10 Winning Money Tips for New College Grads
Congratulations to all fresh college graduates! You have finally finished school and enjoying the fruits of your labor.
Now, you are set to embark on the new chapter of your life — joining the working force.
Hopefully, in a few months’ time, you will land a job that pays well, start your new career and make your own money. Making a living entails a lot of responsibilities and one of them is managing your finances. Being a fresh graduate and joining the workforce for the first time is the perfect time to start being responsible in your financial life. If you are reading this, then you are one step closer to financial success. Consider these winning money tips to keep you going:
1. Start a savings habit.
Heard of the saying, “pay yourself first?”
Your first financial goal is to save a part of your income so you can establish your emergency fund. An emergency fund is a money set aside in case of big, unexpected expenses such as job loss, major home repairs, and large medical bills. Your emergency fund should cover at least 3 to 6 months’ worth of living expenses.
One of the ways in building your emergency fund is by paying yourself first. It means you set aside a portion of your income as savings the moment you receive your pay. There is no shortcut to doing this so a lot of patience is needed. Start little by little until it becomes a habit and you’ll see that it’s an effective way to save money.
2. Make your own budget — and stick to it.
Spending without a plan will definitely hurt your finances and give you financial strain. One way to avoid this is by making a budget. A budget is a plan for using the money. You allot a portion of your money for a particular expense so you have the direction on where you will spend.
In budgeting, you first need to identify how much you’re earning, where you spend most of the time and how much you’re spending on average. It might be food, transportation, rental or other expenses. When you have a good idea on your cash inflow and cash outflow, use this knowledge to plan for a budget. Also, be mindful of your needs and wants so you can improve your budget allocation. In this way, you will identify what’s necessary and what’s the unnecessary expense.
3. Start tracking your expenses.
Make it a habit to track your expenses. Monitoring your expenses makes you aware of where you’re spending your money. When you know where your money went, it gives you a clear view of where you spend more and you know what you need to cut down to save more. There are ways to track down your expenses. You can either do the manual way by jotting down all your expenses in a paper or use a spreadsheet software on your computer or you can use personal finance app on your smartphone to track your expenses. Do the method you are most comfortable with and keep doing it until it becomes a habit.
4. Automate your savings.
Sometimes, manually saving your money is a hassle. Good thing there’s automation.
Automation is the automatic transfer of your funds to your nominated bank account. Once automation is done, it would be easier as your bank is doing the transfer for you. Some of the big banks in the Philippines offers this type of service. Make an appointment on your bank to check on how they can transfer funds for you.
5. Beware of lifestyle inflation.
Lifestyle inflation is one of the obstacles in achieving financial wealth. It happens when you start upgrading your lifestyle as your income increases instead of managing your finances. For example, someone who used to eat at cheap eatery slowly develops a habit of eating at fancy restaurants, or a person who used to have an entry-level smartphone now has a top-of-the-line smartphone.
Avoid this trap by managing your spending wisely. While there is nothing wrong in upgrading your lifestyle, carefully consider on how it will affect your finances and make sure that you are not going beyond your means. Remember that those small but unconscious spending can hurt your finances.
6. Remember the 3 I’s — Investing your income is important.
You are not getting any younger. If you don’t invest your money today, when will you start? Investing your money while you’re still young and don’t have a lot of financial obligations is the best time to start. You don’t need millions to start with. In fact, for as low as 5,000 pesos, you can already start investing your money.
There are a lot of great investment instruments you can consider as you begin your investment journey. There’s Mutual Fund, Unit Investment Trust Fund (UITF) and Stock Market investing to name a few. If you’re still confused about where to invest, there are tons of information on the internet that you can extract through the flick of your finger. You can also ask financial experts for advice but decide on your own. At the end of the day, it’s your decision to take an action that counts.
7. Never stop learning.
Graduating after college doesn’t mean that you should stop learning. Learning doesn’t stop at school. In fact, learning after college is just the beginning. Never stop learning, for learning is the key to success.
If you really want to make more money, you have to learn new skills to make yourself more competitive in the job market. There are different ways to learn new things. You can study and learn a new language, learn how to code, read self-help and motivational books, attend seminars and training, etc. You should also acquire important life skills as you go along. This includes time management, financial management, social communication, and networking. Allow yourself to grow and make the most important investment — yourself.
8. Spend within your means.
Having a credit card has its upsides and downsides. Credit cards, if used wisely, have their own benefits but if you are just starting to manage your own finances or if you are not disciplined enough about controlling your spending, then it is better not to get one. That piece of plastic comes with big responsibilities and you might end up in a financial disaster if you misuse them.
If you want to purchase something, it is still better to pay in cash as it helps you think twice about your purchase and it limits your spending. I know you want to buy a lot of things now that you are earning money but you can eventually buy them without going through unnecessary debt. Just be patient and focus on your goals instead. Also, remember this: if you cannot pay it in cash, you can’t afford it.
If convenience is the issue, then you can consider getting a prepaid credit card instead.
9. Establish a short-term, mid-term and long-term financial goals.
Having a financial goal is an important step towards financial success. Setting up financial goals helps you to stay focused, creates a sense of achievement and can inspire you to work hard.
The first step in creating financial goals is to determine what are your short-term, mid-term and long-term financial goals. Some of the common financial goals are a dream vacation, establishing a business, a new home, retirement fund and emergency fund. Once you have your goals, the next step is how much money do you need and how long will you save for each of them. Don’t be discouraged if the amount is overwhelming. Start small and you will eventually get there. Be patient.
10. Invest in life experiences.
Sometimes, spending for experiences is better than spending for material things. The instant gratification of purchasing new things quickly fades but the joy and memories of experiences and adventures can be converted to decades of storytelling that no one can take away.
So if you want to travel, go ahead. You want to try new things, go for it! Enjoy your life while it lasts — but never at the expense of your future. The most fulfilling experience doesn’t have to cost a lot of money. Moreover, find the balance between enjoying yourself today and preparing for tomorrow.
Leaving your comfort zone and entering the real world can be scary but exciting at the same time. Enjoy your journey. Embrace every change in your life with enthusiasm.
I wish you all the best in your career, your money, and your life. Follow these bits of advice and you’ll be setting yourself into success in the long run. Again, congratulations and may God be with you!