There is no more exciting time in your life than graduating from college and going out on your own. I remember when I first stepped out into the world, feeling like I was now truly able to take charge of my life.
You are finally completely independent, and you can start to make decisions for yourself without having to check with anyone.
With independence, however, comes a lot more responsibility. College was structured – your goals were to pass your exams, which were designed to have right and wrong answers. You were largely wrapped within the confines of a sheltered surrounding. The wide world is now your oyster; just make sure that you care for it and make sound decisions for your future.
The crippling weight of student debt
Statistics indicate that as many as 69% of those surveyed when graduating said they have student loan debt, and 70% admitted that college didn’t prepare them in any way to know how to handle, pay off, or deal with any of their debt. Sure, it seemed like a good thing to do when you were entering college; but now standing in the face of making repayments, it is a much scarier place to be.
The key is to try to pay off your student loan debt as quickly as you can without putting yourself into too much of a financial bind — which can be easier said than done. There are simple things that you can do to pay your debt down more quickly, keep yourself on track and accountable, and not let your student loan debt get out of control or end up ruining your credit due to a poor repayment record.
Make a budget
It sounds simple enough: you have money coming in, so you decide how much you have to put out. However, people often don’t budget correctly and they can get into significant financial trouble.
Because you’re now finding yourself “flush” with cash. It is too easy to underestimate what is going out and to overestimate what is coming in.
The truth is, with your loan repayments and (likely) meager starting salary, you’re actually more strapped for cash than you realize. That’s why it’s important to maintain fiscal discipline with a budget.
To make a budget, you have to be realistic about things. That means adding the minor things that add up monthly, like entertainment, food or even gas. Those are all extras that many people fail to put in their budget and then suddenly find themselves in the red every month.
Put money away for savings
One of the biggest differences between the new generation and older ones is that the newer generations don’t have the same commitment to saving. Living paycheck to paycheck and using credit lines are the new way of the world, but they also can get you in a whole mess of financial trouble. It is important for you to put money away in savings. That means determining an amount each month that gets deducted immediately before it even touches your account. When you’re making your budget, you should deduct a savings amount right off the top.
Know what your credit score is and how it is affected
One of the biggest determinations for your financial future is going to be your credit score. The problem is that many companies target college kids and give them credit cards, which feel like free money — until the interest starts accumulating and the student hits the card limit. Keeping your credit score clean is a simple thing to do if you play it smart. First, do what you can to pay down any revolving debt you have. Second, always pay your bills on time without fail. Finally, don’t owe more than you have coming in. When you go to make a large purchase or want to finance something, your credit score is going to be the key to your interest rate and how much you will end up paying in the long run. It will also be the deciding factor in whether you can get a loan at all.
It is never too early to invest
As a college graduate, you feel like your life is just beginning — and it is, but that doesn’t mean it is too early to start investing in your future. Make small investments each month so that you will have the money to do what you want when it comes time for retirement. You would be surprised at how much just $20 a month allocated to a 401k plan can do for your future financial wealth. And it’s likely you won’t miss it from your weekly paycheck.
You are embarking on an exciting time in your life. Just make sure to play it safe financially so that your future will be as bright as you want it to be. The adage “a penny saved is a penny earned” is truer than you know. So go ahead and save those pennies, and soon you will be set for life.