With college in the rear view and a cumbersome student loan bill coming your way, there is no time like the present to jump into adulthood and begin learning about properly managing your finances!
Here is a college grad’s guide to financial stability and success:
Build a Safety Net
Building an emergency or “rainy day” fund is important for many reasons. Whether you lose your job, your car breaks down, or some other unplanned tragedy occurs, having that safety net of cash set aside for that specific purpose will save you from unneeded financial stress. The key here is to plan ahead. Set aside some money from each paycheck into a savings account so you can be prepared in the event of a crisis.
Live Within your Means
Going out every night may have been ok for your wallet when you were in college (thanks $1 beer night), however, your post-college days will be different. Perhaps it’s time to evaluate your goals and prioritize your money to save extra by passing on a few happy hours here and there. This does not mean you cannot have a social life, it just means you are making the decision to spend or save your money on other important things in your budget.
Invest in a 401k plan
Do your future self a favor and invest in a 401k plan! If it is offered by your company, it is wise to take advantage of the matching contribution to save and receive as much as possible. If you’re going it alone, open an individual retirement account and contribute to it as much as possible. As your income increases over time, increase the amount you are contributing.
Keep your Credit under Control
If you do not already have a credit card, get one. Building credit is essential and will come in handy later in life when you want to buy a home or a car. As long as you exert self-control and pay your bills on time, you will be well on your way to a solid credit score. Paying student loans on time will also become a factor in your score, so make sure you are making your payments on time. If you own a credit card and are facing debt, build a plan to pay off any outstanding payments as soon as possible.
Pay your Student Loans
College students today face the heavy and relentless burden of student loan bills. The best way to go about your student loan debt is to have the right mentality-pay off as much as possible, on time, as soon as possible. Some experts suggest treating your student loan bill like a mortgage. Refinance them based on your income and pay more than the minimum each month if you can to shave years of interest off. For more tips on paying back student loans quickly and efficiently, click here.
Explore your Options
If you are really strapped for cash, try exploring additional ways to save or add to your income. Consider freelance work, a second job, or turning your personal hobby into your own side business. If all else fails, there is no shame in moving back home with Mom & Dad to avoid today’s high rental costs and save extra money while paying off those hefty student loan bills.
Best wishes to all of the graduates of 2016! May you have a happy, healthy and financially stable future ahead of you!