New Money, Finance Advice for Grads

Diploma in hand and a career ahead of you, you are now ready to move out and move on with your life. No more dorm rooms or living under the same roof as your parents. It’s time to get your own place, and after 4-5 years (or more) of undergrad it’s about time you treat yourself, right? Not so fast. Making that highly anticipated move to your first apartment after school and transitioning into that new job can become costly very quickly. Before you pick that amazing apartment in the heart of the city with skyline views, drape the walls with humongous flat screens and spend all that new money, know that starting off-less can be so much more.

Rent is more than likely going to be your highest monthly expense. Avoid the priciest pads. Your career is young, and mobility is a requirement if you are looking to climb the corporate ladder. There is no need to throw away thousands of dollars a month towards a place that is only providing a short term benefit. You don’t need every amenity life has to offer at this point. Be patient. Consider things such as having a roommate. I know, now that you are out of school, you “don’t do roommates”. But look at it this way, not only can a roommate save you a considerable amount of money (I’m talking hundreds of dollars a month) , a good roommate can also make the transition to a new location easier. Choose carefully, and you won’t have to face the thrills and challenges of moving to a new city and being truly out on your own alone.

Next, prepare for those student loans baby. In six months Sallie Mae, Great Lakes, Nelnet or whoever you borrowed money from will come knocking to collect their funds. It is vital that you prepare for these monthly expenses in your new post college budget. Check with your loan providers to see exactly how much  you owe and what kind of payments to expect. The first six months will be good living since this debt will not be a responsibility yet, but I would hate for you to get in over your head by purchasing a luxury car you don’t need or renting that costly loft downtown. I’m telling you, once those loan payments start rolling in, you are going to reevaluate your ways of spending. Honestly, if I could do it all over again, I would start deducting the amount owed monthly for student loans before they begin to roll in. This gives you the true amount of money you will have at your disposal each month and also creates a small savings net for loan payments.

Taking on additional debt on top of student loans might be a necessary evil you have to face. Furniture, household appliances and automobiles are expensive but necessities. And paying for them upfront is a daunting task fresh out of college. If you find that you need to open up a line of credit to get started, please be smart, do your due diligence and only borrow what you absolutely need. Splurging on items just because you can is not a good idea at this point. If you’re like most of us, you’re already starting on the negative end of your net worth. You should definitely be working to get on the positive side sooner than later. It’s really dumb to lock up all your money in unnecessary, over-the-top material things. Let’s be honest, do you really need to purchase or finance that expensive 46″ LED 3D TV? The answer is probably no. It is very easy to rack up debt quickly. Carefully evaluate your needs vs wants and make smart decisions.

The bottom line is receiving a generous monthly salary after being a broke college student will drastically alter your thoughts on money and probably provoke a little frivolous spending. It’s only natural to want to spend a little to celebrate your accomplishments, and this is a-okay only if it’s in the budget. Create a budget, review it frequently and stick to it no matter what. Don’t get in over your head and try to stunt with the latest and greatest material things just because you are now making a lil money. I’m not saying you shouldn’t enjoy the here and now but only after preparing for tomorrow and the day after. Learn from the mistakes we made and money we wasted as we transferred from broke college kids to young working professionals and you’ll be well on your way to financial freedom.  Congratulations on your current achievements, but please understand this is just the beginning. The world is now in front of you – do something GREAT with it.

For help with budgeting, check out Mint.com: Take the “Ugh” Out of Budgeting.