Being the typical broke college student is an invaluable experience. It is something you should look back on with the fondest memories and a smile. Why, you might ask? In terms of personal finance, college was about living on what you had and making what you had work. Most of us couldn’t afford a new car while in college let alone a weekend trip home. We ate meagerly and jumped at the chance for anything that was given out for free. Why is this important to a personal finance article? Because you can use that mindset to help you blaze your own trail when you secure that job and enter the workforce.
Almost, but not quite
You’re out of college. There is no reason you need to continue eating Top Ramen and putting hot sauce on everything because you don’t have anything to season with. After all, the reason we go to college is partially so we don’t have to eat sandwiches every meal for the rest of our lives. The solution? Don’t. Once you land that first job, go on and start living more like you’d like. Buy the spices you need for cooking, look into purchasing a higher quality vehicle, and start thinking about a vacation in 12 months. Just remember to do so within your means.
Don’t go overboard with your spending. Try to keep the college mindset of being frugal and not spending on excess extras. Hash out a budget and figure out where your money goes each month. Then, find out the minimum amount you can spend on each of these things. Do your best to live below your means leaving you extra money to put towards your student loans or into your savings.
Emergency Funding
What if you’re dicing up some tomatoes and you drop your freshly sharpened knife and it so happens to jab right into your foot? Well let’s hope that doesn’t happen but I’m not talking about that kind of emergency. An emergency fund is an amount of money readily available (meaning you should designate it to a savings account) in the event you lose your job. This fund should cover 3-6 months of your current necessary expenses.
Pay off Credit Cards
Now is when those late night food runs and extra cases of beer won’t seem so worth it. It’s easy to make instinctive purchases when you don’t have to actually pay for it yet. That’s one of the tough mental obstacles to overcome when purchasing on credit, because when you do actually pay off that card it’s tough to see your money go towards something you already used or experienced. But paying off outstanding credit card debt is a must. Because if you don’t, that amount owed will continue to grow thanks to accruing interest. And if you thought paying off credit cards was no fun, paying off the interest owed on that card is even less than that.
It’s a big deal to land your first job. You should be proud of yourself for achieving this. You’re starting to blaze your own trail. Part of this is additional responsibility is being financially independent. Remember to live below your means and you’ll be smooth sailing as a financially independent young careerist!
Gale Newell is a finance specialist who shares her knowledge with the public.
