Graduating from college is an exciting time. You’ve worked so hard over the years to get your classes done with the best grades possible, and now you’re ready to start your life outside the educational system. Graduating isn’t entirely fun, though. The next big worry you might already be encountering is money, like how to deal with it and what to worry about after you leave your campus for the last time.
The worst thing you can do is panic. Take a deep breath. There are some simple tips to help you get an idea of how to manage your money after college, so read up and then decorate that graduation cap — you’ve got a stage to walk.
Make a Budget
Easier said than done, right? Not exactly. Budgeting can seem overwhelming before you know what your payments will be and how much you’re going to make. After you get that information, all you need to do is plug in the numbers.
Not everyone will use the same method to budget, but there’s a great way for everyone to start. First, write down how much you know you’ll earn each month. Then write down all your expenses. These would include things such as:
- Utilities, if they aren’t included in your rent
- Student loan payments
- Gas money
- Cell phone bill
- Groceries, which you should divide up by week
Add all your expense up and subtract them from how much you’ll make. The extra will be your savings money and sometimes money to do fun stuff like go out with friends or splurge on dinner.
Pro tip — if you write down the date for each bill you have to pay, you can even schedule out when you spend money. This will come in handy, so you never have an automatic bill payment take you by surprise.
Watch What You Buy on Credit
It doesn’t take long for credit card companies to start sending college students information about credit cards through the mail. You’ve probably already thrown out many of their envelopes. It’s a good idea to build credit, since you’ll need it for big purchases like a house or a car, but don’t view credit cards as the answer to your money problems.
The average amount of credit card debt for American households is $16,061 per person. It’s nice to be able to buy something and pay for it later, but that can get addictive. Instead, use your credit card only when necessary, and put minor bills on it to build credit, like a phone insurance bill.
Watch what you use your debit card for as well. If you keep track of your purchases, you’ll see what you need and what you don’t, and then you can save the money you don’t actually need to spend. This will give you a good start on your savings account.
Hope for the Best, Save for the Worst
What do you use your saving account for anyway? For starters, it’s good to have an emergency fund. When you’re right out of college, this means saving up at least one month’s worth of income in case you suddenly lose your job, and then build that to three months of savings the longer you stay at your job.
Another reason to use money from savings is for large, unforeseen expenses, like if your car breaks down or you end up in the hospital. Your savings account should help you breathe and just focus on immediate expenses. This won’t build quickly, but it’s important to be diligent about putting away some money each month. You never know what could happen down the road.
Feel Confident With Your New Money Knowledge
Saving money, building credit and budgeting are among the most important financial decisions you’ll make as a recent college graduate. These will help build a solid foundation for later in life, when you decide to switch jobs or buy a house. Remember, everything is going to start small, but give it time. You’ll figure it all out as your budgeting and spending becomes routine. At least you’re not writing research papers anymore.