Graduating from college is a milestone that leaves many students overwhelmed with finding a new career, managing monthly expenses and paying off student loans. Finding a solution that allows you to manage your money wisely is the best way to start a new career, and an independent lifestyle, without accruing more debt than you can handle. Learning which steps to take to create a new home and new life, and which to avoid, helps you avoid some of the most common mistakes that new graduates make.
Prioritize Your Spending
Setting up a new apartment is one of the first steps that you will take after college. It is important to take the time to decide which items you really need to purchase, and which can wait a little longer. For example, you will need furniture, but a top of the line television is a luxury that you can put off until you are a little more financially secure.
It is also important to look at your weekly budget for food costs and entertainment. Setting a budget for food, drinks with friends and other non-necessary expenses can save you thousands of dollars a year. You can also take the time to learn new skills, like cooking, that can help you stretch your money. Cooking meals at home is one of the simplest and most effective ways to cut spending.
Use Debt to Your Advantage
Debt isn’t always a bad thing to have. A manageable amount of debt can be an advantage when you make payments on time. Making payments on time allows you to begin building your credit score, which will assist you in buying a new home or car in the future. Just make sure that you only take out loan amounts that you can comfortably manage to ensure you aren’t overwhelmed by the monthly payments during the first months after graduation.
Saving can seem challenging to new graduates but this step is one that you shouldn’t skip. Even a small portion of your income can make a big impact on your retirement or emergency fund over the course of several years. Start by investing about two percent of your income into a savings account that is set aside for emergencies, such as unexpected car repairs, then switch to investing in your retirement account. You may want to research your options before choosing an investment account to find the best returns on your investments.
One unexpected aspect of being financially independent in keeping up with and organizing paperwork. Choose to use online statements and automatic payment options whenever possible to help reduce the amount of paperwork you need to organize at home. Not only will paperless options cut down on clutter, automatic billing and payments taken directly from your account ensure you make payments on time without the hassle of sending a check.
By planning your finances carefully and prioritizing spending, graduation can be an exciting adventure instead of a financially stressful event. Begin planning your financial future early to be confident that you are prepared for your new life as a recent college graduate.
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Daniel Ramos is working for Garden Savings bank. He loves to blog and offer people advice on their personal financial issues. When he is not blogging, he enjoys writing for his own finance blog.