The transition from school life to the business world can be complex for a variety of reasons. One of the biggest challenges most new graduates struggle with is figuring out how to put their personal finances in order. After all, chances are you have accumulated debt and savings may be low or non-existent.
While completing your degree will have taught you a thing or two about being independent and making active decisions about your finances, it’s okay if you need help as you go from university dweller to workplace warrior – and the following tips should help.
Create a budget
Perhaps the most important thing a new grad can do to get their finances on track after college is set up a budget. A budget is a plan for how you’re going to spend your money. This doesn’t mean you can’t be spontaneous or change your mind. However, you should have a good idea of how much money you can afford to spend in each area of your life. You’ll need to go through all of your incoming and outgoing expenses carefully to ensure you understand where you stand from a financial perspective. It also helps to update your budget and consider it a fluid document.
Consider your student loan situation
There’s a good chance you have some student loans to pay off after you graduate. These loans could include your student debt, the money you borrowed for your car, and housing expenses.
Creating a loan repayment strategy will help to prevent heavy debt loads from weighing you down as you progress in life. Start by paying off high-interest debts and credit cards, then think about your student loans. You can also review existing loans and convert them into a new lending opportunity to save some money on interest.
Analyze your spending habits
It’s hard to get control of your personal finances if you’re not aware of your spending habits. Before entering the business world, as an employee or an entrepreneur, it can be helpful to take a moment to reflect on your past and the finance hang-ups that have led you to your current situation. If you know you’re likely to live above your means, it’s a sign that your internal growth hasn’t kept up with the challenges of your external growth and ambition.
Make a savings plan
Finally, it’s crucial to have a savings plan in place for emergency expenses and personal goals (e.g., starting a business, building your side hustle, investing, etc.). Remember, saving means paying yourself before you spend money on anything else. Look at your available cash and outgoing expenses and figure out how much you can afford to save each month.
You’ll find it’s easier to stick to your savings goal if you automate the process. Research the best free online savings accounts with the option to set up automatic savings. Also, consider automatic savings apps. They are an easy, reliable, and foolproof method to hack your way to saving more money.
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