How to manage your money after you graduate
Once you complete your graduation from college, the next challenge is to land your first job. Once you find a job, you will need to manage your personal finances effectively. You will find that it requires better planning and monitoring. Here are four steps to help you manage your finances:
Make a budget
When you receive that first paycheck in your bank account, it is always tempting to spend on those things that you have been dreaming of purchasing for many years while in college. But, you will need to set your priorities. If you have been waiting for so many years, it can wait for some more time till you have saved enough to purchase those things. Setting priorities is important when you begin managing your expenses. Start by creating a budget and managing your monthly income and expenses so that you know where your money is going. It is important to review your monthly bank and credit card statements and see if you are spending on your needs or wants. It is important to separate the two expenses.
You need to build a cash reserve
Setting aside money from your paycheck on a monthly basis can slowly build a reserve that can be useful for future emergencies like a job loss or medical need. You should ideally aim to have enough reserve to cover for at least three months of living expenses in the event of a financial emergency. You can do this by setting up an automatic transfer to a savings account
Setting savings goals are important
Once youve made a budget that sits well for you, setup your savings goals. Its important to understand your financial priorities; whether youve got your eye on that new Mercedes or a first home. Create a realistic time frame for meeting those goals, so that you are aware how much you need to save from each paycheck.
Save for retirement
As a young graduate, saving for retirement may be the last task on your lengthy to-do list, but starting to save for your retirement now is critical to helping meet your goals later in life. When youre starting a new job, the more you save early on, the more you should be able to take advantage of compounding by reinvesting your returns. If you have a 401(k) plan at work with an employer match, you might consider contributing at least enough to receive the full match amount.
Getting your first job allows you to create the foundation for a successful career. By sharpening your money management skills and saving wisely, youll be able to build on that foundation and help prepare for the future.