Money Management Lessons for Recent College Graduates
You’ve worked your way through college and have made it out alive on the other side! Congratulations!
Now that you’ve got a college degree under your belt – and hopefully some gainful employment – there are a number of lessons to learn when it comes to the almighty dollar. There is no quicker way to a financial downfall than by learning money lessons the hard way.
With that said, there are a number of money management lessons that can benefit nearly any college graduate. The key is to understand them, take them to heart, and make a concerted effort to follow them throughout your adult life:
Pay regularly on your student loans – Many college graduates put their student loans at the end of their priority list. However, this could be a huge mistake, as failing to pay your student loans can spell trouble with your credit score and your ability to obtain any type of credit in the future. Student loans are vital to keeping your credit rating afloat, so take them seriously and pay on them religiously.
Enjoy the benefits of credit cards, but reel yourself in – Credit cards are a great financial tool, but they should always be treated with respect. It may be quite tempting to begin buying yourself what you weren’t able to afford in college, but mounting credit card debt could easily be in your future if you don’t watch your spending habits. The best advice is to only charge on any given month what you can afford to pay off the next month. If you always pay off your balance, you can enjoy cash back rewards -- making your credit card pay you!
Start a retirement account and contribute the maximum – Starting to save for retirement in your 20s has an immense benefit, and it’s called compound interest. If your employer matches up to a certain percentage to your 401K, meet that percentage and take advantage of this “free” money your employer is offering you. If your employer doesn’t offer a retirement account, set one up for yourself. Start an IRA and make regular contributions.
Keep your lifestyle in moderation – Just like credit card use, it is quite easy to start spending lavishly when you start seeing your first paychecks. It is vital that, from the start, you make sure your lifestyle never exceeds your income. Make a budget and stick to it, and always make it your priority to set money aside into a savings account each and every month.
Borrow wisely – Most college graduates need to use credit to build a lifestyle. While it’s commonplace to use credit to purchase things such as a home or a car, be careful about overextending yourself. Be particular when it comes to borrowing money and make credit work for you, not against you.
As a new graduate, you have your entire financial life ahead of you. When you save smart, manage your budget well, and use credit cards to your advantage, you will quickly succeed in the University of Life.