Post-college money management is an important stage in your financial journey as it is at the helm of your money independence. As you start to earn your own money using the degree you worked years for, you need to start on the right foot. It will help you reach your goals a lot faster and enjoy a good quality of life.
You need to remember that your effort plays a big part in the way you manage your finances work. Do not wait to be lucky because luck is just your preparation and hard work meeting an opportunity. If you read about what Fox News shared an executive order came out forgiving student loan debt for permanently disabled US military veteran.
These heroes deserve this and more because they risked their lives protecting the country and helping them financially is just the right thing to do. Student loans are just a part of what you need to manage after college. You still have credit card debt, other payments you need to make, and even looking for work. These are just part of post-college money management.
There are a few things you can do to help you stay on top of your finances better. Here are some you might want to look into.
Create a comprehensive household budget
One of the best financial tools you can use in post-college money management is a comprehensive household budget. As you are just starting out to earn your own money, you need to track your income and spending as best you can. In the beginning, it is quite easy to do because your expenses are still not that many and your source of income might be coming from one job.
As you grow and mature, you will make changes in your finances which will hopefully benefit you in the long run. Financial mistakes are also unavoidable along the way. In all of these, your household budget will help you get through it and give you the ability to make informed money decisions based on a comprehensive tool.
If you need to make a big purchase, the first thing you look at is your budget. It will help you determine if you can or cannot afford the payments on that purchase. If you made a mistake and have to spend a few months paying it back, your budget will show you what items you can move around so you can get through your situation.
Take control of your spending immediately
Post-college money management has a lot to do with how you manage your spending. Earning money comes from a regular day job but how you use it is crucial. It can determine the quality of life you have at present. This can also dictate how fast you can reach your short and long term goals in life. Your spending is a crucial part of the whole process.
You could be earning above the average of a starting salary but if you are spending money as fast as you earn it, you could be in debt. On the other hand, if you are earning only the minimum but you are a wise spender, you can allocate it accordingly and make the most of your finances. You get to steer your finances in a way that you reach your goals.
Have a doable repayment plan
Post-college money management is littered with challenges such as student loan repayment. Forbes shares that the class of 2018 has an average of $28,565 in debt per borrower. That is a big amount you have over your shoulders and other fresh graduates. They haven’t received their first paycheck yet but they already have pending payments under their name.
During these times, it is important to make sure that payments are done right and on time. The last thing you need is sending in a late and reduced amount. If you are having financial problems, it is best to talk to your lender immediately to talk things through. You can send the minimum amount just to keep you current. However, that can be an expensive route because lenders can start adding fees and other penalties on your account.
Create a repayment plan that will help you stay on top of your payment schedule. Your first goal is to make sure that you do not miss any payment due dates. With your budget, take a look at how you can make adjustments to help you prioritize high-interest payments first. This way, you get to cross them out from your list faster and you avoid being assessed fees and penalties on that account.
Common mistakes you need to be aware of
As you take on post-college money management, there are a few things you might want to stay away from.
Excessive credit card payment because you have a steady income
Your credit card is there to help you manage your finances better and not to put you in deeper debt. The number one rule in credit cards is to make sure that you only charge what you can pay in full at the end of the month. You might start to think that you can use your card to get the things you want because you have a steady income. However, this line of thinking puts your goals in peril.
Fear of making big investments
It is not easy to do anything the first time and when you start looking at making big investments, it could really be a scary thought. However, the earlier you start with them, the more you can learn about it. Take stock investments, for example, you learn more along the way if you start early. You can also cash in on a bigger income when you start early enough.
One of the biggest investments you could be thinking twice about is getting a mortgage loan for your dream house. This is a tricky situation to be in because younger people tend to move around early on in their career. Once you have decided where you want to settle down, that is a good sign that you can venture into buying a house. The earlier you start with it, the sooner you can pay it off.
Not setting aside money for emergencies
You never know what will happen in the future that is why it is important that you prepare for emergencies. When it comes to your finances, this comes in the form of an emergency fund. Even just after college and working on your first job, you need to start saving for emergencies. This will help you stay on track and prevent falling into debt.
As you save money, it is also a good idea to start as early as you can with retirement savings. The sooner you begin, the faster you can retire in the future. You get to dictate when you want to stop working and not be forced into it because you do not have enough. Retirement is supposed to be a great time in your life so save up for it.
Post-college money management can be an exciting time for you as you set out and make your own financial path. There are a number of challenges you have to face but you just have to persevere and be smart with your decisions in life.