Congratulations! You’re done with school forever and the world is your oyster. You can do anything you want. Well, almost anything. If you’re like most of us, you’ve got a hefty amount of money to pay back first. For recent graduates, money management quickly becomes a very important skill. Here are a couple of money tips to keep you in the black.
Keep Your Credit Cards in Check!
One credit card can be useful and helpful, and two could have their uses, but any more than that and you’ll likely end up in trouble. Credit card companies bank on you not being able to pay your card balance each month. They add around 20% of interest each month. Before you know it, you’re facing even more debt and you could be hurting your credit score too.
With credit cards, people have a tendency to spend more than they can afford because credit cards feel like free money. While they have their uses, the less you can use credit cards, the better.
Speaking of Student Loans
When it comes to student loans, some suggest that trying to tackle it immediately doesn’t make sense. You’re better off putting your money in high-yield savings. Most schools or government-assisted loan programs allow you to defer your payments for a while; most of them also have low interest rates. The best thing you can do is ensure you know as much as you can about your loan, when it’s due and how much it is.
Start Your Savings
With student debt hanging over you, it may seem like strange advice to tell you to start saving money, but a savings fund is essential for when things don’t go according to plan. Think of it as a rainy day fund. If your car needs some work you weren’t expecting, or you need to take a trip out of the blue, a savings fund allows you to access that money without putting more strain on your credit card.
Have a Budget
Having and keeping to a budget can feel like a chore, but it is by far the best way to keep on top of your finances. Making sure you only spend what you can on a month by month basis will help you make all your payments, and it’ll set you up with great habits moving forward.
Think Long Term
When you’re planning your budget and looking at the money you owe, start to map out a long term plan for paying it off. How long will it take to pay off your student loan if you pay $50 a month? $100? How much can you afford and how long are you willing to work with your debt. Thinking long term will help you know what you financial outlook looks like.
Now that you’re striking out on your own, don’t let poor money management get you in hot water. Don’t hang on to too many credit cards, and remember to pay your student loans.