You’ve just received your college diploma after countless hours of studying, testing and learning. Now you’re embarking on the next phase of life: financially preparing yourself for a career and future stability.
To get you started off on the right foot, we’ve compiled six of the best financial tips to consider while positioning yourself for financial success.
Supporting yourself can be expensive, and you can quickly find yourself struggling financially if you don’t take time to create a budget. Calculate the amount of money you’re taking home after taxes, then figure out how much you can afford to spend each month – while still being mindful to contribute to your savings. Be sure to factor recurring expenses into your budget, such as student loans, monthly rent, utilities, groceries, transportation expenses and/or vehicle loans.
Missed payments could hurt your credit history for up to seven years! In turn, this could affect your loan qualifications, the interest rates you pay and your ability to get a job or rent an apartment. To avoid these hiccups, consider setting up automatic payments for regular expenses like student loans, car payments and phone bills. You can also contact creditors and lenders to request a different monthly due date from the one provided by default (e.g., switching from the 1st of the month to the 15th), to help spread out expenses so they aren’t all due on the same day each month.
Understand the responsibilities and benefits of credit. Shop around for a card that best suits your needs and spend only what you can afford to pay back that month. Paying monthly (a day or two ahead of the billing cycle) helps you establish routine, a good credit score and avoid the additional charge of the credit card’s interest rate.
It may seem odd since you’re just beginning your career, but now is the best time to start planning for your retirement. Contribute to retirement accounts like a Roth IRA or your employer’s 401(k), especially if there is a company match.
Invest enough to qualify for your company’s full match; it’s free money that adds up to a significant chunk of change over the years. Plus, depending on the vestment rules for your company, you may be able to roll it over to future employers, as well.
Hardships can happen in a split second. Start an emergency fund and do your best to set aside the equivalent of three to six months’ worth of living expenses over time. Make saving a part of your lifestyle with automatic payroll deductions or automatic transfers from checking to savings. Put your tax refund toward saving instead of an impulse buy, or easily enroll in a program like Simply Save where you can automatically round up each purchase to the nearest dollar and have the difference transferred into an account to save with each purchase.
Many banks offer free digital banking tools that let you check balances, pay bills, deposit checks, monitor transaction history and track your budget. Some even offer text banking options where you can easily check in on your account balance at any time of the day or night.
Don’t be too overwhelmed about student loan payments, either. Typically, the interest rates are lower than traditional loans, and you’re able to defer for a period of time once you graduate from college.
And, most importantly, as you embark on this next chapter in life, take a moment to get excited! You’re on the cusp of finding your stride and enjoying financial freedom. The world is your oyster, so go forth and budget with confidence.