It’s a bittersweet day when college comes to a close and the realization of the real world sinks in. Bills, budgets, savings … taxes?! It can be overwhelming to balance a new job, student debt and other financial challenges. But becoming familiar with a few basics will set you up for an easy transition.
- Build a budget and stick to it. Establishing a budget doesn’t have to be complicated. Start by identifying your monthly income and expenses. Be sure to include discretionary expenses (like dining out, travel and hobbies) as well as fixed expenses (like housing, food, utilities, and transportation). Then, compare the totals. If you’re spending more than you’re making, it’s time to make some adjustments. If you have extra money left over each month, start a savings account, emergency fund or make an extra payment toward outstanding debt.
- Invest in your future. The moment you start having dispensable income is the moment you should start saving, if not before. Does your company offer a 401K match? Do you have a Roth IRA? You have a few decades to go before even thinking about retiring but start saving now so your retirement fund has plenty of time to grow.
- Research credit card options. There are countless credit card options and programs out there. Credit cards can be useful in helping to monitor spending, but they can also lead to spending more than you can afford. Before you accept a credit card offer, evaluate it carefully. Read the terms and conditions and be sure you know what the interest rate is and how it’s calculated. Look for rewards or incentive programs that will be most beneficial to you.
Remember, credit card use affects your credit score. Building credit is important for future purchases like a home or car, so be sure to determine an amount you can pay off each month, and don’t overspend. Missed payments can cause your credit score to suffer which could make it more difficult and expensive to borrow money later.
- Take advantage of technology. Managing your budget, spending, credit cards and 401K can be overwhelming. Luckily there are numerous resources online to help. And if there’s one thing millennials are good at, it’s using technology. From budgeting apps like Mint, PocketGuard and You Need a Budget to apps for managing investments like Acorn, if you have a question about finance, there’s probably an app for that.