Graduating from college and heading out into the “real world” is an exciting time. You may be living on your own for the first time (not counting the dorms or your college town apartment), and you probably are hoping to get your career started shortly. After spending most of your life going to school, it feels like you finally get to be an adult and chart your own path.
However, along with that freedom comes some pretty serious responsibilities. There is a good chance that you have not previously dealt with some of the financial realities that you are now facing. Of course they can be conquered, but that doesn’t mean they aren’t a little bit intimidating at first. Here are five of the financial firsts that most college graduates will face after graduation.
#1 – Paying Back those Loans
Most people get through college by taking out student loans. When you are an incoming freshman, paying back those loans seems like it is a lifetime away. Unfortunately, four years of college can go by rather quickly, and suddenly you find that you need to start paying back the money that you borrowed.
Be sure you know exactly how much you owe on a monthly basis so you can plan it into your budget before you take on any other monthly payment obligations for a new car or house. You can even try to consolidate your loans to get a lower rate overall and directly impact how quickly you can pay them off. This can be done through a variety of channels but some, like Achieve Lending, allow you to compare the best rates available.
#2 – Paying Rent or a Mortgage
If you lived on campus during your time in college, you probably just paid room and board as part of your overall tuition and even those who rented off-campus apartment’s during college usually got away pretty cheaply by splitting bills with roommates. But now that you are out on your own, it will be up to you to find housing – and pay for it. You will probably need to rent at first until you can save up enough money for a down payment to buy your first house.
#3 – Utilities
Speaking of living on your own, paying monthly utilities is something that most people don’t give a second thought when growing up. As a kid, you don’t necessarily understand that your parents have to pay for things like water and lights. It won’t take long living on your own to realize that utility costs can add up quickly and you will need to budget for them just like any other expense.
#4 – Having Money to Spend
One of the unexpected problems that many recent graduates will run into is actually having money to spend for the first time. When you get out of school and start working a full-time job, you might feel like you are rich when those paychecks are deposited into your account.
Avoiding the temptation to spend all of your money at once is important because the bills will not be far behind. Setting a savings goal early on in your career is one of the best things you can do to shape your financial future.
#5 – Managing Credit Responsibly
Another aspect of making money is the ability to obtain credit cards based on your annual income. If you land a good job after college, it may be tempting to open up a few credit accounts so you can spend as you wish. Of course, this can easily lead to trouble.
While it is a good idea to have at least one card in order to build your credit score, you will want to avoid accruing a balance on the card. When you do use it, only use it for things you already have the money for and pay off in full each month.
What financial lessons did you learn after college? Did you make any money mistakes? What other financial advice do you have for new college grads?
Photo courtesy of: SOAS Newsroom