After scrimping and saving for four years, you’ve finally reached the Promised Land: a real job with a real paycheck. But just because you aren’t in school working part time anymore doesn’t necessarily mean that all of your money problems are over.
While a salaried position is definitely a step up, if you haven’t walked into a job running a hedge fund right out of undergrad, chances are money will probably get tight before you know it. You need to be able to manage your finances before you get in over your head. Here are a few essential financial tips for recent graduates help you stay financially secure:
Make a Budget
This is the first and foremost tip, and it almost seems too obvious to mention. But there’s a little more to it than you might think. I’m talking about actually keeping track of your savings and expenditures, not just keeping a vague running tally in your head if you can afford to go out tonight because you may or may not have already gone out twice this week.
No, a real budget is real plan you make that you commit to sticking with. Try the 50/20/30 rule: 50% of your income goes to those expenses that are unavoidable: rent, food and transportation. 30% goes into savings—or paying down debt like student loans or credit card debt—and 20% remains available for you to spend however you see fit. This way you can keep your spending on non-essential luxuries in check but still have a little bit of fun.
Be a Smart Car Owner and Apartment Dweller
Of course, if you already have the know-how, you could save a lot by being able to know how to do maintenance on your own car, but even the less mechanically-inclined can save money on their cars just by being responsible owners. Routine maintenance will cost you a little up front, but in the end it could save you $100 since the people at the garage will stop little problems before they become big problems. Something as simple as keeping the tire pressure in your car at the right level is also another sneaky way to save money – as much as $250 a year. You can fill your tires up for free at most gas stations and well inflated tires make driving your car safer and more fuel efficient.
For those of you living in apartment complexes, you probably have a dedicated maintenance person to take care of all of your home repairs. And even if you aren’t renting in a complex, your landlord should be taking care of most major repairs in your apartment.
Figure Out Your Taxes
Perhaps nothing else will drive home the fact that you really are a grown up now like filing your own taxes, but doing so with some fundamental knowledge can end up saving you a bundle. If you put your money into a 401(k) plan or a health savings account, it will lower your taxes in the short term and make tax free money available for you later on. So, yes taxes can be confusing, intimidating and something you don’t really want to think about until you start seeing gray hairs, but it’s best to confront them as well as you can.
Most important of all, be sure to triple-check your tax withholding when you start any new job. It could save you money and a few headaches down the road when tax season rolls around.
Be Aware of Your Credit Score
Your exposure to credit scores might be limited to sing-along commercials, but like taxes, it’s better to get a handle on your credit score sooner rather than later. Having a bad credit score can ruin your chances of borrowing money to buy a car or house, something you might want to do within the next few years, so it’s really important to know where you stand now.
You can check it at places like creditkarma.com. To get a good score, make sure you always, always pay your bills on time and don’t max out your credit cards.