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5 financial tips to master as a new grad

21st November 2019 Print

As a new college grad, you will be facing new financial challenges that differ from student life. Living paycheck-to-paycheck is unfortunately very common among new grads who struggle to set up a proper budget. Tracking expenses and income is just one part of the equation. Take a look at these five tips for getting yourself on track financially after you graduate.

Make A Budget

The budget you set for yourself after college has a few crucial differences. Most student loans give you a six-month grace period after you graduate ?— don't abuse this by not budgeting. A good rule of thumb is the 50/30/20 rule where you spend 50% on necessities, 30% into savings, and 20% into spending. Calculate your student loan payments in your budget to see if you will be able to make the monthly minimums with your current salary. If you can't make monthly payments, you may need to consider your deferment options to pause them for up to three years.

Build in Emergency Savings

You should include a small percentage of savings in your monthly budget to build a cushion. Start with a goal of saving $500 for emergencies and then shifting to $1K and up as you reach each milestone. The ultimate goal here is to have at least three months of emergency savings to cover bills and necessities. You never know when you may experience a medical emergency or a job loss that could be financially catastrophic.

Always Pay Bills on Time

This one may seem like a no-brainer, but you may find some bills slip through the cracks. Late fees and a negative impact on your credit score can quickly add up. If you're forgetful, try to set up auto-payments for essential bills. Even setting up reminders on your phone will help you keep track of all of your bills.

Track Your Credit

Once you've got a budget that is within your means, you should track your credit score. Building good credit means paying bills on time and using credit cards responsibly. Avoid maxing out your credit cards and keep your oldest card open to preserve the length of your credit history. All three major credit bureaus are required by law to give you access to your credit report once per year. These reports can help you see any problem areas you may have on your credit report so you can work towards resolving them. A free credit monitoring service may also help stay on top of your credit score.

Set Long-Term Goals

It's easy to lose track of your financial goals in the day-to-day operations. Embracing an aggressive student loan repayment plan can go a long way to getting yourself out of debt. But budgeting doesn't have to be reserved for getting yourself out of debt, either. You can budget ‘fun’ like saving for a vacation or a new car. Setting goals for things you want is a great way to reward your financial responsibility. Foregoing temporary temptations like coffee and lunches can save a significant amount of money over the year.