If you’re reading this then it means the curtains about to fall on your college experience and the inevitable feeling of doom and gloom that is synonymous with the real world has crept into your brain.
Don’t worry, everyone feels like this, and ‘by this’ we mean is totally and utterly unprepared for adulthood in every way possible, especially when it comes to getting your head around all things finance and money management.
In college, the most challenging life skill to learn on the double was how to work the washing machine so that you could do your own laundry, which isn’t that hard it turns out.
Money Advice to Help You in the Real World After College
But in the real world – where so many souls go to get quashed and way too many people get caught in the downward spiral of debt – life is a little more complex and the results of our actions can have some pretty serious consequences (cough credit ratings etc.).
In order to help you start on the right foot and give your financial journey the most positive start – so that you never feel the need to bury your head – we have come up with some pieces of financial wisdom that every new college graduate needs to read.
Remember, jot down and stare at because these bits of advice will make your transition into the real world that much less daunting.
Read About The Basics Of Money
The more you can understand the basics of money the less daunting all those industry buzzwords will be and the less overwhelmed you’ll find yourself. This is so important for one reason: when we are scared of something our fight or flight response kicks in which, in the case of finances, always seems to be the latter.
This is the worst reaction, though. Why? Because burying your head doesn’t make money problems go away; it makes them worse.
If you want our advice on where to start, we’d say you need to bookmark the Fortunate Investor blog created by Michael Banks, and then head to Amazon and buy yourself some tangible books aimed at young adults.
Books like Generation Earn: The Young Professional’s Guide To Spending and Get A Financial Life: Personal Finance In Your 20s And 30s. The reason this is so important is that no school or college gives a class on this, and that is where the problem lies.
Have All Of Your Papers In Place
This is arguably the suckiest part of suddenly being thrust into adulthood. When you were a student, the only thing you really needed to organize was your bag for class, and that simply consisted of a pen that worked, a notebook and possibly your MacBook Pro.
However, in the real world, organization becomes a little more important because certain bits of paperwork become crucial to your life. First off, your birth certificate and social security card are needed for most things.
But then there are other things that are essential, but can be quite hard to get your head around, like 401k enrollments, taxes, and health insurance. As well as, legal forms, contracts or lease agreements for your apartment, car ownership documents/title and all that sort of stuff.
Get into the habit of understanding these but, more importantly, keeping them in a safe place that you can easily access.
Have A Budget And Stick To It
You may need to wait until you have been in employment for a few months before you can really get into the nitty-gritty details of this one because you’ll want to know exactly what you’re taking home after taxes. But once you reach this point, then you can start figuring out exactly how much you can afford to spend each month.
We know, this is exactly the kind of boring thing you didn’t want to hear about adulthood, but it will keep you at of financial trouble and possibly set you up for a brighter future.
Trust me, there is nothing that can make you feel quite as nauseous and terrified of life as a phone call from a credit card company. So, to budget your money properly, start by adding up all of your essential outlays. We’re talking about things like rent, utility bills, weekly grocery shopping, transport needs, student debt repayment and everything else that is an absolutely necessary expenditure.
Once you know how much all of this costs, you’ll be able to work out how much is left for what we like to call ‘fun spending’ and, yes, saving.
Reduce Your Debts As Fast As You Can
What matters most of all is paying back your loans. That’s a fact. To put it to you as bluntly as possible, ignoring them doesn’t make them disappear; paying them off does. That’s why you need to put it at the top of your priority list.
Don’t just look at it as an important bill that needs to be paid each month, look at it as your nemesis, your sworn enemy, the bane of your existence. The more you hate your debt the more likely you will be to pay it down quickly.
The reason this is so important is simple: the faster you can pay it off, the less you will have to pay off. Even a sum as small as $29 a month can drastically reduce the lifespan of your debt and the amount of interest you have to swallow. That is why we urge you to pinch, pinch and pinch some more.
If you do this, you could be debt free in just a few years, and then you’ll have that much more cash at your disposal. Yup, more money for ‘fun spending’. Woohoo.
The All-Important Emergency Fund
The other thing we need to mention quickly is the need for an emergency fund. The thing you will learn super fast in the adult world is this: life doesn’t go to plan. Hurdles crop up at every turn and every junction and most of these hurdles tend to cost money.
So do what you can to protect yourself by building a little cash cushion of at least $1000. If you can, try and save enough to cover three to six months worth of living expenses. Car repairs, redundancy, broken dishwasher, these sorts of things come out of nowhere, so be prepared. These 20 money saving ideas can help.
Get these right and your hard fall from college life into real world existing will be much more gentle. Like a feather falling onto a soft mattress. Just remember, be proactive when it comes to your money, never run and hide.