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Money Matters: Transition from College Life to the Real World

piggybanksavingsGraduating college is an important milestone in a person’s life. But once the celebration is over, you’re faced with real-world responsibilities. If you haven’t already been paying all your own bills, figuring out your personal finances is top priority. Whether you are considering graduate school or working full time, the decisions you make about money will influence your future. Handle money matters with a plan and a budget.

Make a Budget

Make a budget of your incoming cash flow and your liabilities, so you know exactly where you’re at before you pay bills. Invest in budgeting software or find a resource online to help you keep track of your expenses. Determine how much you have between paychecks so you can set accurate limits on your spending. Consider an app like Mint.

Determine the True Cost of Living

In college you might have lived in a dorm or with your parents, so you avoided paying for housing. Research the true cost of living on your own. You must ask the following questions:

  • What is the cost of groceries in your neighborhood? Determine if the area is flooded with gourmet grocery shopping at places like Whole Foods or if there is a Walmart or equivalent available for basic needs
  • What is the cost of basic services in your area? It is a prudent exercise to learn how much dry cleaning, a trip to the doctor’s office and a haircut costs in your area
  • Get a realistic assessment on car insurance rates and gas based on the neighborhood you choose. Auto insurance varies based on zip codes. Plugging in your zip with the online calculator on insurance quotes will give you an idea of rates in your area.

You may be eager to move out of your parent’s home, but the truth is, not having to pay for rent right after college is a great opportunity to save money. You don’t have to rush into another property that’s less than optimal. Put some savings aside and take your time deciding where you want to settle.

Live Below Your Means

The independence of the real world can offer tempting luxuries, but resist spending money on things you don’t really need or want. Even if you have some debt, try to save part of your salary in a savings account or in investments. The long-term benefits of saving earlier rather than later isn’t always clear in your 20s, but will definitely be a wise move as you age. If you have a 401k available through work, take advantage of your ability to contribute to it.

Charging items to a credit card is convenient, but do not get caught up in the allure of plastic. The next thing you know, you have several cards with balances and a high interest rate. Revolving credit means accumulating debt. Make it a policy to use your credit card sparingly.

Start an Emergency Fund

Put away small amounts of cash every month. This will come in handy in case an emergency arises. A car repair, unexpected housing cost or even something bigger can set you back if you exclusively rely on your regular salary. An emergency fund might save you when you need it the most. If you’re not good at putting aside money, set it on auto. Enroll in a program like Bank of America’s Keep the Change, which helps you incur savings with every purchase you make.

The transition between graduating college and the real world is exciting, but also carries new responsibilities. Be smart with your money and make wise decisions to invest in your personal and financial health.

 

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One Response to “Money Matters: Transition from College Life to the Real World”

  1. Nate M. says:

    Great tips for young adults transitioning into their careers. It’s a very stressful time for graduates so remembering these tips help!

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