Once you graduate from college, you are officially in charge of your own finances. If you are in your 20s and just starting out on your own, it can be scary to have to balance a checkbook or make sure that your student loan and rent payments are submitted on time. If you have graduated from college after taking time off to start a family or to establish yourself in your chosen field, your student loan debt could be a shock to your bank account. Regardless of where you are in your life now, how can you successfully manage your finances after graduation?
1. Plan Your Budget Ahead of Time
The best way to deal with your finances after graduation is to start thinking about them while you are still in school. There is a good chance that you already know how much your monthly payments are going to be and how long you will be paying those loans off. As you may be able to prepay your loans before the end of their terms, it may be worthwhile to save a portion of your money to make your first few payments. You may also want to start making payments while you are in school or during your grace period to lower the amount of interest that you have to pay, which will lower the amount that you ultimately repay.
2. Don't Be Afraid to Ask for Help
You may need assistance paying your loans or your other bills while you look for work or while you attempt to pay down your loans as soon as possible. Most private and federal loans allow for forbearance and deferment, which means that you don't have to make payments for a few months at a time. Graduated repayment or interest-only repayment plans are available for those who can't handle their entire payment.
Asking your parents to live with them while you attempt to pay off your loans can help you manage your finances until you get back to financial stability. While living at home, you may not have to pay rent, utilities, or food. This can easily shave hundreds or thousands of dollars off of your monthly expenses. If you plan on putting that money directly toward your loans, you can pay your loans off months or years ahead of schedule.
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3. Don't Forget to Save for Retirement
Regardless of your current financial situation, do not neglect to pay for your retirement. In most cases, creditors cannot seize money inside of your 401k or IRA. Therefore, if you fail to make a car payment or student loan payment, you won't risk losing that money. You may also be able to access the money in those accounts to help you buy a home or pay for medical bills that you may incur in the future.
However, the main benefit to contributing to your retirement is the fact that you will have a nest egg for the rest of your life even if you don't plan to stop working for several years or decades to come. Employers may match dollar-for-dollar any contribution to a 401k up to a certain percentage of your contribution. When your employer matches your contribution, it is akin to a 100 percent return on your investment for free.
4. Credit Cards May Help You Bridge Financial Gaps
While you don't want to rely on credit cards to help you get by, a 0 percent interest credit card to put some of your expenses on is a much better option than a personal or payday loan. You generally have 18 months to pay off your balance before you have to start paying interest on it, which may be enough time to help you get achieve financial stability. In the meantime, you can put some of your payments on a credit card if need be, which can help you keep your good credit intact.
5. Don't Worry about Keeping Up With Others
You don't need to buy a new car or buy a home right away just because you see your friends advancing in their own lives. Each situation is unique, which means that you shouldn't assume that you aren't doing as well as others just because you don't have what they have. Some people are better at saving, have more help to put a down payment on a home or car, or simply make more earlier in their career. Your top priority should be to save as much as possible and make sure that you can provide yourself with the basics before adding any new debt.
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6. Your Employer May Help You Pay for School
Your employer may offer to help pay some of your college tuition or offer scholarships in exchange for a guarantee to stay with the company for a certain amount of time. You may also be entitled to a raise in pay after obtaining an advanced degree. Ask your employer before you start school about the type of assistance that may be available to you. If you can't get help with tuition, you may be able to receive salary advances or other assistance to make sure that you can pay your bills and stay above water financially after you finish school.
Graduating from school is a great feeling and signals the unofficial beginning of adulthood to those who are just starting out in life. However, it also means that you have bills to pay and other financial obligations to meet. Planning ahead and asking for help when you need it increases the odds that you will be able to deal with your finances in a successful and effective manner.
