To find out more about the financial decision you can make now to shape your future, read our detailed article below.
Focus on saving
When you start out in your career, you plan what you’re going to do with your money, and where it will go. The first personal budgeting tip you should follow as a graduate is to start saving from the beginning. While you have little to a few financial obligations, now is the time to put some money away each month for your future self. While there is no specific amount as it is a personal choice, the act of saving itself is a helpful step to financial security.You can calculate a percentage of your salary that goes towards your savings. Remember that it is always more effective to have more than one savings goal. For example, if you decide to save 10 to 20 percent of your savings, you can split the percentage into smaller goals such as your long term savings which can be retirement savings. Your mid to short term savings can include a deposit for a car or apartment. And, lastly, an emergency fund that will help you in the event that you fall ill or out of work for a few months.
Knowing exactly what you’re saving for and why is an effective way to save and stick to your goals each month. In the beginning, it may seem like you’re far from your saving goals but always remember that a little always goes a long way.
Pay off any existing debt
Once you’re in a stable job and receive a steady salary, you need to pay off your existing debt. That can be student loans, credit cards or store account cards that you have. Credit cards and store accounts have a higher interest rate, and it would be in your best interest to pay them off before you take on any other financial obligations such as moving out.By focusing on paying off your debt, you are allowing yourself more financial freedom. Settling your debt can also improve your credit score, allowing you a better chance of getting great deals on any other loan you might need in the future. If you do not have a credit score and are considering how you’re going to improve your credit, keep the following in mind:
- Open up a credit card, but always stick to an amount that you can pay off immediately.
- Make sure your payments are always on time.
- Don’t max out your credit card or store account.
- Make sure you check your credit score regularly to check for incorrect information.
Buying a car you can afford
As you enter adulthood, you begin to realise the importance of owning a car. Whether it is to run personal errands or to travel to work. However, as important as buying a vehicle may be, you have to be financially smart about how you do it. This means purchasing a vehicle that you can afford. Lenders have a car finance app that has a car affordability calculator that can give you; an estimated amount of the cost of the vehicle, what you can afford, and it automatically structures a deal that suits your needs. And, even if you have no credit score or no credit history, some lenders have car finance for graduates that will allow you to purchase a vehicle.This finance program is a loan agreement for graduates who are seeking to purchase a vehicle but have no credit history. Lenders understand that there are graduates entering the workforce who do not have a credit score. Most lenders require candidates to have a good credit score when being vetted, which puts graduates at a disadvantage.
This is why they have a tailored payment option that you can afford while still planning for your future financially. This allows you to purchase what you need to make your life easier, while still allowing you to have room to save, pay off debt and create the life you want for your future. And while there may be financial assistance available for you, save up for a deposit and be sure to choose a vehicle that is still in your price range, preferably a pre-owned car. That way, you don’t spend too much on a vehicle, and your deposit helps you pay off a substantial portion of the loan amount.
Stay at home for as long as possible
The thought of freedom when you are away from your parents may sound appealing, but you need to consider all of the alternatives. Moving out costs a lot of money; you have to cover the rent, food and utilities. Most graduates who enter the labour market earn an entry-level salary, and taking on more than you can handle can lead to debt and bad financial decisions.
For as long as you can, it is advised that you stay with your parents. That way, you’re able to live comfortably and reach your financial saving goals. If you need to move out, make sure you find a roommate who you can split the bills with, and find a place to rent that is affordable. Once you have saved up enough money, have reached your financial goals and have enough money to live comfortably on your own, you can look towards buying your own house or renting alone. When starting out in your career, you must ensure all your financial decisions help you now and in the future.
Live below your means
Lifestyle inflation is something that many adults face. As they grow older and start making more money, they change their lifestyle to meet the amount of money they make. While it’s okay to treat yourself every once in a while, there is a fine line between treating yourself and living beyond your means. As a graduate who is starting out, you still have the chance to ensure you keep your expenses at a reasonable amount. To ensure you live below your means, make sure you:- Have a monthly budget and track your expenses.
- Take advantage of food specials when dining out or buying groceries.
- Budget for your wants such as entertainment, personal care and clothes.
- Try to DIY and turn it into a fun hobby.
