Summer School – Financial Tips for New Grads

| August 11, 2015 | 8 Comments

Financial Tips for New Grads

Congratulations!  You’ve finished  several years of hard work and are excited to be out on your own.  No more teachers, no more books (well I hope not, you should keep reading) and ready to take on the world. Hopefully you’ve landed a great job to start yourself out, and your future is looking bright! 

With “great freedom comes great responsibility” and now is the time to get your personal finances off to a good start as well.  There’s lots more to a successful financial life than these 5 tips, but this should get you off to a good start.

1.  Keep your regular expenses low.  Download this Excel Budget Spreadsheet to figure out what it costs to keep you afloat for 30 days.  Fixed costs like rent, utilities (electricity, phone, internet), and loan payments need to be planned for.  You should be able to calculate this amount pretty accurately, and it shouldn’t change much from month to month.  For those of you with student loans, don’t forget that most loans don’t require payments until 6 months after graduation so get used to setting that money aside now!

2. Track how much you’re spending on your lifestyle.  Now that you’ve got some cash in your pocket, it’s natural to want to go out to eat more often, and to enjoy some of your success.  That’s not a bad thing.  You just need to look at this more regularly than once a month.  I recommend you visit the bank machine once a week, and take out a set amount that you’ve decided  as your weekly “having fun” expenses.  A lot of money can leak out of your budget by using your debit or credit card, going out to lunch everyday, and spending cash is a great scorecard when the end of the week comes around.

3.  Start saving early.  If you develop a good savings habit now, it will serve you well for the rest of your life.  Sign up for your employer’s retirement plan as soon as you can if they offer one.  Save 10% of your income if you can, less if you must.  At least save what your employer matches so you can claim that extra money and start it working for you.  Also, open a savings account and set money aside in it until you have at least 3 months of your monthly expenses set aside.  This account will become your emergency fund and will serve you well as your cash cushion for the rest of your life.

4. Be careful with credit cards, they are not all the same. Compare interest rates, fees and reward points and choose a card that you will benefit the most from using.  I do think it’s a good idea for you to have your own credit card, it starts building your credit history and can be a useful and safe tool for buying things online.  The downside comes if you don’t use it wisely.  Use your card for purchases you would have made without the card and pay the balance off in full each month.

5.  Track your spending.  You’ve got to come up with a system for keeping track of your spending, I recommend finding an app for tracking your personal spending, some will pull your transactions in from your online banking sites automatically.  It will take some effort to get a system set up, but once it is done all it takes is 15 minutes a week to maintain.

I hope these tips help you get off to a good start!  Please let me know if you have any questions, or other tips in the comments below!

Andrew AndrewWBradley.ca

 

Photo credit: Andalib. / Foter / CC BY

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Category: Education, Family, Finance, Living, Tips, Weekly Themes

About the Author ()

Andrew is a father of two boys age 6 and 4, a licensed Life Insurance Broker and Registered Retirement Consultant-RRC® helping Ottawa families since 2011. He is a member of the Independent Financial Brokers of Canada (IFBC) and a host of Ottawa Experts on Rogers Cable 22. Author's website.

Comments (8)

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  1. loriag says:

    This is great advice for the new grad.

  2. Laurie P says:

    Definitely some great info here! Especially about credit cards.

  3. Emily Marie says:

    Great list. As a recent grad who sees lots of friends letting the finances take a back seat I cannot stress enough how important this stuff is. Knowing not only your own habits but how the financial system works is important and unfortunately we tend to learn that all too late.

  4. KD says:

    Living within one’s means and saving are key tips everyone should follow.

  5. Elizabeth Matthiesen says:

    I find the tip with credit cards to be the most important. Grads get them thrown at them, as many as they’d like and it’s so important for them to realise that if they use them too much and can’t pay the whole bill at the end of the month then trouble starts as they charge a high rate of interest.

  6. mrdisco says:

    #3 is very very important

  7. kathy downey says:

    Definitely some great tips for young ones starting out one of the most important is tip with credit cards

  8. kathy downey says:

    I think kids should learn about credit cards before finishing school and starting out on their own,to many find themselves in debt

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