Every college graduate faces a long road of challenges. Getting a good
start with your finances will remove some of those challenges. Here are some tips to get started:
- Live as if you will be unemployed tomorrow. First jobs are often not our “dream jobs.” Lots of graduates find themselves in dead end jobs that they cannot leave because they have committed their whole salary to payments for rent, a new car and the good life charged to credit cards.
- Live on 75% of what you make. Hoard the first 25% of what you earn. You do not have to do this forever, just until you have a fairly substantial savings – enough money to relocate if necessary or to be out of work for six months.
- Create a reasonable budget. Your budget is your plan of action to achieve your personal American dream. In this case that means your new lifestyle is as an employee, not a student. There are any number of budget forms or online programs that you can use: www.mint.com or www.everydollar.com are two of the most popular. Before you start apartment hunting, looking for a car or whipping out your credit card without thinking, work the numbers.
- Have a clear idea of what is most important to you. If having a night out on the town every weekend is your idea of fun, then do not commit your total income to a fancy apartment or car. There are no right or wrong decisions. This is your life, so consider how you want to live it and plan accordingly.
- Do not forget your student loans. Just because you do not have to start paying on your student loans for six months does not mean you do not have to think about them until then. Your student loans will probably be a huge part of your budget. There are numerous options to repay federal student loans. You can go online and study your options at https://studentaid.ed.gov/sa/repay-loans or schedule an appointment with one of LifeSpan’s certified student loan counselors by calling 513-868-9220.
Save for emergencies. Life happens and sometimes what happens can be financially devastating. That is why everyone needs an emergency fund. Start putting money into your emergency savings immediately. And if you are of the lucky few who receive a “signing bonus,” let that be the seed money for your emergency savings. The first time you have a huge car repair bill, you will be grateful you did.
- Retirement: Yes, now is the time to start thinking about when you will not be working. If the option is available, sign up for your company’s 401K plan as soon as you are eligible. Consult a financial planner and start putting money into an IRA as well. The more you save, the happier and more secure you will be!
- Make all these savings automatic. Set up transfers from your checking account to your emergency savings and your retirement savings and then forget them.
Follow these tips and you are on your way to being a financially secure adult. If you would like additional information, one of our certified financial coaches can help you create a long term savings plan.