don’t have and more on the needs of others. Not only that, but it has been shown to increase our happiness levels more than spending on ourselves. 10% of $3,833 is $383. If we subtract that from our take home pay of $2,568, we're at $2,185.

Note: percentages below are calculated based on actual take-home income (after taxes, 401(k) and donations).

Rent: 34%

While it varies significantly depending on location, the nationwide average is $614 for rent and $119 for utilities. Tack on another $17 for renter’s insurance and we’re up to an average of $750. For a more accurate reflection of your region’s prices, punch in your state to the regional cost calculator. If you're looking to reduce rent costs, Craigslist has some really great deals.


Gas & Auto: 16%

According to AAA, the average cost of driving 1 mile is $0.58. Assuming most recent college grads drive smaller vehicles, we’ll assume AAA’s small sedan rate of $0.45 per mile. If that seems high, consider that driving costs include: depreciation, gas, maintenance, tires, oil changes and insurance. Driving 750 miles at $0.45 would cost you $338 per month.

Food: 11%

The nationwide average for groceries is $197. If you eat out less or are a little more active, this will be higher. We will figure $250 just to be on the safe side.

Clothing: 2%

You’re going to have to pay for a shiny new wardrobe full of professional clothes. This isn’t cheap, especially for the fashionably-inclined among us or those with a flavor for the more expensive brands. This varies greatly, but the average is about $600 per year or $50/month.

Cell Phone Bill: 3%

It seems like everyone has a smartphone these days. If mom and dad stop paying your bill, you’re easily looking at $75 for voice, texting, and data.

Cable/Internet: 5%

As much as us young folks would like to believe, Wi-Fi isn’t just magically everywhere. You have to pay for it. Digital cable will cost you about $75 per month. Tack on another $30 for internet and we’re at $105 per month.

Entertainment & Eating Out: 5%

This category will vary greatly, but the average is just over $100.

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Savings/Debt Repayment: 24%

This gives you about $450 remaining to pay off student debt, build an emergency fund, contribute to your Roth IRA, and save for your other financial goals.

I hope this gives you a good idea about what you will be spending on each category. This is not a comprehensive list, but should be a good template to start your budget.


For those of you earning slightly more or less than the $46,000 example shown above, the chart below uses the same percentages to give you an estimate of your cost of living for each category.

Did anything surprise you? Is the cost of living on your own higher or lower than you expected? If you’re out on your own, do you agree with the numbers we’ve assembled here? Leave comments below!

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.


Joy from United States on July 25, 2013:

Nice hub. Very useful

Nathan (author) from Midwest on December 28, 2012:

@jdcedeno - Thanks for the comment! I really appreciate it.

Car insurance is actually included in the "Car & Auto" section. I suppose you could incorporate car payment in separately, but I chose to leave it out since depreciation was included in the cost of driving from AAA.

That should cover the car payment since the value of the car is being reduced with every mile driven. The only thing that wouldn't be incorporated by that figure would be interest from any car loans - which not everyone has. If you do, then that would be included.

Essentially, I wasn't trying to get everything down to the exact penny, but just to give everyone a vague idea of where there money might go once they're out on their own! :)

jdcedeno from Houston, TX on December 22, 2012:

Great article! That breakdown really helps young people be aware of what they'll have to spend.

Only thing I think you forgot though is car payment/car insurance. I know I didn't have a car and needed one once I started working.

Thanks for writing!

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