New graduates, welcome and congratulations on your graduation! The first thing on your mind may not be your finances, but it’s so important that you get started with money in the best way possible. There are some simple things that you can do in order to get yourself set up for a great financial future (like installing the Piggy Coupons app).
So, what should be the financial goals of recent graduates? Let’s take a look at some money lessons for new grads:
1. Create a Budget
Our favorite financial advice for recent college graduates – as tempting as it is to start thinking about how much money you can make, it’s essential to get started off on the right foot, which means learning money management for new grads.
Budgets sound boring, but they will save you! Creating a budget means looking at the money you have coming in, and making sure you have enough to cover the different areas that you need.
To start with, you need to write down all of the money that you have coming in. Next, write down all of your outgoings. You can look through previous spending to get your real numbers. When it comes to creating a budget, it’s important to try and include all of the things that you want in your life, and not just bills.
Making a budget may seem difficult when you are just starting out in your career and are on a lower income, but there’s no reason why you can’t start with small amounts toward your goals and increase this over time.
2. Make a Money Priority List
Leading on from creating a budget, it’s time to put together your own money priority list. If we don’t do something like this, it’s all too easy to get caught up in life and find yourself just spending on bills, and a bunch of stuff that you don’t even want. By starting out from the outset with some clear goals in mind, you can make sure that you are using the money that you earn toward the things that you truly want.
It may help you to go back through your previous spending and see what you have been spending your money on. For example, you may find that you like to go out and eat with your friends multiple times a week.
You can still spend money on the things that make you happy, and use coupons from Piggy to get the things that you want for cheaper when you’re shopping online (plus earn cash back!).
3. Understand Investing Basics
Something that’s extremely important as a new graduate is to understand investing basics. The sooner you start to invest, the easier it will be to build wealth. We suggest going to a compound interest calculator and putting in how much you can invest each month and how much you can generate.
A lot of people think about individual stocks when they start to think about investing, but one of the best things to look at is index funds, because you will be investing in a bunch of different companies, as opposed to one.
Even just understanding that investing is a way to build wealth, will be the best start that you can give yourself when it comes to your finances.
4. Retirement Plan
So we’ve talked about investing as an important way to build wealth, especially over time, and a good reason for investing is definitely for your retirement! It doesn’t have to be for that of course, but if you are going to be saving over a long period of time, it makes sense.
When we are young, the thought of saving up for retirement seems silly. After all, it’s so far away, and you want to spend that money whilst you are young. Big mistake! In reality, the sooner you start planning for the future, the easier you make it for yourself.
Think about how much you’d like to live on when you’re retired, and use a compound interest calculator to figure out how much you’d need to invest each month.
5. Take Inventory of Your Student Debt
A big part of financial advice for recent graduates is student debt. As a new graduate, it’s likely that you will have student debt. And lots of it. It can be tempting to ignore it and just pay the minimums, but we want to have a good plan of action in place.
The first step is to look at how much debt you have. It can be a scary thing to do, but in order to make a plan, you need to know where you’re currently at. Write down the amounts, who you owe the money to, the interest rates and when it is due by.
6. Start Making Student Loan Payments
As you well know, you don’t have to start making payments on your student loans straight away, but that doesn’t mean that you shouldn’t! If you have the money there to start making payments on your student loans then you should.
The worst thing about debt is the interest that you have to pay, so the sooner you can start attacking the debt, the lower the amount of interest that you will have to pay.
This may be a bit controversial, but you can use credit cards to help your finances. It’s important to note that you don’t even need to have a debit card if you don’t want to. You can use credit cards for your everyday spending, and set up automatic payments to make sure they’re paid off each month.
8. Higher Paying Jobs Aren’t Always the Best
You will be told to go for the highest paid jobs, that the more money the better, but is that true? You should of course think about getting well paid and thinking about careers that will get you a lot of money, but money isn’t everything.
The most important thing apart from being able to pay your bills is to be happy. You need a good work/life balance and to not run yourself into the ground.
9. Don’t Buy a New Car
There are a few types of debt which have been normalised: student loans, mortgages, and cars.
Who doesn’t like a new car? There are so many great new ones out there, and it’s totally normal to want a nice new car. But is it the savviest thing to do? Our financial advice for new graduates says no.
New cars decrease in value as soon as they have been driven off the lot, which is why it’s a better idea to look for an older car. Make sure to do your research though!
10. Find Cheap Fun Things to Do
As a new graduate, you are probably looking forward to having a bit of spare cash and spending time with your friends. Seeing your friends and having a good time doesn’t mean that you have to spend a fortune; there are plenty of fun, cheap things that you can do. You could host a potluck, go for a picnic, go to a free museum, hang out at the park, spend the day at the beach. There are so many good ideas if you take the time to brainstorm!
Here are a few places to get started with your search for things to do at an affordable cost:
What are your favorite personal finance tips for recent grads? Do you have any new graduate financial advice you’d like to add?