New Opportunities: 8 Managing Money Tips After Graduation
Alright, you've made it. You've graduated from college. But now what?
This is a pivotal point in your life. You can either start setting yourself up for success by practicing managing money tips or walk down a slippery slope that leads to financial stress and tremendous debt. Did you know that nearly 80 percent of Americans live paycheck to paycheck?
That means that they absolutely depend on their next paycheck to get by. Should anything go wrong (medical, car, veterinarian, home maintenance emergencies), they would find themselves in a world of trouble, possibly defaulting on payments and torching their credit score or worse.
Don't follow the path of financial insecurity. Instead, take a look at our top eight managing money tips to see how you can get started on the right path after graduating college.
1. Don't Wait Around for a Perfect Job After Graduation
Now that you have a degree you've driven hard towards for years, what are you going to do with? While you may be tempted to wait for the perfect job to come along, it may not be a wise decision. Many postgraduates operate under the assumption that they'll find their dream job immediately upon leaving college.
Unfortunately, this isn't true. Whether it calls for your new degree or not, find a temporary job after graduating from college to avoid hitting a lull in your bank account. The right job will come along eventually, but you don't get to put your life (or your bills) on hold in the meantime.
Additionally, if you do find a job in your field, it may add some beneficial experience to your resume that could be instrumental in landing the dream job in the future.
2. Create a Budget for Yourself
If you're looking for the most fundamental managing money tips, you need to start with a budget. Create a spreadsheet noting all of your incoming revenue as well as your expenses each month. Look for unnecessary costs that you can cut out to save money (subscriptions, memberships, daily coffee from coffee shops, dining out, etc.).
Once you know where you can cut costs, implement a little discipline and hold yourself accountable for saving that money rather than blowing it on unnecessary luxuries. This includes your grocery shopping. Make a list every time before you go to the store and don't improvise.
3. Invest in Life Insurance
While it may seem counter-intuitive to saving money, you should invest in life insurance for you and your spouse (assuming you're married). While it can be a grim subject to discuss with one another, you need to make sure that the surviving spouse is taken care of financially should the worst happen.
Imagine establishing a wonderful life with a beautiful home and countless possessions. This life is based on the income of two people. Should one of those people/incomes be taken out of the equation, it could make life incredibly difficult moving forward as if you wouldn't already have enough to deal with.
Life insurance would give you the financial security you need to grieve and eventually move on in your life with grace while minimizing financial stressors.
4. Live Well Below Your Means
One of the most important managing money tips is learning how to live below your means. Just because you bring in $4,000 a month it doesn't mean you need to spend it.
Many people make the mistake of letting their lifestyle match their income, which leads to living paycheck to paycheck, as we discussed earlier. You need to set financial priorities in your life and make sure you're not falling into the same trap. For example, don't max out your mortgage, car loan, or credit cards.
5. Limit Dining Out
Once you graduate college, you'll feel the need to celebrate, which isn't a bad thing. However, that freedom can produce a perpetuating sense of grandeur. This leads people to treat every weekend as a celebration, eating out, ordering drinks, and so on.
The average American household spends over $3,000 a year eating out. Imagine how much good that money could do if it were redirected into a Roth IRA or other investment.
6. Don't Buy a New Car
Speaking of celebrating, a lot of new college graduates reward themselves by getting a new car. While we can certainly understand the incentive behind this notion, it can be a costly mistake. Did you know the average new car payment is $554 a month?
Instead, if you really need new wheels, opt for a used car or compromise with a certified pre-owned vehicle. With a new car comes other costs such as higher insurance premiums, registration fees, etc.
7. Learn How to Improve Your Credit
Next, you need to start learning how to start building up your credit report. This will benefit you substantially when it comes time to apply for a mortgage for a home or a business loan to start your own company.
Your credit score can be improved in the following ways:
- Minimizing your debt to income ratio
- Not maxing out credit cards
- Using credit cards and paying them off each month (also a great way of earning rewards without paying costly interest rates)
- Make all payments on time
- Don't close unused credit cards
- Don't let payments go to collections
- Time - credit is built up over time and consistency
8. Start Saving Money Early
Finally, one of the most beneficial managing money tips you can learn is to start investing in your retirement as soon as possible. Investments passively earn money over time. You gain interest off of the amount you have in various accounts.
The more you have invested, the more you earn. This interest compounds on itself, becoming a perpetuating cycle of putting money in your retirement fund. You may have to start investing small amounts initially, but the sooner you start, the better.
Want More Managing Money Tips?
If you're interested in taking charge of your finances, be sure to check out some of our other articles with managing money tips. We have an entire section in our blog devoted to finances. Alternatively, if you think it may be time to invest in life insurance, click here to get started on a quote.