You’ve finally made it through years of late night study sessions, living in a crowded dorm, and eating pizza for every meal. Congratulations, you’re done with college and are officially an adult. Now what? While graduating college is a major step in life, you may be struggling with what to do next and which direction you’re headed in next. No matter where you end up, you should start to consider how you’re going to manage your finances. It doesn’t have to be an overwhelming process if you know where to start. Here are some tips for people, like you, who are just starting out.
Learn to Budget
Putting together a budget is one of the first steps in maintaining your financial independence. It allows you to see all the cash you have coming in and going out, so you know how much you can afford, where you need to cut costs, and what you can do to spend your money more effectively. There are many different ways you can set up a budget. Some people like using software with built-in tips on how to maximize your money, while others prefer the good old fashioned pen and paper method. Decide what works for you and use it.
Be Cautious With Credit Cards
Credit cards certainly have their usefulness, especially when you’re just starting out and need a safety net in case of an emergency. However, you should use credit cards carefully. They aren’t unlimited spending tools to use haphazardly. Credit card debt adds up fast, especially when you factor in interest and any annual fees your card may have. A good rule of thumb to go by is to never make credit card purchases you cannot pay off immediately. That can help you limit your spending unless in a dire emergency.
Invest in Good Insurance
You never know what may happen, which is why one of the first things you should do after you graduate is to invest in good insurance. You’ve likely been on your parent’s health insurance, but will now need to research and purchase your own. If you’re a renter, it’s never a bad idea to buy renter’s insurance to ensure your belongings are protected in the event of fire, theft, or other damage. You may have gotten away with bare minimum coverage car insurance while you were in college, but now that you’ve graduated you should look into getting more comprehensive coverage in case something happens to it. Part of being a responsible adult is ensuring you and your loved ones are taken care of in the event of an emergency, and it often starts with good insurance.
Start an Emergency Fund
Having a credit card to use in the event of an emergency is a nice added safety net to have, but you shouldn’t solely rely on credit to get you through the hard times, as it could put you into more debt than you can handle. Start setting aside an emergency savings fund to protect you in the event of a medical emergency or job loss. You should strive to have half a year’s salary in the bank. It may seem like an overwhelming task, but start small and have your savings automatically deducted from your paycheck so you don’t have to think about it. Over time the savings will really add up.
Save for Retirement
You’re young, healthy, and the last thing on your mind is retirement. However, that doesn’t mean you shouldn’t think about it. Now is the time to start putting money away for your future so you’re taken care of in your golden years. You can start small and increase your savings percentage as you get yearly raises. If your company offers a match, put away as much as you can to maximize that match or you’re essentially throwing away free money. Don’t spend all your money on clothes or accessories (earrings, men’s bracelets….) all of those are secondary.
You’re young and have plenty of time to settle in and become financially successful, but that doesn’t mean you shouldn’t start as soon as possible. These tips are a great starting point in making sure you’re taken care of now and in the future.