You just graduated from college. Whether you or your parents handled your finances these past four (or five or six) years, you are probably in need of some financial advice as you start your career and become self-sustaining in your 20s. What should you do with your money now?
Here are nine helpful tips you can use to become financially independent and make the most of your money — whether you’re in the military or not.
Find a career, not a job
There’s nothing wrong with wanting a job that pays the bills right out of college. But it might not be a good idea to look for just any job out there you can find. By the time you graduate from college, you should have some idea of what you want to do with your life — a career instead of a job. Even if you don’t land your dream job right away, think ahead about a job you can turn into a lifelong career. It’s never to early to start because as you get started in your career, you’ll find that it’s easier to move up in the ranks as well as in salary. Choosing a career will help you become financially independent sooner rather than later, and all that post-college money is better saved than spent.
Live with roommates if you can
You might be thinking, “I’m done with college. Finally no more roommates!” But if you can stand to live with one or a few roommates for a couple more years, you’ll be much better off financially. It’s not ideal, but if you aren’t married and don’t mind sharing space, consider bunking with a few friends in a house or apartment. That way, you’ll be able to split costs such as rent, utilities, furniture and food.
Track and budget your expenses if you don’t already
Keeping track of your expenses and payment due dates is essential for financial stability. This will keep you from missing a bill or over-drafting on your bank accounts.
“Track your spending using a service like Mint.com, PageOnce.com or Mvelopes.com,” said Gerri Detweiler, Director of Consumer Education at Credit.com. “It will be so much easier to track and stick to a budget if you get in the habit of doing that from the start.”
Start saving for emergencies
It might not seem like emergencies will happen to you until they do. You should, at all times, have enough money on hand to cover at least three to six months of expenses, according to this article from Kiplinger.com. If you keep it in a regular savings account, you’ll be able to access your funds easily. When your car transmission dies, you won’t go into immediate panic mode.
Formulate a plan to repay loans and debt
One of the worst parts about college is the loans and debt that come with it. Unfortunately, they won’t simply go away, especially if you are now responsible for your loans instead of your parents. Organization is key. “Start a binder (or a folder on Google Drive, Evernote or Dropbox) so you can save copies of your loan documents, statements etc. in one place,” said Detweiler. “If you can’t afford your payments, and your deferment is ending, check into IBRinfo.org for your federal student loans. You may be able to get your payments reduced to zero if you qualify.”
Take care of your credit
Now that you have a plan to get rid of any debt you might have, don’t let it slowly acquire again. This is a perfect time to create a foundation of good credit, which will help you immensely in the future. You can check your credit reports at AnnualCreditReport.com and get a free Credit Report Card including your credit score at Credit.com, according to Detweiler. “While you may not have an extensive credit history yet, this will allow you to see what types of information are included in credit reports and help you work toward building a strong credit score.”
Shop around for car insurance
Even if it would be easy to switch directly to individual coverage through your family’s current auto insurer, you should take the time and shop around for the best deal, according to an article from Kiplinger.com. You might find a much better deal in the long run.
Save up for a future home
You might think home ownership is far, far away, but it isn’t. A down payment and mortgage and everything that comes with buying a house can add up quickly to a terrifying amount. Even if you aren’t planning to start a family soon, it’s never too early to start saving for a house. You’ll be glad you did when you don’t have to struggle to live comfortably when the time comes.
Begin saving for retirement
If you thought saving for a home was extreme, you’re probably wondering why you should even be thinking about retirement right now. You should start saving for retirement because even a five-year delay in savings can mean big long-term losses. “Even if you contribute to a 401(k) at work, you can also contribute up to $5,000 for the year to a Roth IRA, which can give you tax-free money in retirement,” said an article from Kiplinger.com. “And a Roth can be a particularly good deal for young people who are in a much lower tax bracket than they will be in the future.”
Photo courtesy of Images_of_Money