As thousands of you new grads cross the stage and accept your well-earned diplomas, you may want to prepare for a few unpleasant realities. Although you’ve worked hard for that degree, you’ll have to work even harder to pay down any debts you’ve accrued and start building a nest egg. The job hunt post-graduation is never easy, especially in this economy, but if you stay smart and follow these simple rules you’ll be well on your way to financial independence in no time.
Don’t Stop Living Like a Poor Student
Did you think your days of living like a poor student were over? Think again. Chances are you’ll either experience several months of unemployment after graduation or your first gig will be an unpaid internship. This may mean you’ll have to stay a little longer in your parent’s basement (or move back into it) and continue to live on a shoestring budget. Even if you do score a job right out of school, you may be shocked at how much living on your own can cost. Try to avoid lifestyle inflation and stick to living like a poor student for a little while longer to build up your net worth.
Get a Part-time Job in the Meantime
There’s no knowing how long it may take you to find full-time employment in your preferred field (it took me 8 whole months after graduation). Instead of staying home all day and over-analyzing the cover letter you sent for that last job you applied for, find a part-time job in the meantime. It could be working at a coffee shop or grocery store, or you can look into finding a more flexible on-call gig like being a movie extra or general labourer. Not only will this help keep you occupied until you find your first real job, it will also help you put some money in the bank too.
No Matter How Small the Amount, Start an Automatic Savings Plan
Whether you’re just working a part-time job or you’ve successfully landed a full-time permanent position somewhere, you need to start an automatic savings plan. Even if all you can afford is $100 a month, set it up through your bank so $50 is taken off each paycheque and put directly into a high-interest savings account. The goal for this account is to save up at least 3 – 6 months of your personal expenses as an emergency fund. At the same time, you’ll also want to start paying back any loans or lines of credit you’ve taken out. Rule of thumb is to focus on paying off the debt with the highest interest first.
Start Studying Again
You may have thought you wouldn’t have to crack open another book for some time after graduation, but the best way to put your best financial foot forward is to get educated. If you don’t know where to start, Dave Ramsay, Suze Orman, David Chilton, and Gail Vaz-Oxlade are great authors to begin your personal finance education with. The first personal finance book I ever read was David Chilton’s The Wealthy Barber and not only did it make the world of money that much less scary, it also got me excited to take control of my finances and make a plan to attain the comfortable and secure future I always dreamed of.
Bargainmoosers, what advice would you give to new grads on how to save money and avoid getting into more debt?
(Image: nasrul ekram)