You did it, you’ve finished your degree! You’re out in the ‘real world’ now, from broke college student to plain old broke adult. So how do you start building your savings, and paying off your student loans? We have four tips to kickstart your financial journey.
Track Your Spending
The first – and easiest – tip is to start tracking your spending. ‘Budgeting’ can seem daunting, but if you just start by looking at what you’re spending every day, you’ll see what areas you can improve on. Do you need to spend $5 on coffee on your way to work every morning, or could you buy a coffee maker from Walmart and put the money you save towards something else? You can design a budget that works for you once you know where you’re spending money. This doesn’t mean sacrificing as much as changing your mindset towards how you spend.
Live Within Your Means (This is good advice in general)
The second tip is to live within your means, for real. Be realistic about how much money you need to spend each month – ie. rent, transportation, health insurance, groceries, etc. – versus how much money you’re choosing to spend. Do you really need your own subscriptions to Netflix, HBO, and Hulu, or could you share with a friend and split the cost? Rather than having your own apartment, could you find a roommate (or two) to live with? You can often find nicer apartments in better areas when you have others to share the cost, rather than trying to pay for a studio or one-bedroom by yourself.
Consider Your Transportation Needs And Expenses
The third area you can save money is transportation. If you’re looking to buy a car, consider buying used rather than new. A car that’s a few years old can be in great condition and be a fraction of the price compared to buying fresh off the lot. You can also research transportation in your city. Sure, the city bus might add an hour to your commute, but it could save you thousands of dollars a year by not paying for car insurance, monthly car payments or gas. Sacrificing in the short term could set you up for more financial success in the future.
Start Paying Off Debt ASAP
The final tip is to start working on your debt as soon as possible. Make sure you understand your student loans: are they federal or private, how much do you owe, and what are the interest rates? Look at your credit card debt too. Paying your credit card should be your priority at the end of every month after you’ve paid all your necessities. Consistently paying your credit card reflects positively on your credit score, which can help you with interest rates on your loans, insurance or mortgage. Pay off bigger debts with higher interest rates first to avoid big interest rate penalties.