If you are a recent college graduate, you can be fairly optimistic about your future as you leave campus and head out into the real world. No one ever says life on your own will be easy, but post-graduate financial security can be a reality. These six tips from your friends at Dale Carnegie Training of Central & Southern New Jersey offer a starting point for recent graduates who are ready to put their education to work for a secure financial future.
Get real about your paycheck — Compared to the minimum wage jobs you survived on through college, the annual earnings at your first post-graduate job may give you dollar-sign eyes. Don’t be fooled though; after taxes, benefits, living expenses and student loan payments, your remaining monthly spending money could amount to less than half of your gross income. But don’t get discouraged—while that new car may have to wait a while, with smart budgeting you can still enjoy the finer things in life with a clear conscience.
Your credit score matters — Thought you were done worrying about test scores? Think again. Whether you want to get an apartment, mortgage, car or a new job, your credit score says a lot about you and can make or break these important investments. Examine your report regularly for accuracy, and pay off any existing credit card debt as soon as possible. Credit card interest is wasted money, and outstanding debt can hurt your credit score.
Take care of yourself first — After expenses and taxes, your paycheck may look too slim for comfort, but protecting your assets, health and income is worth the additional cost. If you have an apartment, renter’s insurance is a relatively inexpensive way to protect your possessions. Health insurance is also a must, whether you get it through your employer or stay on your parents’ plan. Your paycheck is worth protecting, too. Disability income insurance is not just for those with physically demanding jobs, as most beneficiaries are on disability from illness, not injury. Preparation for the unexpected comes at a small price considering the costs associated with the alternative.
Save for the fun stuff — You have worked hard to start your career, and deserve to reward yourself. The best way to spend smartly is simply to spend less than you have. Diligent saving allows for the occasional splurge without feeling guilty or anxious about your decision to spend. Consider directly depositing a certain amount from your paycheck into a savings account for a “fun fund.”
Save for the future now — Your parents’ nagging may start to quiet now that you’ve graduated, but their retirement planning advice is worth listening to. Start investing now—you won’t regret it. Although retirement seems a long way off, successful investors understand that the longer your assets remain invested, the greater the potential for growth.
Don’t pass up free money — Many employers offer pretax savings through retirement accounts such as a 401(k). Because your retirement contributions come out before taxes, your taxable income is decreased, saving you money. If your employer matches a percentage of your retirement contributions, it is wise to contribute the maximum amount of their match so as not to pass up on “free money.”
Personal finance may seem daunting, but don’t be discouraged. The above-mentioned tips boil down to common sense: spend less than you earn, stay protected through proper insurance, maintain good credit and save for the short and long-term, and you will be off to a great financial start in the next chapter of your life.
This post is brought to you by the good folks at Dale Carnegie Training of Central & Southern New Jersey. We would love to connect with you on Facebookand Twitter @CarnegieJersey.
Photo credit: freedigitalphotos.net/David Castillo Dominici