How to set yourself up for success: Financial tips for graduates
You did it. You spend the past four years studying, staying up late to finish homework assignments due the next day, and waiting for this moment. Now that you finally have your diploma, what do you do with this newfound freedom?
Before you get too carried away, you might want to consider making some plans for spending your money.
Learn how to budget.
It’s not just scribbling a few notes on the back of a napkin. Take the time to sit down, figure out your income, your expenses, and how much you want to put into savings. Then stick to your plan.
Don’t spend more than you earn. Don’t buy things you don’t need. Follow these simple steps, and you’ll already be better off than a majority of people.
Use credit wisely.
Credit isn’t evil—but it shouldn’t be your best friend. Keep a safe distance. This means being responsible, not charging everything to a card, and never charging anything you can’t actually pay for when the bill shows up.
Ruining your credit score now will make it harder to get loans, low interest rates, or even rent a house in the future. Take steps to build your credit score. You can start by looking into at your options, and then creating a plan outlining what you will use the card for. The best thing you can do to save yourself pain in the future is thinking before you swipe.
Live within your means.
Sure, you want to buy that brand new car. You want a big house. You want a lot of things. And eventually, you’ll get them.
But not now.
You’re starting at the bottom. As a recent grad, you likely don’t have much work experience and are going to need a few years before you start seeing substantial increases in pay.
Not being able to afford something isn’t a reason to take out a loan or line of credit, it’s a reason to work harder and save so you can in the future. For now, focus on developing good spending habits and increasing your skills. The rest will come later.
Build your emergency fund.
Life happens. You’ll want to be prepared. Imagine your car suddenly breaks down, you fall and break a leg, or you lose your job. How are you going to pay for the extra costs that come from those situations?
Having some money set aside for when things go wrong can be a lifesaver. It prevents you from turning to credit cards and allows you to feel secure when your main source of income is gone or no longer covers what you need it to.
Don’t put all your hope in a single job.
While it’s tempting to wait for the perfect job, that job likely won’t come. At least not right away. The majority of jobs are made through connections, something you just don’t have as a recent graduate.
When you first start, it’s ok to take a job that isn’t exactly what you wanted. Just make sure you keep an eye out for opportunities, be intentional in building connections, and learn everything you possibly can about your position. The skills you learn now will help you find a better gig later on.
A first job is probably not your dream job. You might not even know what your dream job is yet. That’s ok. You’ll figure it out—just give it some time.
Start saving for retirement.
It’s never too early to start. If your employer doesn’t offer retirement benefits, open a retirement account and start putting money in. Even if you can only afford $20 a week, that will increase significantly over time.
Your biggest asset right now is time. If you use it wisely, you can build wealth even with a low income.
Always keep learning.
Yes, you just finished school, but that doesn’t mean your learning is done. You may be done with the textbooks and tests, but the lessons aren’t over. You’ll learn so much on the job and from your life experiences. Seek out opportunities to increase your knowledge. The more you can diversify your skills, the farther ahead you’ll be than your peers.
Remember to have fun.
Of course you need to work hard, but don’t spend so much time working that you burn out. Take the time you need to relax. It doesn’t have to be expensive; it just has to be a break. Have a movie night with friends. Go for a walk. Volunteer. Make time for things not related to work. It’ll make you happier and far more productive when you are working.
Learning from your mistakes is effective—but it also costs a fortune.
Eventually, most people figure out how to budget their money. Unfortunately, too many have learned after they already accumulated thousands of dollars in debt, lost their house, or realized they couldn’t retire when they thought wanted to.
Because you are young, you have the advantage of learning from other people’s mistakes, not your own.
Take advantage of this, now is the perfect time to develop these good money management habits.
Start strong. Finish stronger.
Nuvision believes that learning about financial literacy early in life is crucial to success, which is why we dedicate so much time to educating our members and empowering the next generation to achieve financial freedom.
Our annual essay challenge brings financial education into local schools and provides students with the tools they need to build a sound foundation for their future. Students who may have never heard about money management get an opportunity to learn, and a chance to win scholarship money for college. To learn more about the essay challenge, visit here.
The information contained within this article is for informational purposes and should not be considered financial advice. Everyone’s financial situations are unique and you should consult a financial advisor for assistance with your particular situation and goals.