So you’ve finally completed your education and graduated: congratulations! Now that you’ve got your degree, your studying days are over and your work life can begin in earnest. The likelihood is now that you’re seeking or have acquired full-time employment, you’ll be seeing more money than you have at any stage of your life thus far, while also dealing with new “adulting” expenses. You may be asking yourself an important question: how do I manage it all?
Once you’ve started a great job after graduation, you’ll only need to wait a couple of weeks for tangible evidence that you’ve succeeded: that sweet first paycheck.
Be sure not to fall into the “I have money so it’s time to spend it” trap! Though your first instinct may be to get something nice to celebrate your accomplishments, it’s better financial sense to lay a solid foundation for yourself your first few weeks of work.
While you may be flying high from being hired, circumstances both in and out of your control might alter your job security. Laying a solid financial foundation by saving as much of each paycheck as you can, can help you prepare for emergencies that may be hiding around the corner. The best thing you can do is save, work hard, and look to establish healthy financial habits as early as possible.
Rainy Day Fund
Even if you know you have job security, life is unpredictable! Sudden expenses like car troubles could seemingly surge out of nowhere and cause you to dip into your savings. Spending money you don’t have is never an ideal option, so ensuring you’ve got a decent amount of savings is the perfect way to weather the storm.
To 401k, or not 401k, that is the Question
There’s a chance that your employer is part of a 401k program and may also offer to match contributions up to a certain percentage. Many people wonder if taking an extra portion of their paycheck every two weeks is worth it. The reality is that the contributions you make to social security alone will not be able to sustain you after you retire. Thinking of the money you contribute to your 401k as “losing” it is the wrong view. Adding another source of funds in your retirement to complement social security and any savings and assets you may have will guarantee you have solid financial footing.
A 401k is an even better idea if your employer offers a contribution match, meaning they’re also putting in money to your account. Employers will typically only match up to a certain amount, but you’re still making free money in the long run. Of course, you won’t see that money until retirement, but you’ll be better off when you reach that stage of your life!
Budget like a Boss
Now that you’ve got a stable income, it’s time to figure out what your expenses are. You can get as detailed as you’d like, but at a glance you’ll at least want to categorize where your money goes. Utilities, insurance, gas, and groceries are just a few of the categories you might start with. Once you’ve calculated your monthly income and expenses, it’s time to craft a budget.
Are there any areas where you feel like you’re spending too much, like inessential purchases or one too many streaming services? Consider cutting some of this spending and putting it somewhere else, like loan payments or your own personal savings. A budget can be as personalized and detailed as you want it to be. Consider using online tools, like FCU’s budgets widget on our online and mobile app.
If you’re a recent graduate, there’s a good chance that you’ve got student loans to contend with. The total U.S. student debt as of this writing is $1.4 trillion. Though many student loans have a six-month grace period, the faster you start paying them off, the better. You should also strive to pay more than the minimum amount. This will ensure that over time you’ll pay less interest and, as with most loans, build towards good credit.
Monitor Your Credit
Like most folks, you probably have goals that you want to meet, like owning a home or a buying a brand new car. More likely than not, your current funds won’t allow you to make these purchases outright, meaning you’ll have to consider loans to achieve those goals. Your credit score is a number lenders use to gauge how trustworthy you are and will determine what kind of loans you can get, if any, and the terms those loans may have. There are other factors that affect this of course, but credit score is one of the most important!
Curious about how to build good credit? Learn more from another of our blogs on credit scores.
Remember to Treat Yourself
While we’ve been preaching financial literacy and mindfulness so far, it’s also important to recognize when you’ve done well. What good is it to save money if you never get to spend it? Consider treating yourself to an extraneous purchase or vacation on occasion. The key is to always be smart about how much you’re spending and getting the most of what is spent. The previously mentioned budget can also factor in, as you can create a category in your savings that is specifically for spending for fun activities.
Practice Makes Perfect
Building good money habits can be difficult, but ultimately rewarding. Good credit and savings will guarantee that you’re prepared to achieve your goals and make it through life’s unpredictable situations as unscathed as possible.
Hungry for more help or education and in book form? We've got you covered. Why Didn't They Teach Me This in School? by Cary Siegel talks through personal money management principles everyone should learn about!
Florida Credit Union is a full-service financial institution. Founded in 1954 as the Alachua County Teachers Credit Union, FCU now services over 110,000 consumer and business members in 45 counties throughout North and Central Florida. For more information about the services we provide, visit FLCU.org or call us at 1-800-284-1144