In case you missed the explanation, my introduction back into blogging will begin with a blast from the past. In honor of my three-year college graduation anniversary, I’m going to be re-publishing my original blog content.
This is the fourth installment of “The Original Surviving The Real World: Tips from my Former Self”.
Part 4: Learning how to budget
Take it all with a grain of salt, and enjoy the journey!
Learn How to Budget Effectively After Graduation
A poor concept of money is the number one barrier against moving from typical college student/20-something into a real person. It’s pretty hard to feel like a grown-up when you’re still paying off a loan taken out by your 18-year-old self. When I first graduated college, I had absolutely no idea how to create a budget. My entire financial plan was making sure there was enough money in my checking account before I swiped my debit card (and the first step was only taken about 50% of the time). It’s a challenge, but it’s necessary.
Three ways to move from broke college kid to financially stable adult
1. Don’t just live within your means, live below your means
If you bring home $2,000 a month, learn how to live on $1,500. I know it’s hard and I know it’s tempting to just spend whatever you make, but you HAVE to set aside some money for savings. Regardless of how much money you bring home, there will always be unexpected expenses. Setting a habit of spending your entire paycheck every month will leave you with debt every time an emergency expense pops up.
2. Pay off your debt
Unless you landed a full-ride through college or have blessed and generous parents who paid your way to graduation, you probably have at least some student loan debt. Get this debt paid off as quickly as possible. As soon as you find a job, start paying them off (and do not defer them again unless it is absolutely necessary). Always pay off at least the minimum, but when choosing between private and federal loans, pay off private loans first (they almost always have variable interest rates). If your loans are all at a fixed interest rate, pay the minimum on all loans every month and find out which loan has the highest interest rate. Begin paying anything extra that you can afford to pay on this loan until it is gone. Once this loan is gone, do the same with the loan that has the second-highest interest rate. Again I stress – get these loans paid off as quickly as possible. Do not let this debt hang over your head for the next 10, 15, or 20 years. Your future self will thank you.
3. Save, save, SAVE
You need to set aside money in savings every single month. Once your debt is under control and you’re making consistent payments, you need to have at least an 8 month emergency fund in savings. In this economy, nobody’s job is safe and it takes the average person 8 months to find new employment once they’ve been let go. Figure out what your fixed expenses are every month (rent, car payments, food etc.) and multiply by 8. Until you have your 8 month fund, (it sucks, but) you really cannot afford to be doing any extra spending outside of those fixed expenses.
And it’s just that simple!
Back to present day
Thanks for sticking with me, fellow RHIT! I hope you’ve enjoyed the fourth installment of “The Original Surviving The Real World: Tips from my Former Self”. Check back in later this week for part 5!
Photo Credit: http://taxrebate.org.uk
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Introduction to my Blog: A Note from Young Megan
How to Survive College Graduation
Tips for Your First Job Hunt
Survive Moving Back In With Your Parents
Break College Eating Habits
Go To The Gym Consistently
Learn How To Look Like A Real Person
Develop A Morning Routine
Find A Community
Find Out Who God Is