While it can be exciting to graduate college, it can also be a stressful time because you will be living in the real world. Managing your money is often a big part of how successful you are in the adult world, which is why you should take the time to build strong habits now.
Balancing Savings and Debt
Paying off debt and saving money can seem like two competing goals, especially when some of that debt comes at high interest rates. However, saving in high-interest accounts can also help you out, so try to do both. Automating retirement savings is like paying yourself first. If there is extra money after other living expenses are taken care of, consider putting something extra toward debt each month. You also have the option of refinancing your student loans to cut down on monthly expenses. This can make repayments easier on your budget. A student loan refinance comes with the flexibility of being able to get a new loan that often comes with better terms.
Avoid Lifestyle Creep
When you first start working right out of college, you may still have the frugal mindset of a college student who doesn’t have a lot of income. But as you see your larger paychecks coming in, it’s easy to let your money management waver and bump up your spending to match. However, it can pay off to live below your means. That doesn’t mean you need to deprive yourself of all comforts to save money, but it’s still important to create a habit of saving.
Instead of ordering food, consider doing meal planning and going grocery shopping. If your location allows it, consider using public transportation. Stick to a budget that allocates a certain dollar amount for each category. When you earn more money, bump up your savings categories and leave your spending categories as they are. Then if any emergency expense come up, you will be in a good spot to pay them off.
Make Sure You Have Health Insurance
It’s critical to make sure you have health insurance, especially if you are unemployed or your current work does not come with it. It might seem tempting to skip getting coverage, but avoid doing so, because one large medical bill could drain your savings. You might be able to get a subsidy from the health insurance marketplace, or you could look into alternative options, such as cost-sharing options. Even if you are young and healthy, health issues could come up, and it’s possible for anyone to be in an accident that isn’t their fault. Being able to access healthcare can give both you and your parents peace of mind.
Building Credit
Credit cards can be harmful if you don’t use them right, but if you pay them off in full every month, you can build a great credit score for yourself. That lets you get a lower interest rate on future debt, such as a mortgage. And a good credit score can help you get a rental without needing a cosigner.
