Financial Advice For New Graduates
Managing money is a difficult challenge for everyone, but especially for college students. This blog will teach you What Every College Graduate Should Know About Money.
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You might have graduated but that doesn’t stop you from being a student in life because you never stop learning. When a student graduates from high school or college, they enter a whole new world where they are no longer expected to worry about things like due dates of assignments, tests, and classroom presentations but just like energy, worries are constant. You have new responsibilities to worry about.
Like it or not, you must take up responsibilities of your own life, which brings us to the touchy topic of financial independence.
To enjoy long-term financial independence while still having fun, a new graduate should consider the points given below.
1. Jot Down Your Expenses and Income for Efficient Spending
After working for a few months in your new job, you will get an abstract idea of your tentative expenses and savings but having tentative knowledge is not enough. Maintaining exact details of your expenses and income will give you a clear idea of what is necessary and what’s a luxury.
Jot down your expenses to get a clear understanding of where you could be saving money. It will help you prioritize your expenses. For instance, you’ll realize paying off your college debt and buying food is a bit more necessary than going on a luxury vacation.
2. Move in With Your Parents or Get a Shared Room to Cut Expenses
Moving in with your parents is one of the most common practices among new graduates and there are rightful reasons for it. Your cost of living goes down and you can save money for the giant leap you’ll be taking in the future. However, not everyone has the luxury to move in with their parents. Neither do we suggest you do so at any cost. That’s because there are other options available. For instance, a shared room also helps you save money.
A shared room will help you reduce rental expenses. The saved-up money can be then devoted to paying off your hefty college loans. Having a roommate can teach you a lot of things about living in a shared environment which will be beneficial for you in the long term.
3. Early Investments Mean Higher Benefits
The earlier you invest your money, the better returns you can expect. Investing from a younger age means your money will get more time to grow. Research about various investment opportunities and pick whichever fits your criteria.
Historically, buying stocks and mutual funds has been the best way to begin your investment journey but these days there are several options available. Graduates can take advantage of the free guides provided by trusted websites to learn more about several types of stocks, bonds, and mutual funds.
4. Higher Paying Jobs aren’t Always the Best Option
Undoubtedly, as a newly graduated student, you have high hopes about the future, especially with respect to getting high-paying jobs.
However, more money does not always imply higher job satisfaction. If you have decided on a career path, keep in mind that a lower-paying entry job in your chosen field is going to be a better deal in long run than a higher-paying job in a field you don’t care about.
Accepting a job in a field unrelated to your field of study simply because it pays more will undermine your career advancement. Or worse, trap you in a field that does not make you happy.
5. Avoid Spending on a New Car
You may be sick of driving a clunker or not getting a car at all in college but buying a brand-new car is an expensive mistake that will put you on a tight budget for years. Instead, consider purchasing a 1-3-year-old vehicle to save money.
You can get a car that looks new for a lot less money and put the money towards something important, like a down payment on a home loan.
6. Create an Emergency Fund
According to financial experts, you should try to save the equivalent of three to six months’ worth of living expenses.
(A full year is preferable, but that can take time to establish.) Make this a personal aspiration for yourself. Your rainy-day fund should be kept in a money market mutual fund or a bank savings account.
7. Health Insurance is Nothing to be Skipped
You think you’ll never get sick or hurt when you are in your twenties however, unexpected diseases and accidents do occur. The hospital bills will be paid with the help of insurance. If you can’t join your parent’s plan and don’t have a job that offers health insurance, you need to purchase a short-term health insurance policy.
8. Learn about Personal Finance from Different Sources
Follow a financial expert you can trust. Listen to their advice to learn about personal finance fundamentals. Many financial experts offer instructional books, podcasts, YouTube videos, audiobooks, workshops, and other content aimed at educating people about how to manage their finances effectively.
Simply going ahead with a proactive mindset, while avoiding common mistakes most grads commit, will go a long way in building a secure future for you.
Some common mistakes like overspending and failing to save money, failing to invest in appreciating assets, letting debt run out of control, and building a bad credit history can be avoided by incorporating the advice above in your life.
We hope this advice will help you live a financially independent life. If you are a newbie, some of the financial terms can scare you. Especially banking-related terms! Don’t worry, we got your back. Here’s a Banking Guide Glossary to help you.
