Preparing for a life after college is as important as studying at the college itself. While it’s extremely exciting, the post-college life comes with many responsibilities – the biggest of them all being financially independent.
Financial freedom is not only very exhilarating, but equally essential for a secure future. While you can pamper yourself and spend your money the way you want, it is more important to save for yourself!
One needs to have a solid financial plan to move ahead after college life. The sooner you start, the better. Here are some tips that can help you on your financial journey.
Have a Monthly Budget
We can never emphasize enough the importance of budgeting. This is something that one should start while still in college.
If you can’t figure out how you spend your money, change your spending habits and keep track of every penny spent. Once you figure that out, set a budget and include a target amount to save every month.
You can make use of budgeting apps to make the process easier. To budget more efficiently, you might also need to differentiate between needs and wants.
Is it worthwhile to eat in restaurants every day, or can you have a home-cooked meal and save money? This money saved can be put into something more meaningful, like renting your dream apartment!
Make Use of Credit Cards Wisely
Credit cards are so tempting but the truth is that many times people find themselves paying a lot more than they would be if they were paying in cash.
Every time you use a credit card, remember that it’s not free money. It is in fact borrowed money that has to be paid back – and sometimes with interest, late fees, and so on!
If you are disciplined enough, credit cards can be a lifesaver. However, when choosing one, avoid one with high interest charges, annual fee, and other fees.
Focus on Building Your Credit Rating
One advantage of having a credit card is that it helps you build your credit rating. Once you have decided on a particular card, use it wisely, and always pay it on time.
Keep in mind that all these credit card companies track your credit history. A bad rating will affect you when you want to secure a loan, whereas a good score helps you get a loan quickly.
Prioritize Paying Your Student Loans
Putting off your student loan and paying later can be a big mistake. Remember, the longer you wait, the more interest rate you incur. This affects your credit rating, ultimately making it difficult for you to get loans in the future.
Make sure you thoroughly understand your loan requirements and repayment details. Know how much you are supposed to pay back per month or talk to a financial advisor to interpret it correctly for you.
Your aim should be to pay as much principal every month as possible, thus reducing the balance.
Save, Save and Save
Always remember the principle of saving for a rainy day to prepare for the unexpected. Anything can happen – from losing your job to medical emergencies and rent increments.
You must always have some funds set aside to help you in such situations. Your savings should at least cover three months of your spending. Start small and add on your savings with time.
After completing college, the next step should be to consider putting your finances in order and planning for your future.
Whereas most schools will not teach you how to go about it, the experience becomes your best teacher.
If you are a recent graduate or know anyone who is, be sure to set the ground early enough to avoid any regrets in the future and live a truly independent life with your financial freedom in your own hands.