Many people view graduating from college as a step into adulthood – after all, this is when you’ll really begin your career or move into your first home. To put it simply, it’s a transitional period in your life where you’ll suddenly be met with a lot more responsibilities – especially when it comes to finances.
For example, you’ll now have to deal with:
- Rent or mortgage bills.
- Student loan debt.
- Commuting fees.
- Utility bills & more.
However, money management is not something that you’re taught at college (or even school) which is perhaps why so many people admit to struggling with money far into adulthood.
With that in mind, here are some excellent money-management tips for young professionals looking to find their financial footing (and pay off that student debt sooner rather than later).
- Know your worth in the workplace. It goes without saying that junior or graduate positions (in any industry) will come with a lower salary than senior positions – but this doesn’t mean that you should expect a low salary outright. After all, a college degree should increase your earning potential considerably. As a result, you could improve your financial situation and support your career advancement by advocating for yourself during the hiring process. During the interview, or upon receiving an offer, you should ask what the salary is for the role and make it clear if it does not meet your expectations. There is nothing wrong with negotiating for your salary, so long as you are clear and have evidence to back yourself up. For example, you could compare their offer with similar positions at other companies that pay their staff more.
- Make paying off debt a priority. Every student out there would like to ignore their student debt – but you must start to pay it off once you are in a position to do so, if only for the fact that you’ll be able to enjoy financial freedom much quicker when you aren’t sending off a chunk of your paycheck each month. Being debt-free will also help you further down the line when starting a family or applying for a mortgage.
- Find the right bank for you. Finding the right bank, such as the Provident State Bank, is another excellent way to better manage your money. This is because different banks offer different forms of accounts and may be able to offer you specialized support based on your goals. For example, you could open up a savings account that you send a set amount of money into each month. This will stop you from dipping into these funds accidentally and could also mean that you earn extra money through interest.
- Diversify your income. As mentioned previously, junior-level roles don’t always come with the best salary, meaning you might need to find some ways to diversify your income to better your financial situation. Thankfully, there are plenty of ways to make more money without hassle. For example, you could look into passive income streams, such as investing, which means you could earn money with little effort on your behalf. Alternatively, you could find a side hustle that works for you and does not take too much time.
- Get serious about budgeting. During your college years, you may have become a pro at budgeting so that you had money set aside to hit the bars or spend time with friends. In the ‘adult’ world, you must begin to take budgeting more seriously because you will likely have more costs to cover. Furthermore, when done correctly, budgeting can help you achieve financial stability much sooner than you might expect. This means that you can then afford to revamp your home or buy a decent car. If you’re an inexperienced budgeter, start with something simple such as the 50:20:30 rule. Using this method, you will spend 50% of your monthly income on your needs. This includes rent, insurance, basic groceries, and utility bills. You should then allocate 20% of your income to wants, such as leisure activity, meals out, or memberships like your Netflix or Amazon Prime subscription. After all, you do deserve a few treats here and there. The remaining 30% of your income can be allocated to your savings.
- Watch your spending. Putting together a budget spreadsheet is all well and good – but it’s pointless if you aren’t going to stick with it. As a result, the most crucial step you can take towards good money management is actually making an effort to manage your money. Pay close attention to your weekly spending, and identify any areas that could cause problems further down the line. For example, getting one tall coffee on your way to work each day from Starbucks costs you $1,221 annually and $6,105 over 5 years. Once you’re more aware of these issues, you’ll be able to put plans in place to remedy them – such as investing in a good coffee machine so that you don’t have to go without your caffeine fix.
- Remember that you sometimes have to spend money to save money. Money management tips often encourage the reader to become more frugal, but it’s also important to remember that sometimes spending more money can save you money in the long run. For example, if you were looking to save money on energy bills within your home, solar panels may come with a big installation fee, but they can help make your home more energy-efficient, meaning your monthly bills will be much lower. It also means making your home a little greener and protecting the planet!
- Don’t be afraid to ask for advice. Asking for advice from others in any area of your life is the quickest and easiest way to receive support or guidance. For example, if you feel as though you are living beyond your means, asking for tips from those around you on how to live more frugally could help you get back on the right track without having to lock yourself in your room and avoid spending any money whatsoever. Remember, asking for advice doesn’t mean asking for a loan!