Graduation season is a time of celebration for many families. College graduates are celebrating the completion of many years of education and their families are celebrating the symbolic beginning of their children’s adult lives. After graduation, new college graduates are faced with a lot of new challenges, including managing their money effectively to become financially independent. Because many high schools and colleges do not require students to take financial education classes to graduate, many college graduates graduate with little knowledge of financial management. Here are some good money management tips for new college graduates that will get you on the right path to financial independence.
Start Budgeting
One of the most important money management tips for new college graduates is to start budgeting as soon as you are in charge of your own finances. Establishing a monthly budget is essential for long-term financial health because it helps you see how much money is coming in and how much you are spending for different expenses. There are many personal finance apps that can help you with this aspect of money management, including the budgeting app Mint. These apps monitor your bank account and credit card balances, track your spending, and categorize your transactions into budget categories automatically.
Limit Your Expenses
Many new college graduates get into financial trouble because they let their expenses grow uncontrollably until they are living paycheck to paycheck to make ends meet. While there will always be new things to spend your money on, limiting your expenses so that you still have money left over for saving will put you in a much better financial position for the future. Having savings available will help you handle unexpected financial emergencies without having to worry about using expensive credit, obtaining personal loans, or borrowing money from friends and family.
Have A Plan For Paying Off Student Loans
According to a recent study conducted by Edvisors, more than 70 percent of bachelor’s degree recipients will graduate with student loans, and the average 2015 graduate will have more than $35,000 of student loan debt. Having a plan in place to pay off these student loans as quickly as possible will help you eliminate this debt and have more of your income available for saving and other needs. While it may be tempting to limit the amount you pay on your student loans to have more money immediately available for more desirable purchases, the sooner you pay off the loans, the less interest you will pay in additional costs for the loans, potentially saving yourself thousands of dollars.
Join our newsletter
Subscribe to get the latest "Engineer Your Finances" content via email.