The Real World 101: Financial Tips for Soon-to-Be College Grads
Posted on May 12th, 2010
Are you a college student getting ready to face the real world as a reluctant graduate? You are not alone. There are thousands of other students getting ready to face the same reality as college grads who will need to look for jobs and hopefully begin making their first professional income.
There is so much to prepare for (income, obtaining credit, buying a car, making investments, retirement) that it can be scary to think that you might overlook something along the way.
But dont fret. While your financial future is indeed an important one, were here to offer some useful personal finance tips and tricks so that when you get your first job, you will be able to manage your money properly and solidify a responsible financial present and future.
The Process of Saving After Finding Your First Job
Its not always easy to find your first job as a college graduate. But in this tough economy, it is just one of the many challenges college graduates face. So if youre lucky enough to find one, its important that you dont run off and splurge on the first things you see.
Of course, it may be more than tempting to get your hands on things you didnt have access to in college, but this irresponsible financial behavior could create major problems and spell a lot of trouble for you down the line.
So what should you do instead? Take time to create a budget. If you didnt have a budget in college then you need to create one now. In your budget, its good to set aside money for your monthly bills, not-so-regular bills, food, gas, emergencies and even fun activities.
Of course, opening a checking and savings account is a great way to make sure that you have money set aside for all of your concerns. Ultimately, the more structure that you give to your personal income, the greater your chances will be of keeping it, and even growing it down the line.
Obtaining (or Fixing) Credit
Another one of the major finance tips for young people just getting started in the real world is to establish or fix their credit.
Its no secret that the credit issue is a major one for college students. Because so many credit card companies sent their representatives to college campuses for years, many students acquired as many cards as they could, then mismanaged them, leaving them in debt before they even graduated. This issue played a large role in the changes made with credit card reform.
For those students who were able to avoid the college debt trap, but still were unable to build credit in college, it is up to them to now build credit wisely.
If you are looking to start this process, you can begin by getting your hands on a new credit card. Companies like Discover, Master Card and Visa have great deals for people who have yet to establish credit. And if you need to repair your credit, its important to take advantage of finance tips that will get you on the right track and keep you there so that you can qualify for things like a house and car.
Buying a Car and Home
Of course, as time progresses, youre going to want to be able to see the fruits of your labor. The good news is that by taking advantage of good financial planning tips like opening a savings account, creating a budget and establishing good credit right away, you can push yourself in the right direction toward making big purchases like a house and car.
There are two elements involved in making these types of purchases: having the right credit to get a loan and low interest rates and having the money for down payments. By making the right choices early on, like boosting your credit score and adding a car and home section to your budget, you could guarantee that you qualify for great mortgage rates and home loans, as well as lower interest rates for auto loans in a short period of time.
Investing and Building a Nest Egg
While youre busy learning about money management, its important to consider financial freedom tips that include investing your money and building your nest egg. Investing may be the furthest thing from your mind right now, but the truth is, the earlier you start investing, the better.
One of the best places to start is with a 401(k) plan if one is offered by your job. This retirement fund gives you an opportunity to invest in company stock and watch your money grow, while taking advantage of investment contributions from your employer.
Also, you can opt for an individual retirement account (IRA) that can help you put away money for retirement if your job doesnt offer a 401(k) plan.
In addition to these investment options, you can put your money in CDs, money market accounts and other investment products like stocks and bonds to build on what youre already bringing in from your job.
In the midst of this still-tough economy, its more important than ever that you soak up tons of financial tips and begin the process of responsible money management now. The earlier you start with the right habits, the better your chances will be of securing the lifestyle you want now and into retirement.
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Tags: College, Real World
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