Life after college may not be the financial paradise you expected. In fact, you might be wishing someone had told you how complicated it was going to be. It is important to be financially knowledgeable and understand where your money is going. It is never too early to learn the best ways to save money.
The first tip is to figure out your budget. Begin by making a personal budget, tallying up your income and expenses then compare the two. An example of common expenses for college grads would be things such as rent, utilities, food, gas, student loans, and savings for emergencies or a retirement fund. Learning to create and stick to a budget is just the first step to take toward financial responsibility after college. You also want to start planning for the future when it comes to savings and debt payments. Be sure the choices you make today don’t cause you financial harm in the long run.
This brings me to tip two. It’s hard to think about savings when you don’t have much income yet, but you do want to leave some room in your budget for a savings fund. With a savings fund you can use the money for things like retirement or long term care insurance. Why long term care insurance? Good question. Long Term Care Insurance is a retirement planning tool used to protect your assets from the high cost of needing Long Term Care services. For example, if you have known a relative or known someone else to need assisted living, you know already it comes with a cost. The national annual cost of a nursing home is $87,521. While this may seem like a lot, starting a fund to purchase long term care insurance early in life will only make your finances easier later in life. Check out sites like https://www.ltctree.com/ to get a better understanding on where your saved money could go and how to save money on the premiums. Life can throw many unexpected objects at you, and what better way to handle them then to be insured and protected from anything that life may throw at you.
The third and final tip is to prioritize your financial goals. A general idea of these goals would be retirement, an emergency, a major expense (such as a vacation, home, or new car), and paying off debt. Which goal matters more to you depends on where you are in life. No matter what goal you put first, you can shift your priorities with time. For example, you decide to pay down your credit card debt first, and put a certain amount of your income toward that debt each month. Once the cards are paid off, you can focus on a new goal, such as boosting your retirement savings or putting money aside for a car or down payment for a home.
The sooner you master your financial details, the better off you’re going to be. Be cautious with your money, and think of the future whenever you feel like spending more than you can realistically afford. Taking the right financial steps TODAY could save you a lot of money in the future.