**Today’s guest post is contributed by a credit-savvy recent grad!**.
While college was meant to prepare us for the real world, recent graduates have to come to terms with a new reality: we are crippled with student loan debt, job-hunting in a jobless economy, competing for interviews with others just like us (plus the still-unemployed graduates of last year), and sometimes must consider moving back in with parents to make ends meet.
Interestingly enough, according to Sallie Mae, about 84% of undergrads have at least one credit card. If you fall into this percentile, congratulations–you are establishing your credit! But, how many know what their credit score is, let alone how important credit is for future financial opportunities?
Instead of scrambling after graduation, recent grads like me should have been learning in college how to financially prepare for being on our own. So I learned a few things myself.
From wine bottle piggybanks to picking up the grocery tab, here’s a few tips I picked up in the short time since joining “the real world”.
Stop living ignorantly.
First thing’s first – know important, personal financial data like your credit score, checking and savings accounts, and accumulated debt and interest rates. When starting out on your own, you need a firm grasp of where you financially stand now.
With the Internet and all its tools at our fingertips, from checking your credit score to seeing real-time banking transactions, use it to fill in what you don’t know, to keep tabs on your financial information, and gain control of your financial future.
Assume responsibility.
Make it a point that by graduation, you start taking on some sort of financial responsibility, whether it’s paying some bills, budgeting groceries, or figuring out your student loan situation. Kudos to those who’ve been doing it on their own through college and beyond, but for those who haven’t, now is the time.
If your parents pay for everything, offer to start paying your cellphone bill, car insurance, health insurance – anything − so by the time you have landed a full-time job, you will already be a few steps closer to getting off your parent’s ticket.
The sooner you make an effort to hold yourself accountable for your own bills, the more likely you will learn how to manage a budget and–hopefully– grow up.
Live within your means.
Here’s advice to carry you throughout your life– live a lifestyle you can afford. You don’t need brand new furniture to accompany your new apartment. Consider a used car before you spring for the latest sports model. Buy used, buy less, and buy Craigslist.
By all means, grant yourself some of the more affordable luxuries you have had your eye on, but don’t live so extravagantly that you dig a deep hole for yourself before you even have the funds to pay it all back.
If you can, get a 401(k).
I knew someone who saved all of his dollar bills in wine bottles. When a bottle was full, he would crack it open and count out a very satisfying pot of money.
This method is useful, but archaic. Consider instead putting extra savings toward a 401(k) retirement plan. The money for your nest egg comes directly out of your paycheck pre-tax before it gets into your hands, so you have that money stashed away for long-term planning before it gets into your hands to spend. Many employers will match a certain contribution amount, so your contribution can earn you even more money. A 401(k) plan is a great way to save and earn without it consciously effecting your monthly budget.
Skip Starbucks; brew your own coffee.
It’s a small piece of advice, but watch the extra change add up.
Follow my simple advice, and you are on your way to forming your personal financial foundation to set the stage to your financial freedom. After all, recent grad, isn’t that what you are working towards?
Michelle Luksh is a 23-year-old working as a freelance writer in San Francisco. For questions and comments, feel free to reach her at michelle.luksh@gmail.com.
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