As a new young adult ready to face the real-world, you should be prepared for what lies ahead. These financial tips can help you go through the many challenges that you would face right after college.
Think like a student. Most newly grads get excited about getting out of college, having a full-time job, and earning a decent salary for themselves. Unfortunately, this may give way to a totally new lifestyle, wherein they mostly get trapped in unnecessary spending.
In order to avoid this, you should try to spend like you’re still a student, wherein you’re living on a limited budget, keeping up with an older car for too long, and cooking your own meals instead of dining out. If you choose to forget that you have more income now and stick to your old spending habits, you can pay off your debts, if you have any, more quickly and begin planning for bigger goals.
Contribute towards retirement accounts. Make sure that a retirement account will be arranged at your new workplace for you to take advantage of employer-matched contributions. That’s free money put towards your retirement so be sure to maximize your contributions.
Keep your credit in check. At any stage in life, you don’t want to mess up your credit, unless you want to jeopardize your ability to borrow, buy a car, buy a home, or even get a job. If you’ve had a credit card while in college, it would probably be easier to obtain additional credit now compared to starting from scratch. Just make sure you watch out your spending, pay your dues on time, and keep your oldest credit cards active.
Get rid of highest interest rate debt first. Many newly grads do not only have student loans to pay for, but credit card debt as well. While it could be tempting to get rid of your student loan first, it might be wiser to focus on reducing your credit card balances, which carry higher interest rates that can cripple you for a long time.
Prepare for unexpected dangers. You can never tell if anything happens to you, if you’ll get sick or get fired. What’s worse, you’re starting to live independently now and you can’t just expect your parents to bail you out. If you got ill or lost your job, the bills would still come, and if you have no source of income, you have to resort to borrowing in order to pay for them. To avoid accumulating unwanted debt, better build up your emergency fund so you’ll be able to make ends meet without resorting to debt.
Create a budget and commit to it. It’s hard to plan on pulling away from debt and preparing for a brighter future if you do not have a budget to follow. When creating a budget, it is important that you look closely at your income and expenses, and assess which areas you can cut costs. More importantly, you should set a realistic budget that you can follow through the long-term.