Ace your first year in the “real world.”
It’s so important to start your post-college life on the right financial foot. The money decisions you make today could benefit — or haunt you — in the future. Here are 15 financial steps to take your first year after graduation.
Establish credit.
Good credit is a wonderful tool when it comes time to finance a car, home or other major purchase. But a great credit score doesn’t magically materialize overnight. Get in the habit of paying your bills on time and spending well below your credit limit.
Rethink your living style.
Forget the luxurious lifestyle you enjoyed at mom and dad’s house — or even perhaps in the campus dorm room. Your entry-level salary may not go far, so reassess your needs and wants and get serious about living within your means.
Create a budget.
A budget is key to avoiding overspending, dodging debt and developing a rainy day fund. Assess your paycheck and how it will cover your living expenses.
Automate savings and other good financial behaviors.
It’s always smart to save for an emergency, retirement and health care expenses. Put those payments on autopilot through your bank and employer, so you never miss one.
Tap employer benefits.
Don’t neglect employer offerings, such as a match on retirement contributions and health care. Neglecting these could mean leaving money on the table.
Pay your bills.
Get in the habit of paying your bills — from your electricity bill to your student loan payment — on time each month. Neglecting this habit can destroy your credit and cost you thousands of dollars in interest down the line.
Learn investing basics.
You’re going to need to choose how to invest the funds in your 401(k), and your boss won’t — and can’t — give you any advice. So, read up on the basics of mutual funds, index funds and target-date funds to identify an investing strategy that works for you.
Scrub your social media profiles.
Those toga party pictures aren’t cute anymore. Clean your social media profiles and make sure to have a LinkedIn account so that professional contacts can find you.
Learn to cook.
You can eat well on a budget, even if you’re cooking for just yourself. Learning to make your own meals is key to eating healthfully while saving money.
Navigate health insurance.
Think carefully about which health insurance plan is the most affordable option. If you’re younger than 26, your parents may let you stay on their plan. You can also take advantage of employer health coverage or federal offerings.
Repay student loans.
Your first student loan payment is due six months after graduation, typically in November for spring graduates. Examine the repayment plans available to you and prioritize repaying private debt before federal debt, since government-backed loans typically carry more protections.
Land a second job.
If your paycheck just won’t cover your expenses, consider picking up a second job. It can pad your budget in the short term.
Don’t job hop — but don’t be too loyal, either.
Changing jobs frequently doesn’t look good on a resume. But switching jobs at the right time can be the fastest way to score a higher salary — and continue working toward your savings, debt payoff and other goals.
Identify a financial goal.
Working toward a financial goal is key to maintaining good money behaviors, like saving and budgeting. Think of what will motivate you — a new car, nice vacation, better apartment — and use it to enact good financial behaviors.
Avoid peer pressure.
While all of your friends may have worked with similar budgets when you were college students, they may have wildly different paychecks as first-year workers. Find inexpensive ways to hang out with your more well-to-do peers in order to socialize … without going broke.
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15 Financial Steps to Take Your First Year After Graduation originally appeared on usnews.com
