While some people believe it’s not about the money, sometimes it is. It’s true – money isn’t everything. But when you’re a new college grad and money is tight, creating ample opportunities for yourself and having a healthy relationship with your finances go hand in hand.
Much like other parts of life, there’s a happy medium you need to find when it comes to your bank account. Spending too little may have a serious effect on your quality of life, but spending too much can create detrimental future problems.
Many people don’t develop financial responsibility until mid to late adulthood. Instead of continuing in a vicious cycle of too much saving, spending or borrowing, find stability for your finances ahead of schedule with some helpful tips!
Start a Savings Account
If you’ve never been known to save your extra coins, it can be challenging to know where to begin. Sometimes, it helps to start small. Contact your local bank or credit union to set up a separate account where you can stockpile your savings.
If you’re up to date with the latest technology, try using one of the numerous popular savings apps that will do the heavy lifting for you. There’s plenty of easy-to-use money apps that set aside funds and deposit them into an account right on your phone to avoid paying pesky banking fees. All you have to do is designate how much money you’d like to save each week and the money gets stored away in your very own rainy day fund.
You can also take your on-hand cash and start saving the old fashioned way – with a piggy bank! Stockpiling money is a tried and true method of saving money that many people can attribute to great success. You can start by saving a dollar a day and increasing the amount with each week that passes. Just be sure to store your money in a safe, trusted place. Soon enough, you’ll be rolling in the dough!
Boost Your Credit Score
Your credit score is a significant indication of how good you are with money. And if you ever want to become a homeowner, buy a car or get a loan, it’s vital to keep it in check.
You can build credit in several ways: by using credit cards and making payments on time, having a balanced debt-to-income ratio (DTI) or by having multiple forms of credit on your account to prove you’re a trustworthy borrower. By having a good credit score, you’re more likely to qualify for different types of loans from various lenders, ranging from credit card cash advances to student aid to even home loans later on down the road.
Put simply, having a good credit score will save you money over time. Instead of being nickel and dimed by the bank, credit card companies or other lenders, having a healthy relationship with money will set you up for long-term success so you can easily partake in whatever adventures may lie ahead without feeling uneasy about your finances.
Create a Budget (And Stick To It)
Budgeting is a skill you’ll use for the rest of your life, so learning good spending habits now is essential. However, it can also be difficult, depending on the strength of your willpower. That’s why budgeting is more than just tracking your spending.
To budget effectively, it’s important to set restrictions based on percentages of the actual income you receive each month. A common budget that some consumers implement is the 50/30/20 rule of thumb.
According to this guideline, 50% of your paycheck goes to your needs each month, meaning groceries, housing, utilities, health insurance and other payments necessary for you to go about your daily life. Then, 30% of your monthly income should go to your wants. This includes shopping, dining out, hobbies and any other extracurricular activities you wish to pursue. Finally, the last 20% goes to your savings account. This budgeting technique is popular for people in many different financial circumstances because it allows you to spend enough to live life to the fullest and set money aside to invest in upcoming endeavors.
Rent Or Buy?
One of the paramount decisions you’ll have to make after graduating from college is where you want to live. This is the perfect time to weigh the pros and cons of either renting or buying a home. Depending on where you live, either choice could save you money.
If you’re in an urban area, the only option you may have is to rent. The high costs of living in these places can become a burden. But, renting also allows you to forgo the major responsibility of being a homeowner. This means you get to bypass other money suckers, like home maintenance, insurance and property taxes. Renting is also a viable option when you don’t have a lot of money saved up to finance things like a down payment, closing costs or a home inspection.
However, buying a home has shown that most people save money over time. Mortgage payments are often much lower than the cost of renting a home. You also get to enjoy amenities like having privacy or getting to make improvements that best fit your lifestyle. There’s also the added benefit of making money off your home when it comes time to sell. By building equity, you can find out what your home is worth after renovations are made. If your costs are less than your profit, you can bank the extra money to cash later.
Pay Down Debt
Debt can be a crippling factor in terms of monetary prosperity, especially for new college grads. The sooner you address this issue, the sooner you can rest assured that you can manage it well.
While student loans are the first form of debt that comes to mind after graduation, there are also others you’ll be expected to tackle as well. Luckily, this can be a good sign of how qualified a borrower you are in the eyes of lenders. Balancing your checkbook to organize your debt while expenses are low is a good way to face it head-on and ensure you don’t have too many problems later on.
The most important thing to remember when it comes to debt is that you should always make your payments on time and in the right amount. Avoid remedying debt with credit cards, as you may end up spending more to pay off interest in the long run. Instead, set up auto payments linked to your bank account to safeguard your borrowing status and make certain that your debt is taken care of in a functional manner.
Keep A Positive Attitude
Now, this doesn’t necessarily mean constantly running around town with a big smile on your face. And, while simply adding some positivity to your life won’t necessarily guarantee you’ll stay in the green, looking at the bright side will help you handle financial difficulty with stride and pushing onward in the face of adversity, despite how you may feel inside.
Studies show that a purposeful attitude can improve your chances of being successful, both monetarily and socially. Optimists can see the plentiful opportunities given in a situation, while pessimists tend to focus on the problems.
There are several ways to acquire a beneficial outlook on life and create sustainable fiscal habits. If you’re struggling to get the best out of life, try utilizing one of these several strategies:
- Start a gratitude journal: Try using your notebook or a guided book that prompts you to think deeper about what is meaningful to you so you can better allocate your funds to things you care about.
- Create a positive environment: Cultivate your most treasured relationships and activities while cutting out others that foster toxicity or overspending.
- Stay active: Boost natural endorphins and help promote a favorable self-image or inner confidence.
- Focus on the good: Instead of spending time and energy worrying about circumstances out of your control, concentrate on how times of trouble will benefit your future growth.
Goal setting can benefit many areas of life, but have you ever thought about applying it to your monetary aspirations? Whether it’s padding your emergency fund or saving up for retirement, there’s no goal too big or too small to focus on.
Take a personal inventory to decide the time frame you want to target. Do you plan on having a certain amount of money saved up before the end of the year? Or is there something much further in advance, like a wedding or children, that you would like to prepare for? It doesn’t matter if you want to plan ahead for something within the same year or the same decade as long as you have a good idea of what you’d like to accomplish.
Start with writing them down and putting them somewhere you often look when spending money. This can be a note in your wallet or even a whiteboard tacked up to your refrigerator. No matter your choice, keeping your goals at the top of your mind should help you achieve them even quicker than you could have imagined.
Overspending is definitely not part of the budget plan, but hey, we’re all human. Every now and then, it’s perfectly acceptable to reward yourself with whatever you’ve been wanting to buy.
Hit the spa for a relaxing massage treatment that’s guaranteed to help ease stress right before the madness of the holiday season. Get a couple of staple pieces to add to your closet that won’t wear out after the current trends fade away. Or, hit the town for a night out with friends without skimping on the dinner bill (that’s right appetizers, we’re looking at you).
Whatever your preference, committing to small rewards every now and then is sure to keep you motivated even when provoked by the toughest of temptations.
Graduating from college is an amazing accomplishment that should be celebrated and enjoyed. However, it’s important that the festivities don’t last too long, as there’s plenty of work to be done. Even though getting your degree will open up all sorts of opportunities, keeping your finances on track is another way you can leverage your new-found freedom to take advantage of whatever possibilities you might imagine. If you’re looking for more quick tips on how to make your career work for you, check out our blog here.