10 Budgeting and Personal Finance Tips for New College Graduates
It’s graduation season, and many new college grads will (hopefully) be starting their 1st job, if they had any luck in this somewhat weak economy.
For many new graduates, along with starting a new, full time job as they enter the workforce for the first time will come the first real, steady paycheck.
When the money starts to come in regularly, it is very easy to want to start buying things you feel like you can “afford” now that you are making money. However, it can be easy to get into financial trouble with that type of mindset- some people have trouble making the adjustment to a new and frequently larger source of income.
Here are 10 personal finance and budget tips for new college grads.
1.) Make a Budget- Creating and living on a budget is an important step in controlling your finances and spending less than you earn, the key to financial success. You can spend money on things you want, recreation, and socializing, but you have to live within your means and place limits on the amount you spend in those categories. Check out my article on why budgets are important for links to some personal budget worksheets you can use to set one up.
2.) Start slow- First off, take things slow with your new found source of income. You don’t have to start paying for meals & drinks for everyone, now that you can afford it, nor do you have to buy yourself a whole new wardrobe now that you are a member of the adult work force. Take things slow with your spending, and you’ll likely realize you don’t really need to spend as much as
you think.
3.) Resist the urge to splurge- If you’ve gone through life thus far without much money, it can be tempting to splurge some on yourself with your new source of income. Limiting your shopping opportunities, including online, as well as keeping yourself busy, can help resist the urge to splurge on things you don’t really need.
4.) Wait on the new car- For a lot of graduates, a new car is one of the first things they want to buy when they graduate, especially if they’ve been driving around an old “beater” while still in school. If you have a drivable car, waiting as long as possible is a smart money move, as well as buying a used car instead of a new one.
5.) Check and pay attention to your credit report & credit score- Now is the time to start building credit, so be careful when signing up for credit cards, taking loans, etc. Keep up to date with your payments, and don’t let your credit card balances get too high. Here’s how you can check you credit report regularly for free.
6.) Assess your debt situation, and start paying it off-If you were lucky enough to make it through college without any debt, hats off to you, you’re doing great. For many though, both student loans and credit card debt can pile up while in school. Now is the time for focusing on what debts you have, especially bad debts like credit cards, and start paying them off aggressively.
7.) Start investing for retirement- The magic of compound interest is on your side as a young adult. The earlier you start investing for retirement (and the more you save, of course), the sooner you will reach financial freedom.
8.) Rent for a while or live at home- Don’t be in such a rush to buy a place to live either, whether it is a house or condo. The housing market is still struggling, and may go down further, for all anyone knows, and you may not want to tie yourself down to a city or area when you are young. Living at home is not a bad idea, either, and can save you quite a bit of money-which you can save for that down payment when you are really ready to buy a place to live.
9.) Work hard- and as much as possible-Work hard- don’t expect things to get handed to you, and start thinking about your job as a “career”. Getting ahead at work and becoming known as a person who “gets things done” will do wonders for your future salary increases.
10.) Save, Save, Save!!- As someone who did not do much saving for the first 5 to 10 years out of college, let me tell you- emergencies and “rainy days” happen a lot more than you think. As with investing for retirement, the sooner you start, the better off you will be financially.
Similar Posts:
- 10 Great Ways For College Graduates to Start Off on the Right Track with Their Finances
- 25 Smart Budget and Money Saving Tips for College Students
- My Personal Finance Tipping Point or When I Decided to Change My Financial Future
- Why Some College Students Manage Their Finances Better than Middle-Aged Adults
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{ 4 comments… read them below or add one }
I would add 11. Don’t get married and/or have a kid right away. It’s very rewarding, but it costs a lot of money.
All this financial advice sounds great. But first things first. In this bad economy, the first step is finding a job. Worry about that and spending especially frugally before you get that job.
Otherwise I like most of the advice. The main thing to keep in mind is wise spending. Don’t get over excited and try to make as much money as possible.
I have to take issue with your #8. Live at home? Moving back home after you graduate from college is not a proper option. Do your parents not have to pay a mortgage or rent? There is nothing wrong with RENTING somewhere on your own. Or find a roommate.
But the easy, slacker answer of “just move home to save money!” is not helpful. You are offering poor advice. My son graduates from college this year & he will not be coming home to live, just so he can save money. It’s called being an adult & making it work. Running home to Mommy & Daddy is not an option.
Great tips!
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