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Recent grads often feel a sense of shock the first few months that they have to pay bills. Managing money right out of college can be tricky. Here are some tips that will make the process a bit less daunting.
Get Into The Habit of Budgeting
Make sure you know where your money is going. Keep a journal of where and how you spend your money. Keep grocery lists, write down what each item costs. Don’t stray from the items you need. Cut coupons, save and use the ones you got from buying last week’s groceries. Think of this budget as a spending guide. Use websites like Groupon and Rakuten to find deals on everything from groceries to activities.
Have an Emergency Fund
It is hard to prepare for the worst because we don’t want to imagine the worst happening. However, it’s always best to have money set aside in the event of an emergency. Try to put away enough for three to six months of expenses. You can take a percentage of your paycheck and have it directed right into your savings account. Every little bit helps, and having that money set aside can also help when you’re ready to move out of your childhood home and get your own place!
Start Saving For Retirement
Similar to an emergency fund, start saving for retirement. If your company offers a 401k package and plan, max it out. Opt into your job’s 401k plan as soon as you’re allowed to and maximize it. If your workplace does not offer a 401k, open an Individual Retirement Account (IRA). If you start saving now you will see those rewards and benefits down the road. You will be thanking yourself for the future financial security.
Know When Your Bills Are Due
Loan, rent, insurance, utilities, these are all bills that need to be paid on time in order to avoid fees. Think of these bills as having due dates. You can’t procrastinate on paying them on time. In fact, it’s best to pay them off early. Use Zillow to check out what average rent looks like in your area. As for health insurance, you have until the age of 26 to stay on your parents’ medical insurance. That may not be an expense you need to worry about right now. But don’t forget that it will be coming up one day. If you’re getting on your own insurance, save, budget and expect a rate increase.
Control Your Credit
Don’t use it if you can’t pay it! Using a credit card that you can’t pay off will only make you accumulate credit card debt. You are borrowing against your future income, with the assumption you can pay it back once you get a job. There’s credit card interest, and your debt could climb considerably by the time you’re able to start paying it off.
If you can afford to pay off credit cards on a monthly basis, make sure you pay on time, and pay little by little. Your credit score will suffer if you constantly pay late. Missing those due dates also means a late fee on top of your bill.
If you think long-term your bank account will thank you later. We know it’s hard to save right out of college. But the more you can do now the happier you’ll be later.