Home Budgeting Financial Advice For College Graduates: What I Wish I Knew

Financial Advice For College Graduates: What I Wish I Knew

by Tara Robinson
Financial Advice For College Graduates

Following graduation, one begins a new phase of life marked by greater opportunity and increased responsibility. It’s possible that you’re entering the working world, having already left university accommodation, and being financially self-sufficient. Here is some valuable financial advice for college graduates that you can use to gain better control of your finances.

Start A Budget

Although budgeting is essential for long-term financial success, your first financial tip for graduates is particularly important. There’s no need to make it more complicated. A simple list of incoming and outgoing transactions on a napkin would suffice. 

First, compute your net monthly income by adding up your checks per month. When you’ve listed the non-discretionary expenses, point out the items you must pay, called non-optional expenses, such as rent, utilities, groceries, student loans, car loans, etc. When your discretionary or wasteful costs, including dining out, are factored in, your money left is what you have to spend on discretionary. 

The goal is to manage expenditures, which ensures that after you’ve subtracted necessary and excessive expenses, there is still money left over. The added funds may be used to put money away, purchase a house, start a pension fund, buy a new vehicle, or pay off current debt.

Holding a rough budget will help you stay out of debt. It’s simple to keep tabs on expenses using one of the many free budgeting applications available.

Establish An Emergency Fund

Welcomed to the domain of transition, for most people, it occurs when they’re still burdened with debt. No matter what happens, having a safety net gives you peace of mind and keeps you out of debt.

A prime example is the Covid-19 epidemic. However, this has had a negative effect on the majority of people, who are having a tough time finding their feet financially. It might not have covered anything due to the duration and scope of economic pain, but getting an emergency fund of six months would have helped. It is important after graduation to seek out proper financial advice for college graduates, especially nowadays.

Also, it is best to set six months’ worth of expenses as your goal. To create an emergency fund, make monthly deposits into a money market account. Start with what you can afford. You should never expect to create an emergency fund overnight.

Build A Strong Credit History

A strong credit rating is required. Showing you are a responsible borrower and worthy of loans for big purchases like a home or vehicle implies that you can manage your finances professionally. Other than that, your finances are pretty easy. Be sure to pay your bills on time, and don’t apply for credit cards that you will never be able to use up to their full limit. 

You need a credit score of at least 750 to get the best loan, insurance, and mortgage rates. In addition to credit checks, certain employers and landlords do so as well. 

Visit one of the three free services provided by Equifax, Experian, or TransUnion to see where you stand in terms of your credit history. You’re unlikely to have a lot of files on your computer, and that’s fine—your credit history can eventually accumulate.

Understand Your Living Expenses

Expenses can accumulate rapidly when you move out of campus housing. Rent, electricity, and transportation would instantly seem like big monthly expenses. Consider all potential new expenses when setting your budget, and make sure you understand how prices differ depending on service packages and time of year, leaving yourself enough space to account for the possible variations. 

Start Paying Off Student Loans

A new Edvisors report showed that nearly two-thirds of baccalaureate graduates will have debt upon graduation, and 2015 graduates will collectively have more than $35,000 in student loans.

This is strong financial advice for college graduates that I wish I myself had applied more.

Paying just the minimum monthly payment will cause you to spend more money, so consider introducing a repayment plan that allows you to borrow as much as possible. If you pay off your debt as soon as possible, you can save money and pay less interest. 

Plan For Retirement

Sounds bizarre, isn’t it? However, you are never too young to start investing. Save at least a portion of your paycheck by automating your savings. And if your employer matches your contributions, make the most of this opportunity by investing in the 401(k). It’s almost like money for nothing.

Pay Your Bills On Time

In order to prevent substantial late fees and lower your credit score, you must keep a record of your expenditures and make all payments on time. One way to prevent late payments is to simplify your payments. You can set up monthly payments, build a calendar alert or download an app like Mint Bills, which consolidates all of your bills in one place. 

Live Within Means

When you start getting paid, scheduling happy hours, going out for lunch, and signing up for pricey fitness classes all sound like fantastic ideas, but these choices eat into your budget easily. Find some places that you’re very excited to try, and then go to them mindfully and responsibly. 

