One of the most exciting times of life can be upon graduation from college (or university, if you call it that). You’re actually in a position to have the freedom to create your own life, and follow your own path. All those years of school can now be put to use, and you can really get moving in whatever career path it is you have chosen.
The thing is, this is actually a huge transition period in life. While exciting in many ways, it’s also a time where one’s finances can be impacted in a big way. There are real world expenses that need to be paid, and for many people this also includes student loan debt. But beyond that, there are a ton of other things that we find ourselves spending money on. Some are things we want, and others are things we need.
From a financial point of view, two that stand out are having a place to live, and having reliable form of transportation. These are needs. After all, we can’t live out in the wild, and many of us can’t walk everywhere for all our needs!
Along those lines, I think these are two areas where people right out of college or graduate school can make a huge difference in their finances by making wise moves. Here’s how:
Saving on Living Expenses
- Live with parents. If this isn’t possible due to geography, their refusal, or whatever valid reason, then never mind. However, if this is actually an option, it could be a massive money saver. I think this might be the biggest money-saving decision someone could make. This way, you don’t pay rent. Or, perhaps you just contribute a small amount each month. Regardless, a young person on limited income is going to save a lot of money this way. Perhaps $1,000 to $1,500 per month could easily be saved.
- Find roommates. If you can’t live with parents, then find roommates. Perhaps this could mean sharing a place with an older sibling and paying rent. Or, it could be a matter of finding friends or a few people with whom you’re highly compatible, and sharing costs. A person could save hundreds of dollars per month.
- Find an inexpensive place. Most people I know have a real desire to live in nicer places. That being said, if you do need to find a place, find a place that’s safe, convenient, but also less expensive than nicer or better furnished places. When you’re starting out, you just don’t need to waste money on an expensive rental. This is the path I took, but I lived by myself – thus spending more at the time. I wish I would have lived with my parents instead.
Saving on Transportation
- Use public transportation. Much like living with parents, this could be a tremendous way to save money. Of course, if this isn’t an option, then move on. But if it is, it could be a great way to save money. Cars cost money, not only to buy but also for gas, insurance, and other expenses. These costs really add up!
- Drive a used car that’s not a premium brand. If public transportation isn’t viable, then we’ll need a car. Of course, we want to be sure that the car is reliable. However, there is no need for a big brand name car. None whatsoever. It doesn’t matter how it looks to others, simply pay no attention to what friends are driving. There is absolutely nothing wrong at all about driving the least impressive car among your peer group; actually, it’s probably the smartest move to make. I drove a used car, so on this one I actually made the right choice.
Overall, there is a lot that can be gained by saving on these expenses, and simply learning to stop spending money. By living at home and driving a low-budget car, a person could possibly save quite a bit of money. Depending on the alternatives, perhaps up to $2,000 per month could be feasible. Saving $24,000 after-tax dollars annually would be huge.
Think about how doing this for just 2 years could help finish off student loan debt! Or, even better, help to build a strong foundation for one’s financial future. Taking a lump sum, investing it, and letting compounding work its magic can pay huge dividends later in life. These are two ways to make that happen!
My Questions for You
What do you think about the idea of living at home right after college?
If you’re a recent college graduate, what have you done in terms of living arrangements and transportation?
If you’re past that stage in life, what did you do – and would have done anything differently knowing what you do now?