Although money management skills are important, many people have a problem handling their personal finances. This issue is even more important for new college graduates. As they leave school they will be faced with repaying student loans while dealing with other expenses like rent and healthcare. Many new graduates do not find the jobs right away, making it even more important to manage their money.
With some planning and good financial advice, the new graduate can cover bills and save money for the future. Here are some tips that can help in managing your personal finances:
Create a Budget
This is probably the most important aspect of money management. It will take a few months before you get a sense of your spending patterns and expenses if you are new to budgeting. When you look at your income and expenses, this will give you an idea of how much you can save. If you are unable to save, examining the budget can help to decided where you can cut some costs.
Never use more from your credit card than you need to, and try to clear the balance each month. This will help you to avoid additional interest. Do not go shopping for clothes if you don’t need them, and avoid eating out unless you absolutely have to. Ultimately, your main goal is to keep your spending below the level of your income. This is the only way you will be able to save.
Reduce Living Expenses
This can mean getting a roommate and sharing the rent or moving in with your parents. Either way you can save a lot of money that you can put towards savings. For some grads, their parents’ home might be the best option since they can live there rent free. It is a good idea to contribute towards expenses such as food, but the bulk of your money should be saved.
Set aside Money for Emergencies
Some people save in a special account for emergencies. This savings is not used for daily expenses or other living expenses. At any time, a crisis may arise, such as a major health problem. Putting money aside in an account that yields high interest, such as a market mutual fund is a good idea. In an emergency you can pull from these funds without putting a strain on your budget. Note that it will take some time to create this sort of fund, so it is best to start early.
Get Books and Information on Money Management
You can search the Internet for used books that cover this important topic. Some of these books actually target new college graduates, so you will find that much of the information applies to you. Do some research on the author of any book you are thinking of buying. This will help to ensure that you are getting advice from a qualified person.
The Internet has lots of information on money management that will come in useful to you now and later on in life. Learning what you can and applying some of these tips to your own life will help you become financially independent.
Avoid New Debts
Do not create any new debt unless it is for something vital. This is even more important if you have student loans to deal with. If you are struggling to get by, that is not the time to buy new furniture or a new TV, even if these items are on sale. You should also try to clear your existing debts as quickly as possible.
College students and recent grads need to be smart in the way they handle their money but they don’t have to be experts. Personal finance involves common sense decisions such as putting extra money towards their student loan. This is a smart move as it helps to clear your loan quicker. Aside from saving money, it is wise to invest money in mutual funds and similar investment instruments. With discipline, you can end up with enough money to help clear debts or make a down payment on a house.