Every fresh graduate looks forward to their first real paycheck as they begin their new career after college graduation. However, not everyone knows what to do with this new regular flow of income. College graduates spending styles range anywhere from uncontrollable spending to strict savings; but what should these new college graduates be doing to manage their finances after landing their first job?
1. Know Your Salary
Before you can start creating a plan for your finances, you’ll have to figure out how much money you will be making. Having a clear understanding of your take home pay is important so you can see what you’ll be able to afford. So, if you’re one who has a lot of bills coming out of school, try to negotiate a salary that will allow you to live comfortably without having to live paycheck to paycheck.
2. Keep Track of Student Loans
More than half of college graduates funded their tuition through student loans. In other words, before you start planning your next vacation out with friends, you should make sure you have an idea of how much you owe and when you’re first payment is due. Knowing the details of your student loans early will allow you to manage your finances for when your grace period ends.
3. Live Within Your Means
This is the most important part of budgeting! It will be impossible to build a savings if you’re spending more than you earn each month. After you’ve gotten your first paycheck, plan a budget for the money that is left after all bills are paid. Make sure to subtract monthly expenses before going on a shopping spree to avoid complications in the future.
4. Start Planning for Retirement
I know retirement isn’t a hot topic among college grads, but in today’s economy its crucial to have a savings plan and know your employers benefit options. Having a good retirement savings plan will give you a head start and make you more financially stable in the up-coming years.
5. Credit Cards
Everyone knows establishing credit is important if you ever plan to finance a major purchase like a home or a car. However, in the process of “building” credit, many go overboard with spending and end up in debt. To avoid this, leave the credit cards at home and only use them on occasion to keep your monthly balance under control.
You’ve got the stepping stones to financial success, now apply them to help you live debt free!