Stepping into the professional world can be a bit of a sticker shock for many recent college grads.
The transition into a working life can mean managing a budget for the first time. Now that you may have racked up student loans, credit card debt, a car loan, and maybe even a mortgage, better money management is a must! The thought of getting a handle on it all can be overwhelming, but the experts at Broussard Poché, LLP have a few tips to help you get started.
- Learn this lesson early in your career and stick to it. Making a budget is essential to saving money down the road. Create a budget and practice living on only what you’re bringing home. Set aside the rest in savings, while making debt payments. Eventually, you’ll be able to pay more than the minimum payment.
Learn about Credit
- Not just the ins and outs of credit cards, the importance of good credit. Good credit will impact you down the road. Learn how to review your credit report and do so regularly. Then focus on opening a credit card that’s right for you and not letting the debt spin out of control.
Save for an Emergency
- Start small but make it a habit. Set aside a certain percentage of each paycheck for an emergency. That could be a layoff, medical bills, car accident, or anything unexpected. A good rule is to have at least 2-6 months’ salary set aside at first. Then, as you make more income, expand that to 6-12 months’ salary.
401(k) or Retirement
- Use what your company offers or enroll in your own retirement plan. Time is on your side here, if you start now you will be in good shape when retirement age rolls around.
- If you are carrying any high-interest debt, pay that off first before looking to student loans. Most graduates have multiple loans to pay off. You might want to consider the “snowball” method to pay them off one by one.
- Make sure you are paying the minimum for each loan, then choose the smallest one to put extra money towards. Once that one is paid off, take that money and put it towards the next to smallest loan, so on and so forth. This method helps you make progress and could lead to paying off your loans early.
Entering the working world can be an exciting time! Don’t get bogged down in money mistakes. Talk with a financial planner about your future! The earlier you start, the better off you’ll be.