Major life transitions are coming your way as a recent college graduate. Steady your heart because you can remedy looming financial uncertainties with a good financial plan. Here are some great tips to help you out.
- Write a flexible financial plan.
Your financial plan will be unique to your own situation. It does not have to look the same as your parents or your friends. Create a list of important life goals or better yet, a visual dream board to keep you motivated. Keep your plan short, simple, and time-bound.
- Create a realistic personal spending plan.
The road to financial freedom starts with a budget. This will guide your spending and ensure you make savings at the end of every month. Try different budgeting systems and use the one that fits your needs.
- Automate savings.
Savings should be your top priority. Strive to save as much money as you can each month. Prioritize building your emergency fund. Save at least six month’s worth of your basic living expenses and put it in a separate account. Do not just think of today but plan for your future, too. However, if you are in debt, pay it off first before saving for your emergency fund.
- Fund your retirement accounts.
Your fist job after graduation will probably not be your last. If you are switching jobs, do not make the mistake of cashing out your retirement plan. You will benefit more from continued tax deferral through 401(k) or IRA rollovers. Not only are 401(k) withdrawals subject to a 10% early withdrawal penalty, they also rob you of future retirement savings!
- Manage your studen loan debt.
Fight the urge to get overwhelmed by your student loan debt. It can be a challenge but remember that there are a variety of payment options available to you. Find a way that fits your budget while working on other financial goals like paying down high-interest credit card debt. The road to financial freedom is long but stay focused and you will get there.