7 Steps to Thriving Financially as a New Graduate
Style Magazine Newswire | 6/11/2018, 12:54 p.m.
4. Take control of your credit
Having a good credit score can help you get approved for a loan when you go to buy a car or home. A higher score can also save you money by helping you get a lower interest rate on loans and credit lines. Paying bills on time and only using a small portion of your available credit on credit cards are two good first steps to building a healthy credit history.
5. Optimize your savings
One of the easiest ways to build up your savings is to automate the process where possible. If your employer offers a retirement savings plan, you may be able to put a portion of your paycheck directly into the account each month. Some employers also match a portion of your contributions, meaning extra money going into your retirement account.
If you don't have an employer-sponsored account, you could still set up automatic transfers to a savings account. Or, if you get paid via direct deposit, you may be able to automatically have part of your paycheck directly deposited into a savings account.
Ideally, you might aim to save 15 to 20 percent of your income – more if circumstances allow. If you can't put that much aside right away, you could start with a smaller percentage and then increase it slightly every few months as your income-to-expenses ratio allows.
6. Invest in your future
Once you have an emergency fund, sufficient savings and feel financially stable, you can look into investing your money. Starting to invest early in your life can lead to great long-term gains, as you'll have decades during which your earnings can compound.
There are numerous apps that can help you save and invest your money, including ones that automatically review your checking account and invest the money you don't need right now. You can also research investment options to find the best fit for your financial situation before making a commitment.
7. Reward yourself
Financially preparing yourself for post-graduate life doesn't necessarily mean living as frugally as possible. Rather, you should strive to strike a balance between financial stability and enjoying the kind of lifestyle that allows you to live within your means and take steps towards reaching financial independence, while on occasion rewarding yourself for your accomplishments.
Try to build wiggle room into your budget so you can treat yourself. Rewards don't have to be extravagantly expensive, but determining what's important to you and finding a balance between discipline and fun can lead to long-term success while budgeting.
Life as a new grad can be exciting and daunting. Taking some simple steps to ensure that you're on the right track financially can make the transition as smooth as possible and set you up for a strong financial future.
Hugh Norton directs Visa's financial education programs. To follow Practical Money Skills on Twitter: www.twitter.com/PracticalMoney.