With May and June right around the corner, many senior college students have eagerly awaited the much-anticipated day that they can finally call themselves college graduates. While that day will always be cherished, it is also a celebratory welcoming into the real world.
Unless you are graduating with a bachelors of science or bachelors of finance degree, you may not have the knowledge or understanding of how to successfully save and invest your money for your future. Many college graduates and young professionals get overly excited about ‘making’ a salary that they oftentimes live beyond their means. While many people, especially their parents, can call this a learning curve, the trend itself has gotten out of hand as it continues to grow dramatically year after year. That being said, I have jotted some financial wisdom of what you should do with that first paycheck. Remember, the uphill battle is find your career. Winning the war is how much you can save in the process.
Start off by picking up a book or two on money basics or finance. While school may be out of session, learning about the foundation of saving can help you tremendously throughout the years. One of the best selling books to help aid you in your process is, Get a Financial Life: Personal Finance in your 20s and 30s by Beth Kobliner. In this book, Kobliner provides her readers with a substantial guide of money, business, and finance. She teaches you various tricks for becoming a master of your financial future regardless of what happens in the economy.
Once you have studied up, pencil out a budget. I have written countless blogs about creating a personal budget on my career site and professional site. The reason why is because of how important a monthly budget can do for your financial future. The goal comes down to this simple question: How much money are you making, spending, and saving each month? To answer this, you need to map out your budget in a holistic and calculated way. Even for unknown values such as food or social outings, you can always estimate. The main expenses to hit are of course the essentials such as your rent, utilities, groceries, transportation, any student loans, and car loans. Once that is calculated draft up a rough estimate of your social expenses such as a gym membership or any extra curricular activities. Once that number is calculated, subtract that from your revenue (monthly salary) to get your savings. This figure gives you the opportunity to see what you can save or spend each and every month.
Now when it comes to expenses, be realistic. I have heard countless times of millennials finding lavish apartments in New York City or San Francisco. Unless you are making a cool six-figure salary out of college (something that does not happen to often), living within your means will play a large role for your financial future. Make sure to cut your expenses as much as possible. At the end of the day, these expenses will play a large role in what your overall lifestyle can be
Speaking of expenses, try and lower your debt as much as possible. Whether they are student loans or credit card expenses, you want to make sure you are able to cut down that number as much as possible. One thing you should not do is to think of your debt as a monthly bill. That type of mentality will only make you cavalier about paying it off. If there is any way for you to reduce it, do it! It will pay off in the long run.
Last but not least, make it a top priority to set up an emergency fund. The rule of thumb from many financial advisers is to try and set aside the equivalent of three to six months worth of living expenses. The reason why is that we cannot predict our future. Certain things can happen along the way and we want to make sure we can handle them accordingly. Yes, it may be difficult, but this is the start for something greater.