Graduating from college brings a number of major life events. You’re now likely on your own, looking for a job and everything else associated with starting a new life. Remembering back to those times myself, I see mistakes I made. While some of them were of my own doing, many others simply came down to a lack of knowledge – which is understandable.
If you’re part of the recent 1.8 million graduates or have a few years under your belt already, you may feel overwhelmed. That’s ok. Don’t allow that feeling to develop into inactivity or lethargy. Instead, learn how you can put your best foot forward. Below are some life lessons to get you started in the right direction.
Start Attacking your Debt
Debt can be crippling. We reportedly have over $1 trillion in student loan debt as a nation. The average student loan debt per person comes to just over $35,000. If you have student loan debt, you might be tempted to defer your loan payments until you’re more established.
Don’t give into that feeling if at all possible. Instead, establish a plan to start paying them – otherwise the loans will just continue to grow over time, costing you more money in the long run.
Having Good Credit
Establishing a good credit history is vital to financial health. You may think good credit only counts when you want to take out a loan or buy a house. Good credit is certainly important to have in those instances as it can help you to qualify for a loan, secure a lower interest rate and save you money. Yet, there are a lot more reasons why you want to have good credit.
There are many individuals and organizations that look for a good credit history, such as:
- Car insurance companies
- Utilities – like a cell phone or cable company
- Rental companies (cars, furniture, etc.)
- Potential new employers
- Prospective landlords
Building good credit takes time, but it can be done. One of the easiest ways to help build your credit is to actively repay student loans, or any other debt, on time.
Compound interest sounds like a difficult financial term, but it’s not. The textbook definition of compound interest is interest earning interest on itself. In short, it’s your money growing. It sounds almost too simple, but it works. The key to getting compound interest is to start investing as soon as possible.
Investing might sound difficult, especially on a low income, but it can be done. If your employer offers a 401(k), that is the easiest place to start. If they offer you a match on what you invest, then even better as that’s free money. You might be tempted to put it off – don’t. The longer you put it off, the more money you will have to save. Allow time to do its magic and your future self will be thankful you did.
Start a Budget
The “B” word sounds restrictive. You might feel like it won’t allow you to do the things you want. That’s a misconception. A budget, when used right, allows you to have a plan for your money. It lets you use money as you want based on your needs and priorities.
Think of budgeting as giving your money purpose. You direct where each dollar goes and control it. That control will free you to make decisions that make sense for you. That’s definitely preferable to the opposite, which is inactivity that leads to major financial problems.
Time is Your Friend, Use it
I know it feels like there are too many things to tackle when you’re first starting in life. The great thing is that time is on your side – if you take action. Time can do great things to kill debt and grow your savings. The simple truth is you need to start. You don’t often hear that in college, but just starting puts you in a much better position to accomplish the goals you have in life.
By John Schmoll, Staff Writer