You’ve finally done it, you’re a college graduate. Next step in life (after returning from a celebratory vacation of course) finding a job; this is certainly not an easy task in today’s market, but it will happen so what then? After you find the job of your dreams and you’re making what feels like a good salary; how you manage that income will have implications lasting far past the lifespan of the cool car and nice cloths.
There will be tradeoffs in every decision you make, is the cool car worth a higher monthly payment instead of saving for a down payment on a house? Many people would tell you no, but that is their opinion so you have to make that decision for yourself based on your current and long term financial goals. Below I have listed a few steps that I feel would benefit new members of the workforce as they begin their financial life after graduation.
Tips for your Financial Life After Graduation
Save an emergency fund – This one really is more than a suggestion; it’s a crucial need for every individual. Things happen: your car will break down, your computer will crash, your washer and dryer will stop working; something will occur that requires a moderate sum of money which you won’t have if you live paycheck to paycheck. Even if money is tight every month, if you have an emergency fund (and use it only for emergencies) you’ll be able to handle life’s little surprises a bit more fluidly and without going into debt or creating a crisis.
Create a Budget – I expect 90% of you will ignore this suggestion because it’s boring. Maybe so but creating a budget in advance will allow you to see financial pitfalls early enough to react. For example let’s say you’re taking a vacation in June, which also happens to contain your mother’s birthday and Father’s Day as well. Well you’re likely going to be spending a good bit more in June than normal so you’ll have to do some planning right? Creating a budget will give you a head start on meeting those needs. For assistance creating a budget, [click here].
Create Financial Goals – In the back of your mind you’ve probably already got a rough sketch of where you want to go in life. Perhaps you want to rent for two years then buy a house. Good goal, but you’ll need to know what steps you will need to take to get there. If you haven’t made realistic plans of how you will attain your goals they are not goals, they’re dreams. Dreams are great, however in order to make those dreams a reality, proper planning and execution are critical.
Talk to your Significant other – if you’re just out college this may not be an issue but likely it will be soon. Once you reach the stage of living together and into an engagement it is critical that you both communicate your goals and work together to achieve those goals. If one of you likes buying new things every week while the other saves for a house, arguments will ensue. It’s unlikely both will be totally passionate about the same things but as long as you have open communication you’ll find an acceptable balance.