The big day finally arrived; you’ve grabbed your diploma and thrown your cap in the air. An important part of your life is over, but an even more important one has just begun. A first job will replace the routine of classes, and many will consider moving from their parent’s house to their own apartment, among other significant changes.
Graduating from college is exciting but can also be scary financially. Finding work can be challenging. In doing so, you will have to start managing your personal finances with a lot of planning and awareness. Now you will be responsible for your bills, including new and unexpected ‘adult life’ expenses.
However, there’s no need to be scared as there are some simple ways to achieve financial stability during this transition time.
Be Careful When Signing a Lease
The first step for many recent college grads is to find a place of their own as fast as possible. Remember that this will bring a whole range of new costs in addition to the rent, such as moving expenses and security deposits that many landlords require.
In addition, signing a lease locks you into a set rent amount that you need to be prepared for each month. Even before you have a steady job (and salary), taking on this expense can be a risky move. Consider moving back home or living with roommates for a while, as this allows you to save money to afford your own apartment.
Stick to a Budget
Few things give you a greater sense of independence than getting your first paycheck from your first ‘real’ job. But having your own money in hand also brings the temptation to spend it immediately on those superfluous items you’ve always wanted but couldn’t have until now.
It’s really important to be a responsible consumer until you pay your debts and manage to support yourself. Start by creating a budget, calculating your monthly income and expenses to learn ways not to spend more than you earn.
Use budgeting apps and spreadsheets to keep track of everything. You can allow yourself some luxury or reward every once in a while but remain realistic as you are the one paying the bills at the end of the month.
Always Have an Emergency Fund
Living alone brings expenses that are often new and completely unexpected: a sudden illness, a layoff, repairs to vehicles or appliances, etc. That’s why grads should stock away money into an emergency fund dedicated to these situations. Set a monthly amount of your salary to this fund, which can be a savings account or even a piggy bank at home. In a short time, you will have resources that can make the difference in an emergency.
In a worst-case scenario, remember that it’s also possible to take out a payday loan. This is a short-term loan where you get credit based on your income, which you normally pay off with a portion of your next paycheck. Although the interest rates are quite high, it’s an option if you need some money right away and a loan that doesn’t require any collateral. Think Save Retire can help you explore these loans to choose the best option.
Continuously Pay Off Student Loans
After you finally leave college, your student loans can seem like an unnecessary expense. But ignoring that you owe money will not make the debt go away. On the contrary, according to recent data, U.S. student loan debt amounts to $1.73 trillion, and more than 43 million students are indebted with debts of nearly $40,000 each.
Try to repay any loan as quickly as possible, or it will become a later burden in life. Loan repayment terms depend on whether your loan is federal or private. Depending on the provider, you can also apply for income-based reimbursement plans to resolve the situation as soon as possible.
Get Ready for the College of Life
Ideally, you should start preparing your finances for post-college life while you’re still studying. But nothing stops you from chasing lost time after graduation. Once you have an official job and the first paychecks start pouring into your bank account, an exciting new life will begin.
Keep in mind that you will face many completely new situations: unexpected expenses, debts that accumulate and never seem to end, both simple and complex difficulties along the way, etc. The best way to face the unexpected is to be financially responsible, so manage your new finances very carefully. College is over, but your life has just started and you still have a lot to do.