Once you come closer to the end of your college education, the time comes to start thinking about becoming an adult and starting adult life. This usually involves starting a life outside of a student dorm, a complete change of wardrobe, and an updated version of your laptop. With this, you should be ready to start a career you’ve been studying so hard for.
Although this period in life is marked by a great transition and change, it still represents one of the most wonderful times in the life of a person. However, starting this new chapter in your life wisely in financial terms is really important and will save you from unforeseen situations further down the road.
This time is really good to think about investments, even though you don’t think you’re ready. Many new college grads continue their carefree lives even after they’ve graduated, but that’s not the smartest move. To succeed in surviving financially, you should learn to prioritize and make smart decisions when it comes to money. We’ve made a selection of 6 interesting and useful tips every student grad should know when starting their adult life.
1. Start small
Once you decide it’s time to start cutting your debts and losses and start saving or earning more money, you’ve done half the job. A serious mindset is what many student grads lack once they become independent and find a job in their field. There’s no need to start with something drastic and starving at the end of the month, but a smart saving strategy can help you accumulate money in the long-run.
For example, once you find a steady job and realize that you could afford to set some money aside, don’t miss the chance to do so. Even $25 or $50 dollars saved per month are a good starting point, so don’t feel discouraged if you can’t provide more. You can even choose to send money directly from your account to a savings account and minimize the chances of accidentally spending it at some point during the month.
2. Cut your debts and learn about interest rates
Many students are tied up in student loans even after they’ve finished their studies. This can put a strong mental strain on you if you don’t learn how to manage your costs and pay off the debt as soon as possible. The most important thing about loans and debts is to understand how interest works and what you can do to reduce the risk of increasing your interest rates.
Once you take a loan for your studies, you are supposed to return it with a certain interest. This is okay only if you understand that every late payment will be punished with an increase in the interest rate. Since you’re paying every month, you should make sure to always do it on time and avoid serious financial debts.
3. Start investing and keep it simple
Another good option for fresh student grads is to start investing small amounts of money regularly. This should be your long-term habit because it can significantly help with learning how to set money aside and increasing it over time. Of course, it’s best that you keep your investments simple and avoid complications and losses.
You can start by studying basic investment strategies and learn trading terminology to see how things work in the world of investment. This would also be a good opportunity to review the best brokerages available to you. There are great online sources that you could use for your research and learning in the beginning. Those can help you maximize your investments in the first years before you can stand on your feet.
4. Try to live below your means
Although receiving your first paycheck might tempt you to spend all the money from your bank account, it has proven wiser to try to save a little amount every month. It’s true that as a new student grad you don’t have a lot of financial obligations, but you should always think about emergency situations. You never know what can happen next month and having some extra cash that would cover unexpected expenses is always a better option than having to borrow money to solve your financial problems.
5. Learn the importance of having a stable budget
One of the best things you could do for your money is to learn how to organize your budget. By making a thorough budget plan at the beginning of every year, month or week, you can substantially cut unnecessary costs and avoid spending too much money on something you actually don’t need. Having a good long-term budget plan is the best way to achieve your financial plans.
You don’t need any fancy software of app to make this budget plan, just a pen and paper where you can write it down. Try to see what works best for you and once you make a plan, try sticking to it for long-term goals.
6. Don’t give up
Considering the above-mentioned tips can help you accumulate enough money you can use later in life. Becoming an adult doesn’t have to be a drastic change in your life, but you have to play it smart. Financial independence can be achieved easily with a few rules to live by, but it’s more important that you don’t give up on your goals.
Whatever strategy you opt for, make it your number one priority to stick to it until the end. If you opt for saving and investing your money, you should keep at it for the years to come. Once you decide to get married, have children, and settle down, you’ll see how this money you’ve saved and invested will come in handy then.
Graduation from college is an exciting time for every student, especially if you’re ready for the adult life that awaits you. By understanding the importance of financial independence, living below your means, and investing your money you can really provide yourself with a happy and carefree future.
Jane is a writer covering emerging trends in small business and entrepreneurship. A huge fashion and healthy eating addict. When not writing, she can be spotted on Mytheresa, looking for the newest addition to her accessories collection.