Starting life straight out of college can be hard. There are so many new things to learn, like how to pay your rent, bills, food or even clothe yourself.
Congratulations; you graduated. Now what?
So many things change during the first five years after college. Your first jobs and apartments, which usually mean bad bosses and awful roommates, will soon lead you to second jobs and cheaper apartments without roommates.
Your ex-classmates will start posting their engagement photos on Facebook, having children, and receiving their MBAs. But one thing will be true for nearly everyone; money! How do you pay your taxes, lease, a bridesmaid’s dress, your rent? How are you going to afford all this?
Now is the best opportunity for you to build a solid financial foundation and stay out of trouble. Here are five financial decisions grads should make in their first five years after college.
Unfortunately, many unplanned things happen in our lives such as losing your job, your car breaking down or family members getting sick. These unexpected emergencies can be very emotionally draining. But they don’t need to be financially exhausting, too. Try to save up some money with each paycheck. One long-term goal should be to have enough cash to cover about six months of expenses, but you can start small, this is not an easy task to do right away. Start off by saving $1 a week and then increase it to $2, $3 and so on.
You can never go wrong with health insurance. Usually, you start off with your parent’s health insurance until you are 26 but then, you have to get your own health insurance before anything bad happens. The quicker you do it, the better.
This is where it really starts to get ugly. Typically, student loans are structured to be repaid in 10 years but this rarely ever happens. That is why you should have your own “deadline” so you can be debt-free in your 30s and not struggle with other expenses as well. Try to give back more money than you are supposed to at first so you can slowly be more flexible as your expenses start to increase. It might be difficult at first, but it is well worth it at the end.
Do You Need a Graduate Degree?
Do you need a graduate degree? Try talking to recent grads and take advice from people ahead of you in their careers who are in a similar position, location and field. If you still want to do it, you need to figure out how you are going to pay for grad school. Is your employer going to fund you? Do you qualify for any scholarships? How much can you save?
But don’t’ forget to have fun, too. It’s always good to save up, and plan ahead, however, if you only save and don't spend at all, it can get very tiring, and you will soon be ready to quit. Show yourself that you can have control over your finances by saving up for small things that you are ready to buy now- as a short term goal.
For example, you can save every $5 bill you receive and by the end of the month, you can buy a new pair of sunglasses. This will motivate you to stay focused on long-term goals and not feel as if money is always controlling (and limiting) your decisions.
Do you have any other financial tips for new graduate? Share them below…