Money Smarts For Recent Graduates

Graduating college is typically considered the official transition into the ‘real world.’ And in many ways, it is really exciting—careers just getting started and the like. But, it can also be a time where the intoxication of making your own money, and quite a bit of it, compared to stipends from parents or a part-time job, can lead to some unwise financial decisions. You can get into very bad habits now that can be hard to break down the line. But, while mistakes may be made, you can do your best to get things off on the right foot financially. Here are just a few tips to get you started.

Bone Up on Your Money Basics

One of the reasons many of us are so bad with money is lack of basic knowledge. It is amazing what a little thing like actually reading up a bit on finance basics can do for you. The earlier you learn about the tremendous benefits of investing early, or how even seemingly small amounts of credit card debt can drain you over the long-term, you will make smarter decisions right out of the gate. You will look at your habits in a new light, and feel motivation to make good decisions—at least most of the time!

Steer Clear of Debt As Not to Strangle Career Options

If you are like many people out of college, you may not exactly be sure of your career path or what exactly you would like to do with your life. You have a lot of working years ahead of you, and time to feel things out a bit. It is important to do work you like. But, debt can be the killer of dreams, and make it hard to pursue paths you may really want if your main motivator is to get enough money to pay your bills. By minimizing your financial obligations, you will have more flexibility, and you won’t fall into the trap of feeling stuck in a certain job because of the money.

 Money Smarts For Recent Graduates

Make Your Emergency Fund a Top Priority

Money issues cause us stress like no other, and not having any sort of back-up should you find yourself with a large unexpected expense, or unexpectedly out of a job, can be quite anxiety-inducing. Unfortunately, far too many people are living paycheck-to-paycheck; and if most are honest with themselves, this is not because they truly don’t have any money to save, it is because they manage their money poorly. Don’t be one of those people. Squirrel away enough money to support you for at least three months, but closer to six would be ideal. The emotional benefits are priceless.

Consider Setting up Multiple Accounts to Compartmentalize Your Money

If you have various goals for which you need to save money, or put money aside, you might consider setting up more than one savings and checking account to keep everything separate. This way, your money goes where it is supposed to, and you can be more disciplined. You can even make it a bit fun, like getting different check designs—you can find various online stores that offer a large selection of personal checks in all sorts of designs.

Start Investing Now

With a magical thing called compound interest, starting to invest in your 20’s versus your 30’s can make a world of difference in your later years. It is easy to put it off, thinking you have decades until you need this money, and this is the exact thinking that gets us in trouble. Don’t have an all-or-nothing attitude towards investments. Even if you don’t have huge sums, invest whatever you can—it adds up over the years.