Personal Finance Tips for New College Graduates

Transitioning from being a college student to working full time can be tough for many people. Full-time work brings a whole new set of concerns and expenses, ranging from buying and maintaining a professional wardrobe, to choosing among retirement plan options and more. Add to that the fact that you may have more disposable income than you ever have before in your life, and you may suddenly find yourself struggling to keep up with your bills. There are a few things you can do to make sure this doesn’t happen.

Make a Budget:

It may sound boring, but it is critical to know what you are spending your money on as well as what the base amount you need is for such necessities as rent, food, utilities and transportation. You may want to do this on a piece of paper, a spreadsheet or with an app.

Use Automatic Savings:

The earlier you start to build your savings the better off you will be. To start, you should be putting away money for two different necessary accounts, an emergency fund and retirement. It is usually suggested that you put away three to six months’ worth of expenses in your emergency fund. This will depend in part on your tolerance for risk and the security of your job, but it is important to remember that no job is entirely secure. If your work offers a retirement plan, that money will be automatically deducted from your paycheck. You can do the same with your emergency savings, having a certain amount of your deposit diverted each month into that account.

Use Credit Wisely:

Some people might say you should not own or use credit cards, but this is not the case. Responsible use of credit cards helps you build up a credit record. They can save you money as well if you get credit cards that offer rewards. The key is responsible use. You should get into the habit of paying off your credit card monthly. You also shouldn’t have too many credit cards since even if you are not using them, it could affect your credit score.

Refinance Student Loans to Save Money:

You may be surprised to learn that you do not have to pay off your student loans at the original interest rate you agreed to. You may be able to refinance them and get repayment terms that are more favorable. You could choose a shorter term for repayment. This would actually mean that you pay more each month but save in the long run since you will pay the loan off sooner. If you are feeling pinched at the end of each month, you may want to choose a longer term that will lower your monthly payments.

Talk to Professionals:

No one goes out into the world knowing how to do these things. You might benefit from an appointment with a financial planner or another financial professional to discuss budgeting, investments and how to reach your future goals. For example, do you want to buy a house within a few years? Do you dream of early retirement? A professional can help you achieve those goals.