Some say that the most broke people are the ones who just got out of school. You no longer have an allowance and you still have to think about that college loan you have to pay for. Aside from that, some also start to move out from their parent’s houses and live independently.
Fresh graduates are very positive and idealistic, thinking that they could take over the world. Some realize faster than others that it is not as easy as it seems. Think of all the things you have to pay for, such as apartment rent, pocket money for all those job interviews, everyday expenses, gas, loans and debts and other things you have to spend money on.
That is why you have to be smart when you graduate. Since you will be earning on your own and for yourself, there are things that need to be sacrificed. Here are few financial planning tips to help you get started:
Do not Stop Learning
Do not be too proud just because you have a degree. It is definitely something to be proud of but do not let it get in your head. To be able to handle your finances smartly, pick a book or two that can help you out. Success starts in studying the basics, the ins and outs and the most complex things in the financial world. Books will help you get started.
Map out a Budget
From this day forward, think of your financial restrictions. This can be started a few months after getting in your first job and getting your first salary. Your salary will determine your lifestyle and your financial restrictions monthly. Learn to prioritize things such as rent, utilities, transportation, groceries and loan payments. Once you have computed all of these, you will have an idea how much you will be able to save or spare.
Save some of your Salary
Speaking of saving, if you are earning enough, then you should at least save around 15 to 25% of your salary. Make it a habit to save. You can save for emergency purposes or you can start saving for your retirement. The earlier you save money, the earlier you can retire from work.
Invest in Trades
Investing your saving is also a good idea. However, you will only be able to do this if you have earned enough money wherein you can invest it in an exchange traded fund. But while you are still starting saving, you can just keep your money in liquid form or keep it in the bank to earn interest.
Don’t Rent yet
While you are still adjusting, you can still opt to live with your parents. It will not hurt you to live with them for another year or two until you can finally move out and pay rent on your own without having problems of having financial shortage because of the rent.
Avoid Debts if you can
Some say that the ultimate dream killer is debts. Having debts will keep you from doing things such as saving and investing because you have to pay your debts first. Also, this can affect your job application because employers will look into your credit scores. In relation to this, you should also pay loans as much as you can and clear them out as early as possible.
Get the Right Insurance
Get yourself a medical insurance, not a life insurance. If you are not yet earning much yet and you do not have plans of getting married yet, then you will not need life insurance. A medical insurance would be sufficient for now.
Have a Backup Plan
Do not think that your job is meant for you forever. Even if you love your job, think of the possibilities of getting laid off and ending up unemployed. That is why saving is very important. Just in case you lose your job, you will still be able to sustain your needs and expenses as you look for a new one.