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Completing a college degree is a big milestone in one’s life. But it also means that you are now all set to step into the real world. Life after graduation will be different as there are opportunities bundled with responsibilities. Whether you decide to start a business or take up a job, managing finances is vital. The biggest challenge for fresh graduates is the lack of experience with handling money. Even those who may have studied commerce can have their own share of struggles with finance management. Here is a guide that can help you understand how to manage your finances after graduation.
Plan a budget
First things first, you need to plan a budget while keeping in mind your regular savings, income, and expenses. Right from the day one you step out of the college, you will probably be on your own unless there is parental support. A carefully planned monthly budget can actually help you survive until you get a good job. If you have savings, calculate how long they will last. Stick to your budget diligently to consolidate your financial health.
Pay off your student loans
Most students’ biggest concern after graduation is their student loans because probably every student has one to repay. As soon as you graduate, start working on a loan repayment plan that aspires to clear the debt as soon as possible. Consider factors like interest rates, repayment period, and grace period to plan out how you will clear the loan. The sooner you repay, the lesser the interest you will end up paying. This can save a lot of money in the long run.
“Between working to perfect your resume, gaining the right experience and pay off your student loans, it’s also important to get a handle on proper finance skills that will help propel you to success and make life easier.” – How to Finance Life After College
Track your expenses
As a part of your budget planning, you should track your expenses on a daily, weekly, and monthly basis. Right from food to rent, transportation, student loan payments, and leisure have every single expense on paper. This will give you a fair idea about where you stand and how much you earn to sustain right after graduation. Additionally, you will be able to understand your saving capacity as well.
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Understand income and taxes
Graduating from college and moving into your first job is an exciting transition. However, it’s crucial to grasp the concepts of income and taxes early on. For instance, while your salary offer may seem impressive, the actual amount you take home could be less thrilling due to various deductions. Likewise, it’s essential to approach tax filing and payments with care from the outset. There are plenty of tools and resources available that can make the prospect of filing taxes much simpler. One such tool worth noting is Taxcaster. Beyond that, seeking out experienced tax attorneys is always a wise move. Such professionals can provide comprehensive guidance from the beginning to the end, ensuring you stay in good standing with the IRS.
Keep an eye on your credit score
A healthy credit score right from the start of your career or business is a strong trust signal. You should seriously work on building a good credit score if you want to have a reputation for being a responsible borrower. Of course, you may want loans later in life, for buying a house, growing your business, or anything else. A solid credit score will surely help you get one with ease. Follow some basic rules to consolidate your credit score. Pay your bills on time, keep the oldest credit cards open, and avoid maxing out cards.
Live within your means
Another useful tip for students who have just completed graduation is to live within your means. You may be tempted to join an expensive exercise class, eat out every weekend, or splurge on vacations when you start getting your first paychecks. But remember that this is the time to consolidate your savings rather than waste your hard-earned dollars. Be mindful of every single dollar you spend and you will learn the value of saving for the long run.
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Have long-term financial goals
Having an emergency fund and focusing on short-term savings is just half the work done for fresh graduates. Rather, you should have long-term financial goals, even up to retirement planning. This may sound too far-fetched but having a financial strategy right from a young age promises a better financial future. Remember that long-term financial planning is not just about saving money but spending smartly and at the right time.
If you have just graduated and money management seems to baffle you, these tips can be of great help. There are times, however, when you need a short-term loan to help you get through tough times. If you find yourself in this situation, look for a licensed money lender. Don’t hesitate to seek professional guidance over matters like tax and financial planning because being smart with your money helps you live better.
