Financial Tips For New College Graduates

 

Graduating from college is an incredibly proud moment and the end of an important chapter in your life, as well as the start of another. Unfortunately, many graduates find themselves in financial difficulty at the start of this chapter due to their student loan debt and the fact that they are only just starting on the career ladder. The high-interest rates on these loans can make it difficult to make repayments and cause financial hardship straight away. With this in mind, here are a few tips for college graduates for a brighter financial future.

Establish A Budget

It is good practice to create a budget and stick to this as soon as you have accommodation and a job. One of the most popular budgets that can work well for those coming out of college is the 50/30/20 rule. This will see 50% of your income go towards essentials like food and rent, 30% on nonessentials like socializing and clothing and the remaining 20% to savings and/or debt repayment. This budget works well with all incomes but could be altered slightly depending on how you feel about clearing debt.

Supplement Your Income

In addition to your main job, many graduates are now finding ways to supplement their income, and this can be a great way to put yourself in a healthier financial situation. You do not have to commit to a second job to do this either as there are many different ways to make money online or jobs like tutoring to consider.

Affordable Housing

Housing is one of the biggest expenses, so do whatever you can to find affordable housing. This could involve finding somewhere with a few friends where you can split the rent, utilities and other expenses or move to a more affordable area. If possible, moving back home with your parents can be a good way to save up, but you may only want to do this short term.

Sell What You Don’t Need

Finishing college is the ideal time to take a look at all of your possessions and get rid of what you don’t need. The best way to do this is to sell items as you could raise a fair sum for this. College textbooks, in particular, are a good option to sell as they can be expensive to buy new and you no longer need them.

Reduce Spending

Find ways to reduce your spending for a much healthier financial situation. This could include opting for non-brand products, shopping at different stores and cutting back on non-essentials. Additionally, you can avoid paying full price for almost anything if you are willing to shop around and wait for sales. You could also look to buy certain items second-hand which can be much more affordable.

Cheap/Free Entertainment

Following on from this, you can minimize the cost of having fun and socializing by taking advantage of cheap or free entertainment. Going out for meals and drinks is good fun, but this can be very expensive so consider having friends over, going to the park or finding free stuff happening near you.

Emergency Fund

A part of your 20% of the budget should go towards an emergency fund for a rainy day. This way, if there is a moor expense or you find yourself unemployed, you will have some stability. Having 3 months worth of salary in this account is a good idea as this is how long it takes on average to find a new job.

401(k) Contributions

Once you have filled your emergency fund, take the same percentage of your income and put it into your 401(k). This lets you save and invest part of your paycheck before taxes are taken out and this will grow tax-free until retirement. Many employers will match your contribution (up to a point), so this is a brilliant way to build towards a bright retirement.

Improve Your Employability

The learning should never stop even after graduation. In order to make yourself more appealing to prospective employers, stand out from the crowd by improving your skill set and this can be easy (and free) to do online. In addition to this, get as much experience working as possible and network to improve your chances of landing that dream job.

Student Loan Repayment

If you are able to, always make your student loan repayments on time or consider switching to a different payment plan for federal loans if you are struggling. Deferment is also an option if you are unable to find a job, you go back to school or you participate in a service program. Private lenders have fewer support programs, but they may be willing to create a payment plan which you can afford.

Look Into Navient Loan Forgiveness

If you hold any Navient student loan, then there is a chance for forgiveness, cancellation and discharge as a result of a federal lawsuit against Navient for illegally failing borrowers at many steps of the loan process. They handle more than 12 million student loan accounts with over $300 billion in federal and private loans. Look into Navient student loan forgiveness programs today, and you could find that your loan is reduced.

Control Credit

If you have a credit card, be careful with how you use this as bad decisions relating to credit can haunt you forever. Think carefully before opening any new accounts, always pay your credit card bill on time and take steps to improve your credit score. Using credit intelligently is important because it allows you to build credit history which could help you to secure a home mortgage loan down the road.

It can be daunting when you leave college and enter “the real world” and especially when you have a student debt looming over you. Getting in control of your finances and building savings towards a brighter financial future is hugely important and the above advice should help any college graduate to start this exciting new chapter on the right foot.

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