5 Finance Tips for Recent College Graduates
Tuesday, November 7, 2017, 6:00 AM | Leave Comment
Graduating from college is one of the biggest transitions of life.
Graduates change their student lifestyles to join the workforce. Fresh graduates also face unique challenges such as student loans, credit card debts and making the right career choices.
One of the best ways to ensure financial well-being is getting a job. A salary enables you to pay your bills and even save while staying at the job enhances your skills.
Although every graduate has a different financial status, some financial tips can help recent college graduates keep their finances in order as discussed here.
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Getting a Job and Creating a Budget
Creating a budget involves tallying and comparing your income and expenses. It gives you freedom within boundaries. Budgeting advice assumes that you have an income source such as a job and that you know your expenses.
When creating the budget, ensure that all expenses such as rent, utilities, food, transport, loans, clothing, entertainment, health insurance and savings are addressed.
It is important to ensure that the expenses are within your means and what you can afford. For example, health care is essential for everyone. For a single recent college graduate, a simple caustic health care plan will be sufficient instead of a complex one that is more suitable for a family.
After coming up with the budget, ensure that you abide by it. This gives you a peace of mind by knowing you are in control of your finances.
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Dealing with Debt
A good number of college students are graduating with loans and debts such as students’ loans and credit cards. This trend is expected to continue with graduates coming out of school with higher debts.
However, the salaries for college graduates are also increasing. Therefore, graduates need to come up with plans on how to reduce these loans.
In the plan, ensure that the loans with higher interest rates are paid first. When possible make extra payments outside your plan because paying your debts earlier will lower the amounts of interest paid.
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Focus on Saving
To have financial security, it is a must you save. It is advisable to have a cushion of up to 6 months saving worth of living expenses.
Although this may not apply for fresh graduates who are starting up with their job, they should come up with a saving plan immediately.
In fact, fresh graduates should be thinking of their retirement immediately, as soon as they get employed and figure out how they will sustain themselves once they stop receiving their salaries.
The best way to save is ensuring that the amount you intend to save is automatically deducted before the money gets to your hands as is done with the 401k plan. Such an autopilot plan forces you to adapt to a lifestyle of the earning you receive after saving.
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Have a Separate Emergency Saving Plan
Planning for emergencies should be a priority when looking for financial freedom. An emergency fund will help you to address a range of expenses such as unexpected car repairs, medical bills and unemployment. Saving this money earlier makes you feel calmer when dealing with the unexpected.
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Prioritize your Goals
People mainly work towards four major basic goals: saving for retirement, addressing emergencies, major expenses such as home, car and vacations and paying down the debts.
It is therefore essential for fresh graduates to get their priorities right around these goals. For instance, they would rather focus on emergencies and debts at first then focus on big things in life a little bit later.
With these financial tips, fresh graduates can build a firm foundation on their financial status and gain financial freedom in the long run.
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