Wednesday, August 30, 2017

Money Advice Every Recent Graduate Needs To Cherish

budgeting habit
Your whole teenage life and the start of your adulthood is all focussed on one thing and one thing only; getting you to the best college possible so that you can graduate with the best degree possible. That is it. It’s why we go to school, pick the subjects we pick and have to take things like exams.

But what happens once this is done and dusted?

I mean, getting the degree to get you the job is only part of the battle, especially when you accept that it is not a salary that makes you rich but the way you spend your money instead. That’s right, personal finance is the key to success after college. Unfortunately, though, most graduates are not too clued up on that area of life. 

With that in mind, we have compiled a list of tips, tricks and pieces of financial advice that absolutely every recent graduate should read and adhere to because, well, these personal finance tips will set you in good stead for the remainder of your adult life. Trust us on that. 

Reading Works Wonders

You’re in the real-world now, and that means money is king. It also means you need to be proactive and squat up on some money basics by reading books about them. Now this may sound boring, but this could be the very reason your finances stay in order and you don’t feel the need to bury your head all the time. What’s more, given you are a young adult, it makes total sense to read books aimed at young adults. Our favorite in this category has to be Get A Financial Life: Personal Finance In Your 20s And 30s. It is a best-seller for a reason. It is also written by one of the most celebrated finance commentators out there so, yeah, it’s pretty good.

Budget Becomes Habit

We don’t expect you to jump into this the second after you graduate. But once you have moved to New York or Chicago and landed your first job making coffee’s for people who can afford nicer suits than yours, and you’ve been doing this for a couple of months, then you need to get into the habit of this. That is because you will have been working long enough to know exactly what your salary is, how much you take home after taxes, what you spend on rent and living and all that sort of stuff you need to know before you can start figuring out what you have left. We know as well as the rest of them that this process can churn your stomach, but it can also stop you digging an even deeper hole. So, once you are settled, work out your take home pay, what your monthly overheads are - rent, utility bills, loan repayments, grocery costs, travel expenditure, car insurance and even just refinancing your car loans etc. - and then work out what you have left for spending on luxuries and saving for a rainy day. The most fundamental rule of avoiding bankruptcy is this: never spend more than you make.

Reduce Debt Fast

You have just left college which means you are probably saddled with enough debt to concern Warren Buffett. It sucks, but it just part of our sucky system. The important thing to wrap your head around, though, is that this debt of yours is not just some monthly bill you need to repay. Oh no, this debt of yours is your arch-enemy and needs to be defeated now before it grows too strong. That is how you need to look at it. It is just a matter of how that you really need to concern yourself with. To start off, we recommend that you read The Ultimate Guide to Eliminating Your Law School Debt, which gives it to you straight, in Layman’s terms and with all the answers you need. But, to summarise what you need to do, we recommend you find ways to save money in everything you do and pinch the pennies everywhere you can because the sooner you are able to pay off your debt the freer you will be. So, if you can avoid eating out or cap your fear of missing out in order to add $35 to your monthly repayments then do so. Not only will this rid you of your archenemy sooner, it will also save you a ton of money in interest. 

Debt Is The Worst

There is no other way to put it. All those dreams your young heart and spirited head may be chasing will be put the guillotine if you caught in debt, which is why you need to do all you can to avoid getting into debt. Getting a mortgage can be halted by debts. Starting your own business can be a dream easily crushed by debts. Even being able to take that job you would absolutely love to do can be halted by debt because it doesn’t pay enough to cover your monthly repayments. What’s more, you could find that your debts - and thus your poor credit rating - stops you from getting a job altogether because more and more employers are checking the history of their candidates. Debt is the worst and that is why you need to avoid slipping down this route at all costs. If you can’t be sure that you can pay off your credit card then don’t get a credit card.

Emergency Fund Needed

You may not have needed to have any kind of emergency fund before now because the worst thing that could have happened to you at college is a) your iPhone screen cracked, b) your leftover pizza got eaten by a drunken housemate or c) your shoes finally died. However, in the real world, where you have a job and a place to live and a car to run and all of that adult stuff, the need for an emergency fund becomes quite a bit more severe. As such, you should start off by saving $1000 to cover things like a broken fridge. The endgame, however, should be three to four months worth of living expenses being tucked away because you have no idea what could happen. You could get made redundant; you could get injured; you could find your car blows up. These things happen, and that is why an emergency fund is needed.

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