If you are a graduate – or graduating soon – and haven’t started planning your finances yet, your head may be spinning with a dizzying array of information. Many people often struggle to find their financial footing following graduation, leading to debt.
The good news is it doesn’t have to be that way. By following these six steps, you can make sure you are ready to face life after college and aren’t left with nightmares of financial burden.
Build a Strong Credit History
After college, students may feel that it is okay to slack off on their credit and begin enjoying the fruits of their labor. The reality is that if you don’t start building a good credit situation now, you will regret it once you need financing. Having a solid credit score can help lower interest rates and get loans at better interests giving you a better kick start your investment options.
Try Your Hand at Investing
There is no way around it – one of the best ways to grow your wealth is to invest your money in items that will generate additional income. It would be best if you learned the basics of investing. These basics are:
Get a savings account. When you get your first job, set up a separate account for your savings. This helps you develop a culture of living below your means.
Invest in mutual funds. Mutual funds allow investors to pool money together and hire professional fund managers to handle the company’s day-to-day operations. Because of this, it is easier for less experienced investors to make money through mutual funds than through stocks themselves.
Start a Traditional IRA. This type of investment account allows people to invest their money tax-free in exchange for paying taxes on their earnings later. Because you won’t be paying federal taxes on your investments now and can invest without penalty limits or fees, this is a great way to grow your savings over time.
Learn How to Live on a Budget
While in college, learning how to budget your money well is essential. This will not just help you make smarter decisions in the future, but it will also prepare you for the next step of your life. Being able to live on a budget should be one of your goals while finishing up school.
You can start by analyzing how much you spend in a month and properly plan your finances by ensuring that every penny is accounted for. This helps you identify loopholes and opens your eyes to your spending habits allowing you to make better choices, identify areas to cut your spending, and hold yourself accountable.
The best method to know about personal finance is to educate yourself. The internet is an excellent resource for this, but it can also be overwhelming. You should probably start with some books written for those who are more inexperienced.
This will help you understand personal finance planning and provide guidelines to make realistic financial goals. It will also enable you to have great insights into financial decisions. With the proper knowledge, one can thus ask questions and adequately digest financial options to help you make informed choices.
Identify Your Purpose and What You Like
Understanding what you love and focusing on fields that make you enjoy your task will see you make money faster. Most graduates focus on getting money and end up in fields or careers they do not like because the paycheck enticed them.
While looking at what you will earn is essential, ensuring you are pairing it with something you like is crucial as it will help you build the muscle to work smart, put in long hours, and not give up when things get tough.
Monitor your spending
Write down your spending to help you identify how much money you make and how you use it. By knowing how much comes in and how much is used, you can make better choices and understand your financial strengths and weaknesses.
Financial planning may seem challenging as a college grad trying to find your feet. While it may not be easy, having the discipline and the right attitude will see you make solid decisions and enable you to take calculated but informed risks. Ensure you enrich your knowledge on personal finances and continually identify ways to save and invest wisely.
About the Author: Tracie Johnson is a New Jersey native and an alum of Penn State University. Tracie is passionate about writing, reading, and living a healthy lifestyle. She feels happiest when around a campfire surrounded by friends, family, and her Dachshund named Rufus. You can follow her on Twitter here.
Photo Credit: pexels