Graduation signals new beginnings. Start your "adulting" journey on the right financial foot by taking a step back to assess your financial needs, wants and wishes.
What kind of lifestyle would you like your money to help you lead? What do you want your money to do for you in the next five years? What things mean the most to you and are a financial priority? Asking yourself these questions can help you understand what's important to you so you can spend, save and LIVE according to your values.
With your unique goals in mind, it's time to create a budget or, if you've never liked the idea of budgeting, a spending plan. This plan will allocate money coming in towards needs (like housing and food), savings (how you'll reach your goals), and wants (nice-to-haves like takeout and concert tickets). The more you are able to save, the faster you'll be able to achieve your short, mid and long-term goals. Read on for six savings tips for new grads and choose at least one to act on today!
Automate your savings
Pay yourself first! Rather than waiting until the end of the month to save what's left (without a plan there may not be much!) or relying on yourself to manually transfer funds each month (people forget!), take the proactive step to automate your savings. Decide how much you can save each pay period and have that amount automatically transferred to savings so you don't have to think about it.
Treat yourself on a budget
Give yourself a fixed amount to spend each month on discretionary expenses like entertainment and dining out. You don't have to track where every penny goes, but the spending stops when the money is gone. If you have money left over, you can carry it over to spend next month or use it to boost your savings. Remember, the money you save now will be there later, when you need it most!
Housing is huge
It may be tempting to get the best home or rental you can afford, but housing is a fixed cost that's hard to adjust if money gets tight. However, smart housing arrangements can save you some serious bucks!
Consider starting out living with parents or roommates for a while. In addition to saving on rent, you can also split utilities and share the cost of furniture and appliances. Then, when you've built up your savings and increased your income, upgrade to a studio before getting a one-bedroom. By improving your living situation gradually, you can enjoy a new sense of accomplishment and progress with each step while managing expenses.
Resist the new car smell
New cars are a lot more expensive, and they turn into used cars the second you drive them off the lot. If you're worried about maintenance costs, consider leasing or buying a certified pre-owned vehicle. If you can get around without a car for a while, consider saving up to purchase a used car in cash, making it an immediate asset!
Whack out waste
It's always a good idea to review your current spending using bank and card statements to ensure that your actions match your goals. Common budget busters that can prevent savings and waste money include unused gym memberships and subscriptions, impulse purchases, such as an outfit you'll only wear once, or the latest high-tech gadget (when the previous release might work just fine for your needs). Find these areas of waste and focus on ways you can reduce or eliminate them.
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