In many ways, graduation feels like the finish line of a long race. You’ve been dreaming about not having to attend classes or write twelve pages on the molecular structure of a twig. What happens when you get there and realize that graduation is just the beginning of an adult life? Well if you are anything like me you may have come to the realization that there is much that school didn’t prepare us for so non-finance majors, listen up.
Take Stock of any Debts
First thing is first, take stock of any debts from that $50 you owe your friend to those thousands of dollars accumulated in student debt. Pay off those small debts as soon as possible to get into a good habit for future finances. As a student, acquiring debt is pretty easy but unfortunately keeping track of it is not, especially since many need to take out different types of loans to cover the cost of college. As a fresh graduate, understanding your options is important and thankfully the student aid website has all your public loans in one place with helpful visuals no matter where you are in your loan journey. For those private loans, log in to the lender’s site or check your credit report if you’ve lost track of that information. While in many cases repayment does not begin right after graduation, it is important to know your debts and pick a repayment plan. This can start with low payments and increase over time or you may want to plan for future repayments. Either way, it’s best to address any debts before time goes by and it seems too daunting to find accounts and information from years ago.
Address Current Finances
For this step you’ll need to pull up all bank accounts and piggy banks. Thankfully we have the benefit of banking apps which allow you to view account summaries, transfer money, and pay bills. While some apps include more advanced features like depositing checks, checking rewards, and a breakdown of your spending based on categories, you may need to supplement with a third party tracking app or personal spreadsheet including any cash purchases. For this you will want to track how much you spend on popular categories such as housing, transportation, food, etc as well as some personalized ones for hobbies, pets, or guilty pleasures such as your personal sneaker fund.
As you take a closer look at your accounts, now is the best time to review the organization of your finances. My personal favorite debit account setup utilizes banking on the go by having direct payments go into savings first and periodically logging on to your accounts to move money from savings to checking. While this is a great way to make spending more purposeful, it does take some diligence to ensure that you do not over withdraw and many institutions have a monthly limit of six transfers. An easy solution is to open a credit account which works in virtually the same way by keeping your spending and savings separate while allowing you to take advantage of cashback rewards and build credit. For this you will want to look for cards without any fees or apr such as the Tomo credit card, which also offers a weekly repayment plan to increase the number of full payments and build credit faster.
Anticipate Future Expenses
Now that we have gotten organized, it’s time to look to the future by accounting for any upcoming costs. For example, if starting a new job, you may want to anticipate the costs of transportation, appropriate clothing, necessary technology, and housing. Other costs can include those that your parents may have been covering such as phone, insurance, and household items which can add up quickly. Depending on your situation, it may be time to consider these expenses seriously or just in a general sense. Either way, being aware of any upcoming spending will help you start saving or make any necessary changes to ensure that you are both mentally and financially ready. There is no one-size-fits-all route or financial plan, so take this time to reflect and explore what your priorities are and how to best make those happen!