6 Money Tips For Fresh Grads
It’s March, and you know what that means — graduation month! If you’re a college senior, you may be excited to finally get your diploma and move on to the real world.
Graduating from college is also the best time to start taking responsibility for your financial life. While you’re still young and don’t have a lot of obligations tying you down yet, these money tips for fresh grads can make sure that you get your financial life off to a great start:
1. Educate yourself on personal finance.
You can find money in books, but maybe not like this.
Thinking about money can be stressful. But if you want to make yourself financially successful, you’ll need good personal finance fundamentals — and what better time to learn that now, when you’re just starting out in the real world? Educate yourself on personal finance so you can give yourself a solid financial foundation to build on, and future you will thank you for it.
Lucky for you, there are a lot of resources if you want to learn about personal finance. If you prefer your media on dead trees, here are some of the best personal finance books for fresh grads:
- Get a Financial Life: Personal Finance In Your 20s and 30s, Beth Kobliner
- Generation Earn: The Young Professional’s Guide to Spending, Investing and Giving Back, Kimberly Palmer
- The Money Book For The Young, Fabulous, and Broke, Suze Orman
There’s also a lot of personal finance advice available online, such as in iMoney’s Learning Center. Reading up on personal finance, and applying what you learn, will ensure that you have a financially healthy life even when you’re not making that much money yet. For further reference, you can also view this list of the top financial blogs in the Philippines which makes for a good resource on investments and money management. Good money habits will stay with you, regardless of how much money you make, so establish them now. Perfect practice makes perfect!
2. Network, network, network.
It pays to have a good network of contacts.
The Philippine unemployment rate rises every time there’s a new batch of graduates. Last year, of the 2.9 million people unemployed, 19.8% were college graduates. “There continues to be a mismatch between the jobs available and the job seekers,” Nicholas Antonio T. Mapa, associate economist at the Bank of the Philippine Islands, said in an interview with BusinessWorld.
It’s hard to get a job on your own in this competitive market, so why not use your connections to help you find one? It may sound intimidating, but we all have to do it. Building relationships with people who can give you an advantage career-wise will jump-start your career. If you don’t have a big network, now’s the time to start expanding it.
To network effectively, keep these tips in mind:
- Understand your goals before you start networking. Instead of trying to build as large a network as you can before having a specific goal for making connections, figure out what you want to achieve first before you start connecting with people who will help you towards your goal. Knowing your career objectives will make your network more effective.
- Don’t leave your college connections behind. Professors, fellow classmates, or alumni from your school can be a big help in building your network.
- Use less-traditional forms of networking. In this digital age, the internet can be an invaluable tool for new grads to network. “Interested in a particular industry or company? Take a look at the influencers in that space, and reach out to them via social media. Participate in the comments section on the leading blogs relevant to your industry or passion,” said Yair Riemer, chief marketing officer at CareerArc Group, in an interview with US News & World Report.
3. Understand your new expenses, and budget accordingly.
Being a college grad means new expenses.
Your expenses will be different once you’re out of college. While before, your budget may have only been for nights out and food, now that you’re out in the real world, you’ll have to worry about new expenses. If you’re going to rent your first apartment, you’ll need not only rent every month, but enough for a security deposit (around 1 – 3 months’ rent, depending on your landlord). You’ll also need to budget for transportation differently, depending on where you work. You’ll also be responsible for your bills, such as electricity, cable (if you choose to have it), internet, cellphone, groceries, and the rest. Sit down and create a budget for your new expenses, and make sure to stick to it.
You can keep some of these costs down by living with your parents while you save up enough money to rent your own place. But if you’re adamant about living on your own, getting roommates can help lower the costs.
4. Insure your health.
Insurance is important!
You might be tempted to skip getting health insurance to save money, but not being insured could prove to be more costly in the long run. A P100,000+ hospital bill could ruin you financially before you even start making money, so it pays to be insured. If your new job comes with health insurance, great!
But if you don’t have a job yet, or your job doesn’t come with insurance, you should spend the extra money to self-insure. The sooner you get it, the better; younger people will pay lower health insurance premiums.
If you truly don’t have the money to insure yourself, you might still be covered under your parents’ insurance if you’re under a certain age. If it doesn’t cost them extra to include you, explore this option. If it does cost them extra, compare it with other plans to see which one gives you the most coverage for the premiums you can afford.
5. Start building up your credit score.
Having good credit will make you as happy as this girl.
After college, the one grade that will make a difference to your life is your credit score. Banks keep tabs on your credit and borrowing activities, and they make their decisions whether to grant you loans later in your life, and at what rates. Your credit score shows how much banks can trust you with money they lend you, so it pays to have a good credit score.
It’s never too soon to start building a good credit history. Here are some ways you can do it:
- Get your own credit card … Your supplementary credit card your parents gave you doesn’t help your credit score at all — you need a credit card in your name for banks to make credit decisions about you.
- … but don’t apply for too many at once. Too many applications can hurt your credit score. If you’re having a hard time getting approved, take a look at secured credit cards.
- Pay your bills on time. Timely payments reflect well on your credit history.
- Keep your debts low. If you’ve already got credit card debts, pay them off as soon as you can.
6. Spend some money on experiences.
Don’t be afraid to enjoy yourself.
Later in life you’ll be tied down by jobs, families, and other responsibilities, so take advantage of the two biggest assets you have now — freedom and time. You’ll never be this free again! So, as long as you’re being financially responsible in all other respects, don’t be afraid to spend some money on an overseas trip, or other fun life experiences. There are some memories you’ll never be able to put a price on.
Besides, it’s not like you’ll have to bankrupt yourself to have fun. Travel has never been cheaper as it is now. Create a travel fund for yourself and save towards your dream vacations.
Leaving the cozy cocoon of college and moving to the real world can be scary. But with these financial tips, you can make a smooth transition into working life, and you’ll be setting yourself up for success in the long run.