10 Best Money Tips for New Graduates

money tips for new graduates

On graduation day new graduates are probably incredibly excited. They’re finally out of school and in the “real” world, making a nice income and building a career of their own. It’s an exciting new phase.

The only problem, of course, is that their financial woes may just be starting. Many graduates expect to be able to handle their financial burdens once they’re out of college and in a good job. But a study conducted by the National Survey of Student Engagement revealed that a third of students suffer from stress stemming from financial problems. Graduating isn’t quite the solution they expect.

A new graduate will have to deal with more financial problems down the line, especially if they are saddled with student loans. Given this economy, finding a well-paying job isn’t easy, either. As such, it’s important for them to be financially smart as they learn how to stand on their own two feet.

Ten Useful Money Tips for New Graduates to Consider

Don’t Change Your Lifestyle Just Yet

A lot of graduates tend to incur “lifestyle inflation” the moment they start working. They now have an income, they’re independent, and they believe they can spend their cash on anything they want. In a way, there’s also the “I deserve it” mentality, wherein a person starts equating these material things with “rewards” for working hard every day.

The problem with this mentality is that you keep accumulating and yet the returns of such material things wane over time. You might find that your new car is incredibly wonderful now, but in a few months you’ll be off looking for other new things to buy.

Remember To Live Within Your Means

From day one you want to practice living within your means. It’s a good idea to set up a budget system, wherein you only spend what you have. Don’t be tricked into spending more than you can afford and do not start using credit cards to fund a lifestyle of shopping and partying. That’s the easiest way to lose track of your finances. It’s a slippery slope you don’t want to get started on.

Start Saving

One thing a lot of financial experts repeat incessantly is the matter of compound interest. It doesn’t matter how much you save, as long as you do – over a significant period of time. If you save a small amount steadily every month for forty years, that’s more than you can get if you save a large amount in just one or two years.

Start saving, the minute you get your first pay cheque. This way, you’ll be able to set up a reliable retirement fund for your golden years. It’s a long way away, but this is the easiest and best way to have a nice nest egg for yourself.

Don’t Add To Your Debts

Chances are, you already have your student loans to deal with. It’s a serious problem that will burden you for a significance amount of time. So, why add to your debt?

It’s best to protect yourself from additional burdens. One way to save yourself from added debt is to avoid credit cards. You do not want to be trapped by credit card debt. Don’t take out new loans unless they’re really necessary. This is where “living within your means” really becomes important. If you stick to your budget and buy only what you can afford, you will be a lot happier than the people that continue to increase their debt load.

Pay Your Bills On Time

Once you graduate and begin working you need to become completely independent, and you need to stop relying on someone else to manage your finances for you. If you lived alone while in college, you already have some practice doing this. However, it’s still important to train yourself to pay off all your bills on time or earlier. This way, you won’t lose track and forget. Delayed payments have very hefty late charges that can seriously derail your finances.

Learn How To Be Frugal

Since you’ll need to live within your means, it’s important to pick up a few techniques on being frugal.

Stop dining out and learn how to cook! As well, if you enjoy meeting friends on the weekends at the local bar to party, think about how much that is costing you each month.

And when it comes to shopping for new clothes, skip the high priced designer stores and shop at outlet stores or wait for clearance sales.

Don’t Move Back In With Your Parents

I know people that have gone to school, gotten good jobs, but still move back in with their parents - this may be part of your culture. But if it isn’t and you are simply doing it to avoid taking on the responsibilities that many people face once they graduate and find a job, you are only hurting yourself.

After you graduate you want to learn how to live independently and push your way through without falling back on your parents’ assistance. Even if your parents can afford to take you in, or can afford to loan you money, avoid doing that.

Now is when you need to learn how to manage your own finances based on your income and your own skills.

Look For A Career, Not Just A Job

Some people take on high-paying jobs in industries they are not interested in. This isn’t a good idea at all. You may think it’s ideal since you’re getting a hefty pay cheque, but in the long run you’re sacrificing your chance to build a career in an industry you are actually interested in. It’s better to take a low-paying job doing something you love, and then work on finding ways to increase your income in that field of work.

Prioritize Your Student Debt

As per USA Today: “The loans that gave college students the funds they needed to move forward in life are now holding them back.”

