As you have now graduated college, real life will start coming at you fast. Best to buckle up and enjoy the ride.
One of the biggest concerns for a recent college graduate is money. You are thrown into a world of paying bills, making student loan payments, earning more money than ever before, and learning how to balance it all - quickly.
Have no fear, you will manage to learn this new lifestyle, as you have with each transition in the past. Don’t worry if you have a negative or nearly zero net worth today, focus on steps to increase your net worth every month and you will be in good shape. Start slow, show up to work, and continue to educate yourself.
Track Your Budget And Net Worth
This is a non-negotiable in my book. With a massive influx of new income and expenses, you need to track where you are each month. The only way to know exactly how much you are making and spending each month is by making a spreadsheet or monitoring it in some way. The manual process of making a spreadsheet forces you to revisit your personal balance sheet on a regular basis. Keeping track of your net worth will help show the progress you are making each and every month.
Live Like A College Student
Now that you have entered the workforce, most of your days will be spent either at the office or at networking events. You do not need to live on your own just yet - continue to have a roommate so you can split your bills and save hundreds of dollars each month.
Pay Your Bills
This may sound like a silly tip but seriously, pay your bills. Every bill, every month, on time, no exceptions. This will help build your credit and help you avoid taking on any more debt than you already have from student loans.
Build An Emergency Fund
The easiest way to make sure you can pay your bills on time every month is to have an emergency fund. You will soon learn that life can throw some pretty crazy expenses at you and sometimes they are more than what you make in a given month. By building up an emergency fund, you won’t have to take on credit card debt to stay afloat.
Pay Down Your Debt
Unless you were fortunate enough to graduate from college debt-free, you will now need to start paying down those sizable student loans. For every $10,000 of student loans, you will have about $100 per month in payments. By continuing to live like a college student (low budget), you won’t have any trouble making these payments. Do everything you can to pay off these loans ahead of schedule.
Contribute To Your 401(k)
If your new employer offers a 401(k) or other retirement plan option, be sure to start contributing. You are young and have years of compound interest to take advantage of. If your employer offers a “matching contribution”, make sure you contribute at least that amount. This is the easiest way to double your money instantly.
Open A Roth IRA
Early in your career, you are most likely in one of the lower tax brackets, which means you should take advantage of an account called the Roth IRA. This is an individual retirement account that you own outside of your employer’s retirement plan. The main benefit of a Roth IRA is how it’s taxed. You pay taxes today on the dollars you contribute but never pay tax on that again. This means that any growth you receive from the investments is tax-free when you take the money out after age 59 ½. You can contribute up to $5,500 per year in 2017.
Get Health And Disability Insurance
As a newly minted young professional, one of your greatest assets is human capital. That is, the current value of your future earnings. Although they are expenses you haven’t had to pay before, health and disability insurance are critical in protecting your financial life. In the event you have a major injury or illness, you will be protected from huge medical bills and lost income. You may be able to stay on your parent's’ health insurance and obtain group disability insurance through your employer, to keep costs low.
Read A Book On Sales
Why a book on sales? What if you’re working in HR or accounting? Everyone is a salesperson. You are either selling a product in the typical sales sense, or you are selling yourself to your employer. Sales is an art form and it is best you learn now how to make sure you are effective in promoting yourself, your business, and your product.
Seriously, you just graduated college. That is awesome! Maybe you always figured you’d graduate, or you are the first in your family to ever accomplish this feat, this is a big deal. Your employer will offer you some amount of vacation time to take each year, take advantage of it. You are young, healthy, and have more free time than you probably ever will. Just be sure to save for that vacation before purchasing the tickets!