Are you or do you know a recent college graduate?
Entering the workforce after college a tough time for many people, especially when it comes to managing finances. Once those bigger paychecks start coming in, it can be difficult to keep yourself from spending it all on the things you’ve always wanted. This is what you’ve been working towards for so long, but if you’re not careful about it, you can end up causing yourself more harm than good. I’ve come up with a few financial tips from my own experiences to help college grads handle their finances successfully:
1. Invest in Yourself
Graduating from college does not mean you are done learning. I say this all the time, but it is one of the MOST important lessons I have ever been taught. Never stop learning. Learning is something that should never end, no matter how much you already know. Something I’ve witnessed in my career is that the most successful people are the ones that continue to invest in themselves through their education. You have to be willing to invest and spend your money on what it takes to get access to new information. There are a lot of things you can learn in whatever field you are in for free, but the newest techniques and principles often cost money. Whether it’s reading, workshops, online classes, or whatever you may choose, it’s important to keep educating yourself even after college so that you don’t get stuck and you can keep moving forward.
2. Live Below Your Means
You might be earning more money than you ever have coming out of college, but that doesn’t mean you should be living like you are just yet. You can’t just start buying all the new gaming consoles you’ve been wanting or a flashy new wardrobe, you’ve still got some preparing to do before you have that kind of financial freedom. Unexpected expenses happen all the time, and there will definitely be times that you need to take a step back and live below your means. Car troubles, relocating, medical-related costs are all frequent financial setbacks that can affect anyone at any time. Living below your means (continue living as though your income never increased) for a little while longer is one of the most surefire ways to prepare you for unexpected expenses. This means that when you are working with your weekly, monthly, or yearly budget, don’t factor in how much you actually make, budget below your income so you can have enough savings to get you through any tough times.
3. Don’t Buy a New Car
This may sound silly, but you’d be surprised how many young people make this mistake. You do NOT want to go out and buy a brand new car just because you might be making more money. This is one of the worst traps for people entering the workforce because the value of that car will dramatically decrease as soon as you drive it off the lot. You don’t want to get leveled with a small down payment and heavy monthly fees with high-interest rates that take several years to pay off just to drive a car that’s more or less obsolete within a year! Keep driving the car you have if there is nothing wrong with it or if you need a new car, go with a good, reliable, used car that will get you from point A to point B until you’ve had more time to save. Even paying for maintenance on a used car can save you in the long run compared to buying a new car, so don’t make this mistake!
4. Save 15% of Your Income
Now that you are making a little more money, it’s important to put a lot of energy into saving. As you grow, you will find the system that works best for you and your finances, and the more you are able to save, the more relaxed and enjoyable your life will become. Something that my wife and I find important in managing our finances is being able to give. The first thing we do is give to our church or to a charity, and then we save 15% of our income after that and put it into savings. Most young people might not have the ability to do this just yet, but after a little while of saving you will be financially stable enough that you can give back to your community as well. Until you get to the point where you can afford to give, you need to be setting money aside. This shouldn’t be too hard because most college students are used to not having money anyway, so living below your means won’t be much of a change, so I recommend setting aside 15% of your income into savings. Giving yourself time to save after college will help you be in a much better financial situation later in life!
These tips may make me sound like an overbearing parent, but these are important things I learned from my own experiences that I wish someone would’ve told me when I was younger and navigating these things alone. You don’t have to make the same mistakes I did, and you can take this opportunity to learn from my mistakes and take this advice so you can succeed! If you found this helpful, send it to others you think it may benefit as well!
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