Aug 18 2008
Real World Financial Tips for College Students/Graduates
While getting a degree is a smart financial decision, it also brings along some heavy consequences for your wallet in the short run. Whether you’re still in college or are out and ready to face the world, here are some tips from Family Savings Expert Kim Danger on making the most of your situation.
Live Beneath Your Means. The “I’ll pay for it later” mentality is a common pitfall among young adults, according to Danger. “Assuming your paychecks will only get bigger and that paying the bills will be easier when more money is rolling in can get you into big trouble. Always spend less than you earn (aim for living on 80% of what you earn) and your financial future will take care of itself.”
Resist the Urge to Spend. If you’re a new graduate, your first paycheck may be burning a hole in your pocket. “Resist the temptation to go out and treat yourself with big-ticket items,” says Danger. “Let your friends go into debt buying cars they really can’t afford and always carrying the latest designer handbag.” It’s ok to reward yourself for your hard work by buying small pleasures and “realizing that financial security is a bigger luxury than anything you can buy.”
Student Loans. According to official statistics, the average graduate leaves college with about $20,000 in student loans. “It’s a natural urge to want to pay down your student loan as quickly as possible, but if you have a low rate and good terms you may want to re-think,” says Danger. “If you’re able to apply extra to your loan, pay off higher rate debt such as credit cards first. Then, consider investing in something with a higher rate of return to build wealth.”
Don’t Abuse Credit Cards. In today’s world, getting a credit card is extremely easy. Paying it off isn’t quite so simple. “Having one or two cards to establish credit history is a good idea, but leave it at that,” says Danger. “Many credit card companies target newly minted college graduates with low introductory rates. Read the fine print and make sure that your rate doesn’t skyrocket after the initial introductory period.”
Young adulthood is an exciting time. You’ve got your entire life ahead of you and minimal obligations. With systems in place to ensure a good financial footing, be sure to enjoy your money too. Now’s the time to live it up!
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