So you’ve finally graduated from college. Congratulations! Now what? For many of us, this means finding a job, moving to a new place and starting our “adult” lives. This is an exciting step, of course, but it doesn’t come without its challenges. One of the most daunting aspects of this new chapter of life is the financial responsibility. Some graduates may be lucky enough to walk away with no debts and the start to a substantial savings, while others are struggling to see how their last four years of education will ever be paid off. Regardless of where you fall on the financial spectrum, here are some tips for managing your money post-college.
Figure out your immediate plans
Hopefully, this means finding a job with a decent enough salary. Once you’ve accomplished this, you need to figure out a cost-effective living situation. For many people, the ideal plan is to move out of their college housing and directly into a new place, and, for some, this is fine if they can secure a reasonably priced place with affordable utilities that can be split amongst roommates.
However, it is important to do some calculations before you make this step. Can you realistically afford the rent and bills that come along with having your own place? If so, will you be making enough to pay for your other expenses as well? If not, it might be worth considering another option: moving back home. Now, I know that this doesn’t exactly sound like the most appealing choice to most people, but (if it’s an option) it can really make sense financially. If you opt to live with the ‘rents for just a year or two before moving out on your own again, you could end up saving a considerable chunk of money.
Once your housing situation is settled, the next step is to take a look at your commute. This is a financial burden that some people don’t necessarily factor in when taking their salaries into account, but commuting to work five days a week can be very costly. Will you be taking public transportation? If so, weigh all your options. There are usually yearly or monthly packages for commuters that can be less expensive than paying on a daily basis. Think driving might be the better option? Be sure to come up with a rough estimate on how much you’ll be spending on gas, along with any kind of parking fees that you’ll be paying.
If you’re someone that graduated college with debt, you need to start paying it off ASAP. It may have been impossible during college, but now that you have a job, this should be one of your primary focuses. To help manage your payments, put together a budget plan for yourself. The primary expenses here will be your living expenses (rent, groceries, etc.), potential necessities like insurance, and your debt payments. Figure out a budget that allows you to live comfortably while allotting the highest amount of money towards paying off debts as possible.
It is completely fine to set aside a modest amount of money for other unnecessary purchases, like nights out or clothes shopping, just be careful what you spend this on. Before making a purchase, you want to ask yourself a few questions: Do I really need it? Is it a fair price? Is it something trendy or something that will need to be replaced in the near future? If you can’t convince yourself that it’s a worthwhile investment, then try your hardest to steer clear of making the purchase.
After you get out of any debt, it’s crucial that you start saving. This means setting aside a percentage of every paycheck. I suggest saving much as you can afford to, and, again, taking out only what is truly necessary. It’s great to build up savings for the future. Trust me that you’ll be thrilled you have it one day when you need a new car, money for rent, or as a safety net if you run into an unexpected circumstance that would otherwise require a loan.
Once you have some money accumulated in your savings, it isn’t a bad idea to open up a credit card. I’m definitely not suggesting that you do so in order to spend like crazy and blow all your savings. In fact, I would recommend using a debit card whenever possible. However, having a credit card will help you build credit. This is essential for buying or renting a new place, taking out a loan, getting low interest rates on a car, and much more. Plus, this can be a great backup plan in the event of an emergency where you don’t have enough cash on your debit card, but really need to make a purchase. Just make sure that, if you do open one, you pay it off on time. Nobody wants to pay a 20% interest rate, but you’ll probably end up with something close to that if you can’t pay your credit card bill on time.
Whatever financial situation you may be in, you should always be smart about your money. Save often, spend wisely, budget, and avoid getting yourself into debt at all costs. If you can stick by these rules, you should feel confident that you’re in control of your money.