Jumpstarting Your Finances as a New Grad
Earning an undergraduate or graduate degree is quite the accomplishment, and graduation lends itself to celebrations and bright hopes for the future. However, once the parties wind down and the pats on the back subside, the reality of post-graduation life quickly sets in. Getting a job is typically the highest priority on a lengthy list of to-dos, but following closely behind should be a different sort of life preparation. Managing one’s finances after attending college can seem incredibly daunting, but there are a few steps new graduates can take to jumpstart finances. Here’s how to get on the right track with your money early in life, regardless of income.
Boost your Money Know-how
One of the best things new graduates can do is educate themselves on the ins and outs of basic money management strategies. Although many have little desire to pick up a book or take a course after sitting through several years of lectures and completing countless assignments, a college classroom isn’t often where real-life financial skills are learned. Taking the time to gain knowledge about different types of bank accounts, how credit works, and the importance of and strategies for building a foundation of financial stability is crucial to long-term success with money. Consider reading through a personal finance book or two, or talk to parents, co-workers, or a financial advisor about what can be done to create strong habits for managing money after graduation.
Create a Simple Budget
Once there is a foundation of education regarding personal finances, new graduates should spend a little time on creating an easy to follow budget. Getting your first job is exciting, but it can be bad news for your wallet if there is no strategy for how that hard-earned money will be spent or saved. Evaluate how much income you earn each pay period and then subtract all of your required and desired expenses from that amount. Make sure to include fluctuating expenses, like food, entertainment, and clothing, along with fixed expenses like housing costs, student loan payments, and utilities. New graduates do best when they have a solid understanding of their cash flow each month, and when they put any excess funds not used for living expenses into a savings vehicle for the short- or long-term.
Understand your Credit Options
Every now and again, a major life expense comes up that has the potential to derail even the most secure budget. New graduates can do themselves a favor by understanding the credit options available to them before an emergency savings is fully funded. There are short-term loan options through local loan companies like the net lender that can help when a financial surprise rears its ugly head, and an emergency credit card with a manageable credit limit may act as a lifesaver in other cases. Be sure to know what options are available to your based on your income, your other debt obligations (like student loans), and your timeframe for repaying the debt.
Set Goals for the Future
Taking the small steps mentioned above will set new graduates on a path toward financial success for the future, but it can be difficult to keep up with saving and following a budget when cash flow is tight each month. Most individuals experience a greater degree of success when they set financial goals for the short-, mid-, and long-term, and they make an effort to check in on their progress from time to time. Whether it is saving for an emergency, paying down student loan debt quickly, or setting money aside for retirement, identifying the objective for a particular financial strategy is the first step toward achieving it. Consider writing down your financial goals and working with an accountability partner along the way to ensure you’re continuously moving forward on the path of building a stable financial future.