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Graduation is a scary time - trust me, as someone in the throes of it, I feel your pain. The future has never looked quite so mysterious and open. But besides the worrying about a job, apartment, town to live in and all of that, there is something else most likely on your mind (as it is mine): money.
So I decided to ask FatWallet workers what advice they would have liked to hear as a recent graduate that is just stepping out of college and into the critically-acclaimed "real world".
A lot of it you may have heard, but I've tried to make it as clear as possible and get rid of vague advice so that you have actual steps to take.
Save Early, Safe Often
It may be the last thing on your mind because you literally have 40 years before retirement is on its way, but that is actually the advantage: you have 40 years. Think of the interest you can accrue in that amount of time. Waiting til you're 35 to start seriously saving is basically just cheating yourself out of a lot of money.
You may not quite understand what a 401K is, but FatWallet's Bryan Marsden has an excellent article on your saving options.
Stay With Your Parents
More and more graduates are doing this, and with good reason. Not paying rent means you can focus on paying other things. It may seem counterintuitive to live with your parents after four years of being on your own, but a year or two with them will help you get your finances in order.
Pay Those Student Loans!
Also seems like a no-brainer. But paying only the minimum on your loans after graduation can hurt you in the long run. Again, I won't go too far down this rabbit hole, as Melissa Schraiber has an in-depth article on how to manage your student loans efficiently.
If you really need one piece of advice, it’s paying off your premium. Don’t just pay off the minimum or the interest – you’ll get nowhere and basically just be paying thousands of dollars more than you should be.
Your credit score is going to be vital to getting loans in the future and potentially something an employer will look at when deciding whether or not to hire you. So if you want to take out a loan but can't because you haven't ever established credit, there are some ways to do so.
One is to create a Goal Setter Account, where you pay a little into a Certificate of Deposit. This CD is collateral for the loan you would like to take out, and then applied to the loan. Once you've paid off the loan, you've created credit history.
Keep in mind that paying off your loans and debt comes into play here. DO NOT fall behind on payments, this will affect your credit score, and then you will have trouble getting loans in the future when you want a car or house or timeshare in the Keys, or whatever it is you want.
Commit to a Budget
This might be the hardest thing to do, especially if you’ve managed to snag a salary. There are several great budget spreadsheets templates online. Seriously, just type it into Google. You can find one that’s right for your situation. Put on all of the things you must pay, like bills and rent and groceries. Don’t forget your savings.
Sage Fatwallet advice: Make a list of all the bills you have to pay monthly. When you pay one, cross it off your list. When you want to splurge, look at your list and remind yourself what bills for the month you still have to pay.
Work Your Way UpPick a company with clear job mobility – as in you will be able to move up in positions. This is not the same as rejecting positions that you see as below your skillset. In fact, those are good jobs to begin moving through a company.
As well, if you’re not going bonkers about your new job, remember that is temporary: you can work a year or two there to gain experience and show some dedication, and then move on to what you’re actually interested in.
Use Money-Saving Sites and RewardsLots of membership or rewards cards are easy and free to sign up for. It may seem like a hassle, but if you save two or three dollars on average each time you make a purchase, then you may have covered you part of the internet bill for the month.
Using FatWallet.com is totally free, for example, and will not only show you deals (Like Starbucks) but also give you cash back on your purchases.
Frugal New WardrobeYou might need new clothes for your job, but there are ways to get around shelling out 100s of dollars for new threads. Even if it is an entry level job, Ebay can get you some quality clothes, as well as thrift stores and outlet malls. If things don’t fit perfectly, take your clothes to a tailor. Changing a hem can be surprisingly affordable.
Fun AdviceThis is going to against most of what I just said, but here is what I also heard from people, and what they wanted someone to have told them in their early 20s: don’t be so responsible. Let loose and don’t forget to have fun, because that’s important too.
And if you can, travel. Go out before you have started a real career or want to start a family and go see things before obligations get the best of you. I myself am taking this last piece of advice to heart.
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