How to Manage Your Money After Graduation
Congratulations on graduating from college! College graduation is a major milestone that comes with many emotions. While this occasion deserves to be celebrated, it also marks a new phase of personal and professional responsibilities. College graduates can look forward to exciting new opportunities that will help advance their career as well as the prospect of earning real money.
As thrilling as it is to receive your first post college paycheck, you need to know how to manage your money to best set yourself up for success. The Institute for College Access and Success finds that 71% of the class of 2012 graduated with student loan debt and the average student loan balance was $29,400, which is a 25% increase since 2008. Since the average college grad is going to be carrying a certain debt load, it’s crucial to learn how to make the most of your money to help you get ahead.
Here’s our advice for millennials trying to get on the right track with their finances post – graduation:
Live within your means –
It’s tempting to splurge when you receive your first paycheck but before you get carried away, remember that you need this money to pay for rent, food, utilities, insurance, gas, student loan repayment and other living expenses. This can be a challenge as you juggle new commitments but try to maintain a frugal lifestyle and live within your means. You can keep track of expenses by maintaining a budget. Check out online budgeting tools and apps to keep tabs on your budget easily and on the go.
Negotiate your first salary –
Most recent grads are happy and thrilled to receive their first job offer, but few consider negotiating their first salary. Asking for higher pay can be an intimidating prospect. You might even feel happy to have a job and are willing to take what you can get, but don’t leave potential money on the table. Negotiating for more pay can impact your future earnings, as every raise you earn thereafter is based on what you are currently making. Small differences in pay accumulate over the course of your career and those who never ask are putting themselves at a future disadvantage. It’s worth a shot! If you aren’t able to negotiate for higher pay, that’s ok at least you tried. The work experience you gain is invaluable and puts you in a better position for future career opportunities.
Invest in your employer sponsored 401 (k) –
Retirement is usually the last thing on a millennial’s mind, especially considering student loan debt and other financial responsibilities, but you need to invest in your future, as you will not be young forever! If your employer offers a 401 (k) plan and a match, you should be contributing as much as you can each paycheck. If you are not, you are leaving free money on table! The earlier you start contributing the more money you can put away and invest in the long term.
Be strategic in choosing your friends –
Who you associate and socialize with influences your attitude, habits, lifestyle and success. If you spend time with people who spend a lot of money, there’s a good chance you will spend a lot as well. Be sensible in the relationships you cultivate at work and socially. These relationships not only help expand your network but contribute to your personal happiness and well-being. Don’t be afraid to say no to your friends if they are going on an outing you simply cannot afford.
Weigh the costs and benefits of going to graduate school –
You may be tempted to go back to school if you are having a tough time trying to find a job or are unhappy with your current employer, but consider the monetary and opportunity costs of graduate school. Unless an advanced degree will increase your future salary, it is not worth it to accrue more debt, especially if you are currently paying off debt as an undergraduate. Consider other options like working while going to school or part time or even online to keep costs down and income/career on track.
Graduation is a great opportunity to assess the personal and professional direction you want to take. It offers you a clean slate to do what you want to do and live a certain lifestyle. Post graduate life can be exciting, stressful and uncertain at times, but learning to manage your money will be a skill you develop over time. Congratulations on graduation and good luck!