Life after graduation signals a new world of opportunity and responsibility. You’re most likely kicking off your career, moving out of campus housing and becoming financially independent. To help you take control of your finances, here are a few essential money-saving tips:
1. Start a budget. The first step to handling your money is understanding where it is coming and where it is going. Establishing — and sticking to — a monthly budget is essential for long-term financial health. Since you’re a member of the tech-savvy generation, put your smartphone to good use by downloading a free personal finance app to automatically track spending, account balances and credit on the go.
2. Understand living expenses. When you leave the comfort of campus housing, you’ll discover how quickly expenses can add up. From utilities to transportation to rent, you’ll suddenly face a lot of monthly expenses that were previously negligible or nonexistent. Make sure you consider these new expenses when setting your budget and understand how costs will vary based on service packages and time of year, allowing yourself to make smart financial decisions that best suit your needs.
3. Pay off student loans. According to a recent Edvisors study, over 70 percent of bachelor’s degree recipients will graduate with loans, and the average 2015 graduate will have more than $35,000 of student loan debt. While it’s tempting to make the minimum monthly payments, opt for as aggressive a repayment plan as possible. The sooner you pay off those loans, the less interest you pay and the sooner you will have extra money to put into saving, or plan a treat for yourself.
4. Plan for retirement. Sounds crazy, right? But even though retirement seems a long way away (you just started working!), it’s never too early to start saving. Automate your savings so that a portion of each paycheck goes directly into a savings account. If your employer offers a 401(k) and matches your contributions, take advantage of this offer. It’s basically free money.
5. Establish an emergency fund. It might not be pleasant to think about, but emergency funds are crucial protection from life’s unexpected and costly events. Whether your car breaks down, you get injured or lose your job, having this safety net will give you financial peace of mind. To establish your emergency fund, start by putting away $1,000. Then contribute spare change or a little from each paycheck until you have between three to six months of net pay. The trick here is to reserve this fund only for emergencies.
6. Pay your bills on time — every time. It is crucial to keep track of expenses and make all payments on time to avoid hefty late fees and negative impacts to your credit rating. To avoid late payments, consider scheduling automatic payments, setting calendar reminders before due dates and downloading an app like Mint Bills that aggregates all your bills in one place.
7. Establish and track credit. Building credit and a good credit score is a must, as it shows you are a responsible borrower and worthy of loans for major purchases like a home or car. To build and maintain good credit, remember a few basic rules: Keep your oldest credit card open, pay your bills on time and avoid maxing out cards.
8. Live within your means. Happy hours, lunches out and expensive exercise classes are all fun and tempting when you start receiving your first paychecks, but these daily or weekly luxuries will eat away at your budget fast. Identify a few classes, restaurants or bars you’re really eager to try, so that when you do treat yourself, you’re doing so mindfully and responsibly.
9. Be a social deal seeker. One of the best things about being fresh out of college is that most of your friends are likely in the same financial boat as you — cash-strapped and paying down debt, but free from the time and financial responsibilities of family. Keep your college crowd together and grow your new city circle of friends by planning fun, low-cost activities such as picnics, pickup games and free outdoor festivals. Also look out for activities on daily deal sites like Groupon, LivingSocial and Gilt.
10. Set a long-term goal. Budgeting does not always mean just saving; you can also budget in fun. Whether it’s a new couch, tropical vacation or dream home to own, setting a long-term goal will motivate you to stick to your budget and reward your financial responsibility.
If you don’t have the time or the money to embrace all of these tips, that’s OK. Pick one or two to get you started on your way to a prosperous postgraduate life.
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10 Essential Money-Saving Tips for College Graduates originally appeared on usnews.com