A lot of new graduates think they can delay repaying their student loans. Though this may be possible in some cases, it’s best to find a way to pay off your loans before you make any more purchases or increase your expenses.

You don’t want to have to deal with student debts and housing loans in the future, do you? Get rid of your student loan debt as soon as you can. Create a payment plan that you can stick to.

Learn More About Managing Your Finances

This is something that many people unfortunately avoid doing. You can’t stop learning just because you’re out of school. Take some time to learn more about how the overall economy works, as well as what you can do to ensure that you quickly pay off any debt that you currently have, and remain debt free for the rest of your life.

 


Comments

    • glen.stephenson@gmail.com

      glen.stephenson@gmail.com 05/20/2013 6:32 a.m. #

      Great list. I really like all your points and wish I would have chosen a career and not just a job :(

      • Sicorra

        Sicorra 05/20/2013 12:56 p.m. #

        Thanks Glen! I thought you were in a nice career?

    • Corina Ramos

      Corina Ramos 05/20/2013 7:23 a.m. #

      These are great tips for graduates Sicorra. I especially like the part of not moving back in with parents, although one of mine hasn't left yet and has told me he is in no hurry to move out :)

      I think kids are so excited about being done with school they fail to realize the real world begins, I know that was me when I graduated.

      I always talk to my kids about my poor financial decisions and even share stories of a family member who defaulted on a student loan and how it took him 10 years and government wage garnishment to pay it off in hopes that will help me make my point.

      Great tips my friend! Have a great week Sicorra!

      • Sicorra

        Sicorra 05/20/2013 1:17 p.m. #

        Thanks Corina! Everyone is different. Some are anxious to get out on their own and they do it well. Some are anxious to get out on their own but they don't cope very well and some are comfortable to stay at home. Your son is very similar to others that I know that enjoy staying at home. But things can change quickly and you never know what he might do. Good for you for discussing the choices you made with them. Hopefully that helps too :-)

    • DC @ Young Adult Money

      DC @ Young Adult Money 05/20/2013 7:36 a.m. #

      Love the tips! In particular I think making your student debt a priority is very important. This cash outflow each month can really hold you back from taking new opportunities. While student loans can certainly help you "move forward" in life, it's interesting how they can also be a burden for your 20s and 30s.

      • Sicorra

        Sicorra 05/20/2013 1:21 p.m. #

        Thanks DC! It can be a rough ride for someone first starting out, and it is important for them to find ways to deal with their debt, if they had to take out student loans.

    • John S @ Frugal Rules

      John S @ Frugal Rules 05/20/2013 7:55 a.m. #

      Great tips Sicorra! I think all of these are important, but the start saving one is all too often forgotten. I know I failed at it and wish that I could've changed that. Even if it's in small amounts, starting out once you start getting paid can be a great way to start that discipline.

      • Sicorra

        Sicorra 05/20/2013 1:23 p.m. #

        Thanks John! I agree with you in that I too wish I had started saving back then. Whatever I did save back then is long gone. For some of us when we are young we don't think long term.

    • Shannon @ The Heavy Purse

      Shannon @ The Heavy Purse 05/20/2013 12:24 p.m. #

      “The loans that gave college students the funds they needed to move forward in life are now holding them back.” Amen! This is a huge issue because I do believe college is still a good investment but it's becoming more burden than opportunity enhancer. These are some fabulous tips and they are often overlooked by graduates. Great post!

      • Sicorra

        Sicorra 05/20/2013 1:24 p.m. #

        I read that statement when I was doing my research and I thought how true is that and how sad is that.

        Thanks Shannon!

    • AverageJoe

      AverageJoe 05/20/2013 3:33 p.m. #

      What a tough period. You finally have a little "jingle" in your pocket, maybe a real paycheck, and you have no idea how to manage money. This is the time when many people sink their ship and don't get back out until after 30 or even 40.

    • Holly@ClubThrifty

      Holly@ClubThrifty 05/21/2013 5:08 a.m. #

      These are great tips! I think it's a wonderful idea for graduates to live cheap while they can. It's easy to want to inflate your lifestyle after years of being a student....but it's much wiser to wait!

    • Anne

      Anne 05/23/2013 11:43 a.m. #

      I love this list! It is so very true! Shop at thrift stores, too! I have a budget for everything and I stick to it. This is a good list not just for new graduates, but really for everyone.

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