While in college, the last thing most students want to think about is the money they’ll owe from student loans after graduation. Unfortunately, this part of the financial aid process is inevitable. Soon to be college graduates will find themselves less stressed by taking the necessary steps to educate themselves about important matters like financial planning and how to implement key strategies. Doing so greatly increases the chances of managing their debt after college more responsibly and effectively. The sooner such action is taken, the better the results will be.
It is important to keep in mind that financial planning isn’t just limited to your immediate task of repaying any student loans–it also includes factoring in the budget you’ll need to have enough funds for your retirement. Anyone that’s experienced hardships due to the economic situation of the past few years will know firsthand how vital it is to be prepared, even if what you’re preparing for (like retirement) isn’t going to happen for quite some time.
So how does a graduating college student (or soon to be grad) begin down the path of financial planning?
Keep Track of Your Current Debt/Expenses
If there’s any area of your life that should be organized, it’s your finances. Begin keeping keeping track of your monthly expenses–if you aren’t doing so already–and make it a habit to crunch your numbers at the end of the month so that you know exactly how much you’ve spent in bills versus how much money you’ve earned. This will help determine how much money you’ll need to earn the following month in order to cover those upcoming expenses.
To prevent any future debt, control your credit card spending. Just because you don’t owe anything now doesn’t mean you won’t pay for it later on down the line. The goal is to graduate with as little debt as possible. Taking this step before graduation or soon after will allow you to easily make the transition to budgeting your expenses once you’re done with school and are out on your own.
Secure Employment Asap
Unless you’ve already got a job that pays fairly well, you’ll want to start submitting those job applications right away. The sooner you secure employment, the sooner you’ll start receiving a steady paycheck. Consistent income means the financial freedom to continue paying down any debt, as well as the opportunity to save money for the future. Depending on your employer, you’ll also be set in terms of getting affordable healthcare and investing in a retirement fund.
Do NOT Live Beyond Your Means
It’s highly unlikely these days that a new college graduate will find themselves driving their dream car, living in their dream house and bringing home a fat paycheck right away. That being said, don’t allow your newfound freedom from school or a new job to drive you to spend more than you make. Continue to keep your budget structured and follow it to a tee. Splurges here and there are okay but if you find yourself acquiring more bills, chances are your financial planning strategies aren’t strong enough.