Savvy Financial Management for Recent Graduates
Wednesday, June 27, 2018, 6:00 AM | Leave Comment
After graduation, when the celebrations have died down and you’ve used up that $50 your grandmother slipped into your graduation card, reality sets in. Not only can it be intimidating hitting the job market and trying to plant roots in a new city or home, but managing your finances becomes a whole new ballpark.
It’s likely that by the time you’ve graduated, you’re still trying to build your financial status in the world.
It’s important to focus on building your credit score up, keeping your debt low, and seeking investment opportunities, but that’s all easier said than done.
Ideally, with the help of a financial analyst or advisor, you could tackle all these important financial responsibilities, but sometimes that’s not possible. Luckily, there are some savvy financial management tips that can help.
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Improving Your Credit Score
It’s probably no surprise to hear by now that your credit score, specifically a good credit score, is one of the most important factors when it comes to buying a new home or car, getting lower interest rates, and even getting better car insurance rates. So, with that in mind, how exactly do you improve your credit score?
Knowing the importance of good credit is one thing, but actually building it up can be quite the ongoing challenge.
Luckily, credit score experts at Debt Reduction Services provide 10 recommendations on how to improve (and maintain) a good credit score:
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Pay all of your bills on time and in full every month.
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Get current on your credit accounts. If you’ve missed or been late on payments, find a way to get caught up.
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Pay down the total balances owed on your credit accounts.
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Don’t close accounts in good standing as a “quick fix.” Information from any account, whether closed or open, remains on your credit report for 7 years.
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Don’t be afraid of credit counseling. In 1998, FICO dropped credit counseling as a factor influencing the credit scoring model, in part because we’ve learned that individuals actually become less of a credit risk when they receive credit counseling.
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Avoid applying for a lot of new credit accounts within a short period, particularly if you have little or no credit history.
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Stay in contact with your creditor when troubles arise with an account. Work in good faith to pay as agreed or consider arranging a modified payment plan.
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Know your credit limit and stay away from it. “Maxing out” your credit cards can hurt your credit score.
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Live within an established budget and replace poor spending habits with disciplined spending.
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Check your credit report at least annually for mistakes and inaccuracies.
It can take time but patience and diligence really pays off when it comes to building up your credit score. It’s also important to keep in mind that it’s OK if you slip up every now and then, credit is important but sometimes mistakes happen; correct the problem as soon as possible, adjust your finances, and after awhile, you’ll repair your credit score.
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Personal Loans
Whether you need a personal loan for a new home or perhaps opening up your own business, it can be hard as a young adult with little to no credit — and as we just learned, building credit takes time. However, there are alternatives that lenders will consider that can also qualify you for a loan.
As experts at Growing Family Benefits explain, “The best way to qualify for an unsecured personal loan with an insufficient credit history is to provide the lender with all the information they need to approve your request.
Prepare all the documentation in advance. Lenders must base their decision on income and affordability when you have no history. Therefore, performing well on these additional factors can boost your initial eligibility.” And the good news is, being approved for your loan and in turn, paying back on it, can help get that all important credit score up, making future loans and other financial milestones easier to get approved for.
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Financial Advisors
Financial advising and analysis is a valuable resource to utilize if you find yourself overwhelmed with trying to take on the tasks of personal loans, investing, and general financial management. Obviously, not everyone is a money expert, especially right out of college. Luckily, though, there are experts to help fill in those gaps.
According to Arizona State University, “financial analysts take charge, set the direction of an investment strategy and advise clients on how to manage and grow their wealth.”
Whether you’re trying to manage your own finances or the finances of your new startup company, having an analyst on board can help ensure you’re getting that important eye for detail and assist you with your personal financial growth.
Post-graduation is a whirlwind of changes, especially when it comes to your finances. New jobs, responsibilities, and assets means you’ll be faced with a whole set of new challenges. Utilizing the resources that make managing your finances easier can help you navigate this different and exciting chapter of adulthood.
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