So you have graduated from college. Now what?
Graduating from college is a major accomplishment. Graduates are equipped to use valuable learning in the marketplace and pursue a career in the profession of their choice. Setting good financial habits in place at the start of a career can make a major difference in the years ahead. Here are some important steps that will help.
Get a Job – Duh. Experience Matters
That may sound like a given, but pursuing a position in your chosen field is important. Finding something quickly does not always happen, but stay after it – even if you have to take a different job in order to address living expenses.
Create a Budget. Plan (and Act) Accordingly
Based on your income, create a budget for both saving and spending. Know what savings/retirement options are provided by your employer and use them. Know what your monthly commitments (saving and spending) are and when they are due. Use the rule of living on 70 percent of your income and create your budget with that in mind. Then, really follow your plan. Put off impulse spending. Plan to delay certain expenses in order to get your plan in place.
(EASY TIP: There are many easy-to-use templates on the internet. As an example, open “Excel” on your computer. Type “Sample Budget” in the search bar. You will have a variety of choices. Select the one that works best for you.)
Housing is a major part of most individual or family budgets. Recommendations range from a low of 25% to a high of 30%. Managing that cost while starting your career is helpful. Moving home to avoid expenses is not always the best choice, but finding roommates to share costs could really help. Property ownership certainly has some major benefits, but trying to make that happen too soon can prove financially stressful.
Saving should be part of the plan from the very beginning. The “70/30 rule” suggests 30% of your income should be directed to savings. 10% would be for donations/tithing, investments and retirement. Another 10% would be for “emergency” items and the final 10% would be a “holding account” for major purchases like cars, home down payment, furniture or major vacations. Saving should be done first. Living expenses such as car payments, energy bills, groceries, mobile charges, entertainment, etc. should be managed such that they can be covered with what is available after savings is done.
Student Loans and Credit Management
Missing that first student loan payment could ruin your credit right from the start. Using credit cards can be a trap, resulting in spending beyond means, over-commitment and the feeling that there is no way to ever get out of debt. Good choices at the beginning can do a lot to keep you from that kind of experience.
Find a Trusted, Qualified Guide
There are trained financial advisors (who may or may not sell a product) that will help you achieve financial stability and success over time. Even informal guidance from a mentor or book can be valuable.
There are plenty more ‘tips” that could be included in this blog, but if you choose to take the steps mentioned here, your chances of a positive financial experience over the long haul increase dramatically. Asking for help from an experienced source may be the best first step. Contact June Powell, CPA/PFS for more information at June@PriceCPAs.com or 615.385.0686. Visit our website (www.pricecpas.com) for information on other services provided by Price CPAs.