Money can be tight right after you graduate college. As a recent graduate, you may be looking for your first full-time job or to purchase your first home or apartment. All of this financial uncertainty can cause a lot of stress. Fortunately, there are tips and strategies to help reduce post-grad financial stress and get you on the path to successful money management wherever this next chapter of your life leads.
Set financial goals
Setting financial goals can help motivate you to achieve financial ambitions. Once you’ve established the goals you want to work towards, the next step is organizing a plan to put said goals into action.
Being realistic is key in money management, as you want to be sure you’re not setting yourself up for failure or limiting yourself based on financial habits picked up in college. Setting and working towards your potential goals will help start post-college life on the right foot, which is a great way to lower some stress as we enter a new year.
Being the start of 2022, a great New Year’s resolution could be an increased focus on your financial goals and implementing some best practices that will help you achieve them. Budgeting is a great place to start, as well as taking a deeper look into your credit score. Depending on your goals and current financial status, there are various budgeting strategies that could best suit you. Budgeting is a simple task that can really help you stay organized. It can be as easy as using a spreadsheet to categorize your spending and help you visualize where your money is going.
Credit cards and credit score
Credit management is very important to have an understanding of, especially if you anticipate making a large purchase. Dedicating one of your financial goals to getting control over your credit card usage and only using it in cases where you can afford to pay off associated debt is a great way to start building your credit score.
As you enter post-grad life, you may be acquiring your first credit card. There are what seems to be an endless amount of different credit cards to choose from, so it’s important to do your research into the different types of cards and their benefits. When looking at credit card benefits, especially as a recent college graduate, no annual fees and the opportunity to earn cash back are key. Once you make your decision and acquire a credit card, it’s best to start out with a small credit limit. Having a smaller credit limit makes it much easier to limit spending a lot at a time which will help avoid large credit card payments.
Good credit card management that leads to a quality credit score is very important. If you plan to make a large investment such as buying a house, your credit score will be considered during this process.
Put money aside for an emergency fund
A great way to alleviate some potential future stress is to put aside a portion of each paycheck and start an emergency fund. This may not be something you utilize a lot, but having it available to you provides quality peace of mind.
Maybe your car breaks down or you need to travel somewhere last minute and need a plane ticket—an emergency fund helps avoid unexpected instances from hindering your financial progress. Calculating how much you are comfortable with taking out of your paycheck each month and opening a new savings account is a great way to build an emergency fund. As your financial stability improves, this is something you can adjust accordingly.
Prepare ahead of time for large expenses
Paying off student loans and filing taxes can be a daunting task, especially if you have never dealt with either before. For bigger financial responsibilities such as these, it is best to plan ahead to make the experience as smooth as possible.
For student loans, working with a loan specialist to determine how much you can afford to pay each month is important. A loan specialist can help you strategize your loan payments and help inform you on how to attack your student loans. It’s likely you will have a set grace period after graduation where you will not be required to make payments on your loans. Use this time to your advantage, and start setting aside money as if you were making payments. That way, when the time does come you won’t feel the strain as much.
Tax season comes along around springtime each yeah. Doing research and deciding how you will file your taxes beforehand will help the process go more smoothly. Whether you choose to do your taxes by hand, file them online, or take them to a tax specialist to aid in the tax filing process, the more you prepare before it is time to file, the less stress you will have.
If you have access to a retirement plan, utilize it
If you are lucky enough to have a job that provides a retirement plan, take advantage of it. Even if it’s only a small percentage of your paycheck, start contributing to it while you are young. Your future self will thank you.
Some of the most common retirement plans that you could utilize are 401(k) and IRA plans. A 401(k) plan makes it very simple to save for retirement as you can choose to have money taken right from your paycheck and be invested into your retirement plan. A traditional IRA retirement plan offers more tax benefits, and also could be a good choice for someone who is interested in purchasing investments.
Entering life after college can include a lot of financial uncertainty. But knowing a few ways to combat the stress that comes with it can help pave the way for a much less stressful beginning to post-college life.
