Just Out of College? Here's Five Ways to Start Planning for The FutureBy David Thompson, UniversityHerald Reporter
Graduating from college is a major life milestone; one that can bring about a flood of different emotions. On the one hand, you're thrilled to finally be out of school and start living like a young working professional. On the other hand, you realize that you'll now have to find a way to manage your money now and start preparing for your financial future. While both scenarios can feel overwhelming, there's no reason to despair. There are plenty of ways to get started and secure your financial future.
When you were in college, you probably didn't have to worry about your budget that much. But now that you're entering the workforce and possibly living alone for the first time, you need to get serious about money. Gather all your current bills, including student loans, and file them according to their importance. Things like rent, credit cards, and loan payments should always take precedence above your other expenses. Create a budget that includes all your daily expenses, savings, and money you'd like to have in your pocket. A good rule of thumb is to not only have a savings account, but also an emergency fund as well.
Think About Future
Even if it feels like light years away, you need to plan for your future. Investing is one of the best ways to build a financial portfolio passively. In addition to stocks and bonds that grow over time you should also consider investing in real estate. You need to know which ones are most likely to increase in value over time and bring in the highest return on investment. That's why you need to research the market and learn how to determine a property has a good cap rate. The capitalization rate is one way to determine a property's investment potential. If you're not sure how to go about that, you should review a guide that breaks down what it is and how to calculate it, too.
Focus on Student Debt
Just like high-interest rate credit cards, student loan interest can also add up quickly. That's why you need to focus on paying off your loans as quickly as possible. If you relied on them exclusively in college, paying them off won't happen overnight. However, you can try to pay more each month instead of only paying the minimum due.
Start Saving for Retirement
Does anyone really picture themselves over the age of 65 when they're not even 30? Probably not, however, it's never too early to start planning for retirement. If your employer offers a 401K, add as much as you can each month. You can it automatically deducted from your paycheck, so you won't have to worry about it. What's more is that many employers match your contribution, so it's an easy way to build wealth quickly.
Increase Your Credit Score
Having a high credit score is another way to boost your financial longevity. Not only does it help you get approved for a loan or mortgage, but it also opens the door to lower interest rates and repayment terms overall. Since you're fresh out of school, you might only have a student credit card. That's okay. You can use it responsibly by paying off the balance in full each month.
Over time, you can ask your lender to convert the card to a new card with a higher credit line and possibly lower interest rate. Just be careful not to open too many new lines of credit at one time. To lenders, this looks like you're credit seeking, which in essence can lower your score. It also makes to easier to start relying on your cards to pay bills each month. While it's okay to use them sparingly, you don't want to have multiple cards with high balances on your report.
Ask for Advice
Unless you majored in finance, you probably have questions about money management. You can ask you parents or a trusted friend for advice, or you can speak to someone at your bank about the best ways to build wealth over time.