For those of you who just graduated from college, congratulations! That is a major personal and professional accomplishment, and you should be incredibly proud of all of your hard work.
But as the excitement of graduation dies down, you may be getting a little anxious or nervous about starting life out in the real world, especially when it comes to figuring out your personal finances. So here are six pro money tips for you and your fellow new college grads:
#1 - Organize your student loan info
Chances are, you’ve probably got some student loans and will need to start paying them back soon. Make sure you know exactly how much you owe, what types of loans they are, the interest rate on each, and which repayment plan you need to follow.
Take this a step further and schedule automatic payments to pay your bill on every month.
#2 - Start tracking your cash flow
Knowing how much money you have coming in every month and where those dollars are going is crucial to achieving your big life goals. Start by tracking your spending with a spreadsheet or app to get a good estimate of your average monthly expenses. Then sit down, figure out your short and long term money goals, and create a cash flow plan to meet them.
But make sure it’s realistic and flexible over time! A budget that is too strict or unrealistic is one that you definitely will not stick to.
#3 - Prioritize your emergency fund
One of the smartest things you can do to protect yourself is create an emergency fund. This should be an account that eventually holds 3 to 6 months’ worth of essential expenses, but start small and aim to get $1,000 to $2,000 socked away for emergencies.
That way, when life throws something unexpected at you (which it will, trust me), you have money set aside to cover those bills instead of having to go into debt to handle them.
#4 - Don’t buy a Brand new car
Buying a brand new car with a loan is not some sort of adulting right of passage. It’s just an expensive, often regret-filled money decision that will typically haunt you for the next five or so years.
If you need a car after graduation to get yourself back and forth to work, for example, opt for a used vehicle that you can either afford to pay for in cash or with a shorter term, low interest rate loan. Do not get suckered into buying a shiny new car and adding to your debt balance. The less you owe, the more financial freedom you’ll have.
#5 - Start investing aSAP
Time is on your side right now when it comes to investing and harnessing the power of compound interest! The way the math works, the earlier you start investing, the less work you’ll have to do - meaning the less money you’ll personally have to put in - in order to achieve your big money goals.
If you think you can’t afford to start investing, remember that $10, $20, or $50 per month goes a long way. So start investing now, either through your employer’s 401(k) plan or an Individual Retirement Account, or even a roundup investing app like Acorns. You’ll get a head start on your goals and your future self will thank you for it.
#6 - Learn about money and invest in yourself
This tip may very well be the most valuable one to follow. Money will always be a part of your life. You can’t go about your day without interacting with it in some way, shape, or form. So commit to learning and taking control of your money.
If you need help doing that, enroll in our comprehensive MONEY course:
Or you can ask someone else to buy this course for you as a gift! If one of your relatives is asking what you’d like as a gift for graduation, send them this link and tell them you want to learn how to master your personal finances.
Now college grad, tell me...
What are you most nervous about when it comes to managing your money in the real world?
What do you want to learn most about?
Leave a comment below to let me know!
Once you’ve done that, send this video to all of the friends you graduated with to make sure they step off on the right financial foot too.