Financial Self-Care for Recent Graduates
Monday, December 18, 2017, 6:00 AM | Leave Comment
Graduating from college is something to be celebrated. However, after the celebrations are over, the reality begins to set in of what is going to happen next.
Approaching “real life” head-on after graduation can feel daunting, but try checking off a few tasks off the list one at a time by asking yourself some questions of where you want to head post-graduation.
First big question: How can you work toward the goals of buying a house, a car, a decent wardrobe, a great career — all with the credit of a recent college graduate?
Answer: it’s difficult, but not impossible. Student loans can really put a damper on credit possibilities, but they don’t have to mean disaster.
This article will cover how to pay back and/or refinance your loans, budget tips, and credit-building ideas for recent college/grad school graduates.
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Student Loan Debt
One of the downfalls of the American education system is the cost to the student. The great news is that there is a 6 month grace period to allow you time to get on your feet before repayment is required.
During that time it will give you the opportunity to get your finances in line. During the 6 months after graduation it is wise to still calculate the monthly repayment into your monthly budget.
Use the money that you would be using to repay your loans to start a savings account for a down payment on a home or consider starting to pay your loans back early.
Staying current on your payments will make it easier to save yourself some money and lower your payments by getting approved to refinance your loans later on down the road.
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How to Build Credit
If you do not have any credit history except for an exorbitant amount of student loan debt, it is wise to begin to take control and construct a good foundation for your credit.
One of the easiest ways to build credit is to get a credit card. There are many different routes to take with credit cards to ensure that you are using them to your benefit and not to accrue more debt.
You can get a credit card with a low limit and designate it to be used solely for gasoline purchases or groceries.
The key being that you pay it back in full every month. Making only minimum payments will result in accruing more debt.
If you already have a baseline of credit established, there are further steps that you can take to bring your credit score up a bit further.
As counterintuitive as it may sound, purchasing a home does wonders for your credit score. Nothing like being a homeowner to really make you feel like an adult after graduation.
As a first-time home buyer, you can also get a home renovation loan to allow you to install new items like a water purification system, a new patio or finish the basement to make the house truly feel like your home.
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Create a Budget
It may sound stupidly simple but even educated graduates can be bad with their money. Creating a budget for yourself will help to prevent financial woes down the road.
First, start by automating your recurring monthly bills (including your newfound student loan bill). As you automate each payment, create a spreadsheet of each monthly expense and compare it to your monthly income.
You can make an educated estimate of how much you need to reserve funds for groceries and gas by looking at past bank statements.
After you have figured out your expendable income for the month and put a little away in savings, take the reserves out in cash.
Having cash in your wallet enables you to physically see how much money you have left to spend in a given day, week or month.
Taking control over your finances is the best way to go into the unknown after graduation with no fear. It can be empowering to know just how much you are capable of achieving and also understand your financial goals moving forward.
Taking the time to attend to your financial situation right after throwing your graduation cap in the air will be deeply appreciated by your future self in the years to come.
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