Seek Out Good Deals To Save Money

When you have completed your college degree, your friends and colleagues are most likely in the same financial situation as you: struggling to pay off debt, but released from the everyday obligations of family. Dream of cheap things you can do with college students including picnics, pickup games, and free outdoor festivals. 

Set A Long-Term Goal

One form of saving is called “budgeting,” and another is called “budgeting for fun.” Sticking to a budget and rewarding financial discipline will help you achieve long-term goals of any kind, whether it’s buying a new sofa, going on holiday to a sunny locale, or owning your dream house. 

Save A Quarter Of Your Paycheck

It is important to try to save as much money as possible if you can save between 20% and 25%. You will be on top of the world. Knowing that you are helping more than 99% of people by saving them and saving a large portion of their income in the process is absolutely guilt-free. Take charge of your financial life and get ahead as soon as possible. 

Start tracking Your Money & Investments

Sign up for Personal Capital, the free web-based personal finances tracker that I use, so you can keep track of your savings, checking account balances, and investments. My favorite personal finance app is the free edition only. As well as Mint, it has far more features than many rival services, and is constantly updated with new features. It would be helpful for you to periodically monitor your savings and investment returns so that you feel inspired to save more.

Get Into the Budgeting Habit

Just 23% of Gen Zs and 27% of Millenials are conscious of their own spending patterns over the last month. It is doubtful that if you’re in that group, you would find yourself dissatisfied with the “B” term. Budgeting is about not only being able to “living within your means;” but also being educated and prepared for the unexpected and probably unforeseeable financial situation you might find yourself in. That’s why it is essential to get some sound financial advice for college graduates after graduation.

In your mind, imagine a budget as a spending plan that lets you assess your financial commitments and helps you buy the things that really matter to you. Do not allow yourself to be drawn into searching for a specific lifestyle.

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Don’t Wait for the Perfect Job

No matter how much you want it, it is unlikely that it would happen easily, if at all. It is too normal for people to hold out for their big break. Rather, go ahead and get yourself involved. Contribute your thoughts, network, and pursue jobs as closely or as nearly as possible to the role you want. For example, if you want to be a screenwriter, you can get a job at an agency or studio, and begin writing whenever you can. It doesn’t matter if you can’t get a position at an agency. As long as you have a part-time job in a restaurant, you’ll be able to meet screenwriters and chat about their jobs. If you are to find the job you want, move to the city where it is. Begin making connections. It is more likely that you will land a new job or a new career opportunity via a personal connection than applying for a job that you found online. The vast majority of work searches are rigged, so there is no point in trying to kick down the front door.

Minimize Your Biggest Expenses (Eating, Housing and Commuting). 

Maximize your income to allow you to buy a property at a cheaper price than if you had to pay rent. This is a good idea to study before you decide whether you can rent or purchase a home. You should possibly expect to spend a large amount of money on housing in your lifetime, so you should do whatever you can to reduce your costs and invest the difference.

If you are a college graduate, one of the best financial advices I can give you is to double down on your spending. Food is another huge investment, here are several ways to reduce the costs. Commuting expenses make up the third largest portion of people’s overall spending, so learn how to save money on commuting costs.

Start Investing, Even if You Have Student Loans. 

It is certainly not too soon. You’re probably in better financial condition than your parents and grandparents because you have far more time ahead of you, which means your money has more growth potential. One final approach is to buy shares or mutual funds, as this has traditionally been the cheapest way to do so.

Put as Much Into Your 401k as Possible, Beyond Just the Employee Match.

Of course, make sure to make a substantial donation to get your employer match (if any) because it’s free money. A number of work seekers, however, end with the employer match instead of going on to try to secure a higher pay bid. Do whatever you can to contribute. Taxation happens when you take money out of your 401k account, rather than when you add money into it. Consider contributing to a Roth 401(k) if you have the option.

Set-up a Roth IRA (Individual Retirement Account) 

Sometimes the financial advice for college graduates, especially nowadays provided by experts, would recommend this. Try setting it up at Betterment or Vanguard and start beginning to make contributions. In a Roth IRA, you can invest in almost anything, but I suggest investing in an index fund like the Vanguard Total Stock Market Index Fund ETF. Your contributions would not be taxed. To receive additional retirement income, you can put your Roth IRA money into a money market fund. Then, you can withdraw the money anytime you need it.

