Recent Grad? 10 Tips on Handling Your Finances
After years of classes and more all-night study sessions than you care to remember (or would like to admit), you’ve finally graduated. Congrats on this major achievement! After you party hearty in celebration, it’s time to lay down the foundation for the next chapter of your life. As a college grad himself, Charlie is eager to share his tips for a bright financial future.
Here are ten tips to own your finances post-graduation:
Tip #1: Assess Your Current Position
Before you can make any plans, you need to know where you stand now. Hopefully, you’ve already landed a good job, but don’t worry if you haven’t — these things can take time. Regardless of your employment status, you should take stock of your income, expenses, debts, and savings. Write down everything and commit to tracking it going forward.
Pro Tip: Not used to tracking your money? Charlie can help! Just tell him what you need to keep an eye on and he’ll take care of it.
Tip #2: Decide Where to Live
Since housing is a major expense, your cash flow will determine where you can afford to live. While getting your own place can be a great growing experience, if you’re financially strapped, it’s probably going to have to wait. Consider moving back in with your parents or other relatives until you’re on your feet. If you’ve got some cash, sharing expenses with roommates can also work.
Tip #3: Create a Budget
Once you’ve got your housing situation tacked down, it’s time to create a full budget. If you’re living on your own or with roommates, you’ll need to account for the cost of rent, utilities, groceries, insurance, student loan payments, and any other necessities. It’s OK if you need to do a little recon — walk around your local stores, call the utility companies, and get several insurance quotes. That way, you’ll have the most accurate estimate possible. After the first couple of months on your own, be sure to update your budget with your actual spending.
Remember, your budget isn’t meant to be restrictive. It’s supposed to be a spending plan that helps you enjoy your life. If you’re able to work toward your goals and avoid lifestyle creep as your salary climbs, you’ll be in great shape!
Tip #4: Open an Emergency Fund
If you don’t have money for a rainy day squirreled away yet, factor building an emergency fund into your budget. Ideally, you should have enough to cover your essential expenses for a few months in case you lose your job. However, being able to cover a car repair or doctor’s visit in cash is a great first step. Having this money available will prevent you from taking on more debt, help you to retain your newfound independence, and give you peace of mind.
Pro Tip: Automate your savings so you’re not tempted to spend the cash on other things.
Tip #5: Make a Debt Pay Off Plan
If you’ve got student loans or any other kind of debt, create a plan to crush it ASAP. Having debt can make it tougher to fund your dreams and limits your options. You may choose to tackle your smallest balance first or prioritize the account with the highest interest rate. Either way, ditching debt is a win for your finances.
Tip #6: Start Investing
If your employer offers a retirement savings account, try to contribute enough money to get their match. That match is free money and can help your savings grow much faster. If you’ve got extra cash, consider stashing it in an IRA or brokerage account. It’s never too early to start building a healthy nest egg for the years ahead.
Pro Tip: Before getting started, consider getting familiar with (or brushing up on) some investment basics. That way, you can invest with confidence.
Tip #7: Establish (and Maintain) Good Credit
A clean credit history and a high credit score are key to being able to finance large purchases like a car or a house. Additionally, your credit may impact your insurance premiums or ability to qualify for certain jobs. But don’t worry — if you borrow responsibly and pay your bills on time, you’ll be just fine.
Tip #8: Think Twice Before Grad School
If you’ve chosen a career path that requires an advanced degree, that’s one thing. You should still try to get scholarships, ask your employer about tuition reimbursement, and find other ways to reduce the expense. However, if you don’t need to attend grad school to start working in your field, take a hard look at the cost in relation to your goals to be sure it’s worth it.
Tip #9: Get Domestic
If you have spare time, learn the basics of cooking, cleaning, sewing, and home repair. Being able to take care of these things yourself will save you a bundle. Plus, you may be able to turn these skills into a side hustle for extra income.
Tip #10: Keep Networking
Just because school is over, doesn’t mean you should close the door on that chapter completely. Your professors and fellow students are the foundation of your professional network — especially if your work history is limited. Be sure to stay in touch with them as you meet more people and develop in your field. You never know when you may be able to help each other out.
If you’ve never been on your own before, it can be a little nerve-wracking. A household budget has a lot of moving parts and managing it is a skill that takes time to hone. But with some research, planning, and support, we’re confident that you’ve got this!
Tell Charlie: What’s your best money advice for new grads?