Financial tips can help you in every phase of your life. Regardless of your age or your status, you need to consider certain tips that will help you improve your current financial situation. Although this is necessary for all ages, there are certain points in our lives when we need financial guidance the most.
One of the times when we are in most need of financial advice is right before we graduate.
While you are in college, you are in a financially protected state. You are free to make your own financial decisions but you are not necessarily held responsible for them – at least, not yet. You can borrow money and most of the time, you are not really expected to pay it back while you are in school. Your parents are probably supporting some of your expenses or you are working part time jobs to put yourself through school. During this time, you are allowed to make adult-like financial decisions and yet your enrollment is shielding you from the real-world responsibilities associated with these choices.
If you are about to graduate this year, that privilege is about to end. Soon, the shield will be lifted and you will realize just how much the world expects from you and your finances. This is why financial tips for new graduates are very important. You need to know what to do after you graduate so you can start your adult life with your finances on the right track.
Although most of the expectations will come into full swing when you graduate, that does not mean you should wait until then before you act. There are a couple of things that you can take care of even while you are a few months from graduating. The earlier you act, the more you can prepare for what awaits you once your leave school.
How to prepare your finances for life after school
At this point, you have 4 months before you are set to graduate. It may be a difficult time as you are trying to complete all the requirements needed to ensure that you will be marching when the month of June arrives. While it may be difficult to juggle your school work and financial obligations, it is important for you to take the time to review your finances. A few months could make a big difference in helping you manage your finances well.
Here are the different financial tips that you should consider implementing in your life before you graduate this June.
Take a look at your debt.
Borrowing money to finish college has become the norm today. Parents and students are resigned to the fact that the high cost of college is worth going into debt. According to an article published on Time.com, the average debt of students when they graduate is around $35,000. Back in 1993-94, this was only $10,000. If you want to keep this debt from compromising your financial future, you have to start acting now. Even if your Federal Student Loans are subsidized and have a grace period, you need to think about the repayment plan that you will pursue. Some college students also end up with some credit card debt. If you haven’t been able to pay off your balance, now is a good time to think about how you can aggressively lower your debt after graduation.
Set up a budget that you will follow after school.
The next task that you need to look into is to create a budget plan that you will follow once you get out of school. The changes will depend on how you are currently living while enrolled in school. If you lived on campus, that will change once you graduate. If you parents paid for your board and lodging while you were studying, that will change too. Think about the possible budget that you will follow once you get out of school. This will give you an idea about the type of lifestyle that you can afford to live. Calculate your source of income and your expenses to see the lifestyle that you can follow. If you will be forced to live on a tight budget, you have a couple of months to save up so you get a few hundred dollars of extra money.
Decide where you will live after you graduate.
This is in connection with the previous task. To make your budget as accurate as possible, you need to decide how and where you want to live when you graduate According to an article from Post-Gazette.com, ⅓ of college students plan to live with their parents once they graduate. They wanted to put their finances in order first before they start spending more money by living on their own. They understand that their student loans will have to be dealt with immediately so it will not compromise their future. Moving back with their folks is one of the best ways they can save money. This is especially helpful if they will have difficulties getting a stable job.
Start saving money.
This is one of the financial habits that you need to practice regardless of your situation in life. Saving is a great way to improve your finances. If you are still being supported by your parents while in school, this is a great time for you to start saving. This will help you during the first few months of living on your own without the financial support from your parents. Cut back on the entertainment expenses and put it aside for now. Better yet, build up an emergency fund. This will really help you in times of tight financial situations.
Find ways to earn money.
Finally, you need to find a way to earn money. There are so many options before you. Tutoring is a great way to earn extra money. If you are moving back with your folks, you may want to sell some of the furniture and possessions. Organize a yard sale and have your friends sell their stuff too. It should be a fun way to spend your time on weekends. You also have the option to get an online job. There are many ways to earn online so you can increase your funds before you graduate.
These financial tips should be able to prepare you for what lies ahead after you graduate. Entering the real world can be intimidating especially if you have amassed quite a huge sum of debt. While it may seem daunting, there are ways for you to get your finances right on track. You just have to start preparing for it as early as you can.
Important financial milestones for those in their 20s
After graduation, you need to be aware of the financial milestones that you need to reach. This will keep you from cramming in your later years and regretting the time and money wasted in your youth. Here are a couple of things that you need to do so you can start building your personal net worth.
Set short-term and long-term goals.
Start by setting short-term and long-term goals. Your short-term goals may include completely paying off your credit card debt and getting a job that can improve your skills. Your long-term goals can include paying off your student loans and buying your own house. When you have goals, you get to plan that and include it in your budget. This will help give your financial transactions some direction and purpose.
Start saving for retirement.
This is one of the long-term goals that you can set. If you start saving for retirement at an early age, you do not have to pressure yourself into contributing a big amount each month. In a study published on Wells Fargo, they found that those who contributed earlier ended up with more retirement money. The data they got showed that those aged 60 and above only has $50,000 after starting to save at an average age of 37. Those who are 55-59 years of age were able to reach $150,000 because they started saving at an average age of 31. A few years can really make a huge difference.
Build up your emergency fund.
Another thing that you need to look into is building up your emergency fund. If you started while you were in college, that would make your saving goal easier. You can simply add to that to make yourself more secure.
Pay off your debts.
If you got into debt while you were in college, you need to aggressively pay it down while you are in your 20s. First of all, you want to keep the money wasted on interest rates low. The longer it takes for you to finish paying off your debt, the more money you pay towards the interest. Not only that, this can keep you from using your money for something else – like buying your own house.
Invest your money.
Finally, one of the milestones that you need to reach before you reach the age of 30 is to invest your money. Just like with your retirement funds, this will reap you more rewards if you start doing it while you are young. Investing is one of the ways that you can build up your wealth significantly. If you want to retire early, this is one of the financial tips that you need to follow.