Keep Learning New Skills 

Whether you have completed your studies or not, you will never stop learning. To truly earn more money, you’ve just begun your schooling. Street smarts + book smarts + skills = money You can increase your skills to prepare for future demand. A door opens when you’re ready to link and market your specific skills. For free, it has never been easier to learn almost anything in history. Use the opportunities that come your way to gain and sharpen at least two new skills per month. Don’t allow yourself to become stagnant and, no, you don’t need to return to school to learn the skills needed to secure multiple employment opportunities. Doing is part of learning, so spending time on doing is necessary. When you learn by doing, you can learn much more and far quicker.

Find a Side Hustle in Order To Diversify Income Streams

To me, there are so many people who feel that full-time work is enough and that it is too difficult to get an additional source of income. Below you can find the best side hustles that I have personally used. Although I’m all for making extra money, my first goal is to improve my skills, not just to earn more money. To survive as a side hustler, you need to measure how much money you will have when you’re older. So every dollar you earn from side hustling today would be worth at least $5 to $10 in the future if invested conservatively. When you spread your income streams out, you raise more money and your risk, which means if you lose one source of income, you have other sources to fall back on.

Start a Blog and Build Your Brand

The benefits of having a forum, even if you only write only a few times a month, include the ability to earn substantial amounts of money, as well as learn new capabilities and perspectives. A major advantage of sharing your story is that you can learn from the experience. Trust me, blogging is a vital part of your personal and professional identity. You will learn a huge amount of useful new skills, and you will be able to focus on your job. Writing down your ideas and thoughts frequently is important for creating wealth, and having a clear understanding of your thoughts is crucial to attain this aim.

Make Sure You Chill as Hard as You Hustle 

Although I firmly believe in the value of working hard when you are young, as your time, relationships, and money will all grow over time, don’t neglect your well-being. Burnout has never been simpler. I see the situation in which a 25-year-old is mentally and physically burnt out on a regular basis. This is who I used to be. Try to take a deep breath. dismiss Take some time out to meditate. Go ahead and start practicing yoga. Enable yourself to calm down. You don’t have unlimited resources. Slow down and regain your battery.

Think Twice Before Moving in With Your Parents

More than half of recent graduates move back in with their parents soon after graduation, as many graduates bear an insurmountable amount of student loan debt. Do you want to move to your parents’ home to save money?

Some would say that this can be a piece of viable financial advice for college graduates. But this is one of the most common mistakes, so pay attention to it. If you’ve been self-sufficient, it’s tough to return to your hometown. Even though it might be tough in the beginning, you’ll gain the experience and knowledge that will help you in the long run from being on your own.

However, others may lack the desire to save and find themselves wasting their earnings on such items as cars, entertainment, appliances, and the social life instead. Only if you are completely confident you would not slip into the spending pit will going home work for you.

Higher-Paying Jobs Aren’t Always the Best

New graduates can find job opportunities, both in the private and public sectors. Research conducted by Korn Ferry showed that Class of 2017 starting salaries reached an all-time high, but wage growth was virtually flat, with the average salary rising 2.8% to $50,390.

Never swap a lower-paying job for a higher-paying job only because they pay more. Accepting a job that pays more money but does not require your skills may either delay your career progression or discourage you from doing work that might be rewarding.

Don’t Buy a New Car

Buying a brand new vehicle is a major financial error that could leave you trapped on a tight budget for years. To sum up, instead of purchasing a car that is new or a year or older, consider buying a car that is one to three years old and save a large amount of money.
Car prices are much lower if you don’t care about how it looks.

Final Thoughts

After college, keeping a handle on your finances can be more difficult; thus, it’s preferable to learn all you can as soon as possible. Do not place money in circumstances where it can be lost or go to waste. And prepare for the future if you think you would be able to invest more than you should. One of the most important things is to not be afraid to make mistakes. Though you can encounter some setbacks such as a job that does not work out or an unforeseen cost, this doesn’t mean that you’ll never succeed. However, make sure to retain your attention on your financial objectives when you are striving to succeed.

What financial advice for college graduates would you give? Leave your thoughts down below.

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