3 Ways Graduates Can Plan for their Financial Future
If you’ve recently graduated from college, you’re facing the beginning of a new financial life. The first financial hurdle might be dealing with student loan payments, but all graduates can benefit from basic financial principles. Learning how to establish credit, budgeting and saving for retirement are just a few of the fundamental skills you will need for a successful financial future.
Earning and Budgeting
Creating a budget is a proven way to help make sure your expenses don’t exceed your income. Use a budget tool to see just how much money you can allocate to various expenses after you get your first job. Variable expenses, such as food and entertainment, should still have a budgeted maximum. Don’t overlook savings as a category when you draft your budget.
Establishing a Credit Score
Many graduates are faced with large costs they’re not prepared for like rent or health insurance. It’s easy to rack up debt on a credit card with high interest rates, yet getting a credit card or some other type of loan is the only way you can begin to establish a credit history. You’ll need a good credit score if you want the best interest rates on loans you’re likely to acquire in the near future, like a car loan or mortgage.
Saving for Emergencies
Financial emergencies are sure to crop up in life, so building up some savings should be an absolute priority after graduation. An adequate emergency fund can help protect you from taking on high-interest debt in the event unexpected expenses arise, the consequences of which can be financially crippling. Shoot for a reserve that can cover one month of your expenses at first, with an eye toward building up a full year’s reserve over time.