When in college, we have time, but we don’t have money. And when we finally begin to earn, we no longer have as much time as we used to have to spend all of that newly hard-earned money. But that doesn’t really stop many of us from going on a spending spree regardless.
When recent graduates bag their first job after passing out, they are so excited at having their own money that they often lose track of their finances. Their excitement knows no boundaries when they get the opportunity to finally swipe a card that has their own name on it and spending the money that they have earned themselves.
Here are some tips that should help you to start sorting your finances:
Be Realistic
It’s important to be well aware about your expenses and how much you earn before you can create a budget and begin to implement it. You must calculate your debt and income in order to create a budget that is more in line with reality.
Calculating how much you earn shouldn’t be a very difficult task to do. But figuring out how much you owe may require some investigation on your part. For instance if you are yet to receive your student loan statement you should call or drop in a mail to the lender.
Student loan repayment can be deferred for a while but it is unlikely that repaying it can be put off for long. Your other expenses must be accounted for as well such as credit card payments and any other expense that you incur on a regular basis.
Once you have worked out these calculations you should subtract your expenses from the income to figure out how much living expenses you are left with each month. The expenses you incurred as a student will be drastically different from those that you will incur as a working professional.
Understand Expenses
When you step out of the college boundaries you will realise how drastically different the world is from that of the dorms and college apartments. After graduation, when you rent out a home you will be in for a surprise.
You will be required to pay for many utilities such as water, electricity, groceries, gas, Internet, cable connection etc. You can request utility companies to provide you with a history of past expenses, which should help you to know what you should expect at the end of each month.
Most recent graduates are in for a rude shock when they finally receive those monthly bills in their post. If you have selected a house which you can share with a roommate you should be able to split most of the major expenses such as rent and utility bills.
Avoid Unnecessary Debt
Credit providers are always looking for new fish in the sea and recent graduates make for a great supper. New working professionals are always the easiest to target as they have several aspirations after passing out. Buying a new car, new furniture and credit cards are some of their favourite haunt.
Debt often makes us compromise on our dreams. The high paying but dissatisfying job becomes a priority over that low paying but fulfilling job. Moreover, if you miss payments your credit history suffers a blow and this could make getting certain jobs tougher where the employers check your credit.
Every new debt invites a new monthly payment into your list of expenses. The calculations that you worked out at the beginning of every month begin to dwindle.
Start the Budget Right Away
Creating a budget is not just relevant to a person who is well established in terms of job and earnings. By creating a budget you get an understanding of how to live within your means. You also understand what you earn and how you spend most of your earnings.
It may seem like it is too early but creating a Will can be a wise thing to do. You can download a free Will template or try out some of the other inexpensive options which are now available to write a Will.
With a detailed budget you can create financial goals for yourself. If you had taken out a student loan, paying it off at the earliest can be a good goal to begin with. You can kick start your savings by contributing small amounts to an account dedicated for the purpose.
