After four—or more—years of hard work, you’ve earned your college degree – celebrate! Preparing for your life after school is a good opportunity to consider how your financial actions, as you transition to the working world, can have a big impact on your economic status going forward. I saw so many of my college classmates make huge blunders upon graduating that I knew would set them back financially for years and years.
Here are five financial tips for new college grads to make sure you aren’t living in financial regret.
1. Retain Some of that College Frugality
If you were like most college students, you weren’t living high on the hog while you were in school. Don’t you miss those gourmet Ramen noodle dinners? Yummy!
While it will almost certainly be tempting to change your previously frugal ways now that you’re done with college, you’ll benefit significantly by retaining some of your thrifty behavior. Consider retaining inexpensive housing options, for instance, and avoiding routine expensive purchases, to the extent possible, such as costly food and clothing.
One of the biggest things that helped me is that I continued to rent even after I graduated. Not being burdened by a house payment and being able to split rent with roommates was huge! You’ll quickly recognize the advantages of having some spare money in your pocket and bank account.
2. Avoid Quick Spending on Big Ticket Items
There’s a great attraction for many new college grads to immediately purchase extremely expensive things: a new car, costly electronics, a complete new wardrobe, furniture, even a dream house. There may be new credit opportunities available to you that come with graduation and a new job and the temptation to use them can be highly enticing. But these kinds of purchases almost always mean taking on new debt, typically in huge amounts.
For most college students, already burdened by debt related school expenses, new debt can prove to be crushing down the road. By resisting the draw of big ticket purchases early on, those same items can be bought later in an atmosphere of economic security.
3. Developing a Plan to Retire Debt
As noted above, most college students graduate with education related debt, frequently in the tens of thousands of dollars. The financial impact is obvious, but the emotional and psychological effect can be significant as well.
It can be a tremendous relief to develop a realistic plan that will address and settle that debt over time. Doing so may also assist on point number two above—big ticket item spending—by placing in bold relief how much money is already owed and why taking on additional debt at this time is a bad idea.
4. Earning Money on the Side
The typical college graduate has a commodity that most older people—who typically have families and other long-standing obligations—don’t: available time. That time can be spent earning money by doing something in addition to your regular job. It may be possible to leverage a hobby or other interest—computers, an artistic pursuit, etc.—into a lucrative part-time or weekend money-generating activity. This can put some extra cash in your pocket or help settle your debts a bit more quickly.
My buddy Martin from Studenomics has figured this out as he’s hustled with his blog and also a new venture where he shows you to make extra money by freelancing. There’s no time like the present to figure out some extra ways to rake in the dough.
5. Getting Used to Saving
It was probably impossible to establish a savings fund—a TFSA or even a meaningful savings account balance—while in school, but this is one area where a clear behavioral change upon finishing college can be beneficial.
Getting into the habit of putting at least a small amount of money away each week or month will pay dividends in both the short-term—by helping to avoid spending temptations and settling debts—and long-term—by allowing you to reach economic security more quickly and helping to establish positive lifelong financial habits.
Related: The Best Time To Start Saving Is Now
Graduating from college is a transitional time for most former students. If you use this opportunity to create a solid personal economic foundation, it can pay dividends for the rest of your life.
Jeff is an Illinois Certified Financial Planner who authors the blogs Good Financial Cents, Soldier of Finance, and Life Insurance by Jeff. He is a father of 3 awesome boys, husband to the coolest chick on the planet, In-N-Out Burger junkie and Crossfit addict.