Tuesday, March 29, 2011

Finance Tips for Graduates

I still remember the time when I graduated from college 15 years back. That was the most memorable part of my college life. No more studying. No more assignments. No more projects. Whew!

I was so excited with the working life so that I can buy the things and stuff I wanted to have for myself and for the family.

If I had my mentors back then, I could have planned better and could have prepared a much tangible financial plans. After fifteen years of working, I have so much loans to pay and with a little investment. I would say I just started right now to execute the financial plan that I should implemented way back then.

For those graduates, Investopedia has a finance tips for you. I wish I could have read this kind of advice long time ago. Read on...

1. If your student loan confuses you, now is the time to figure it out. Don't just read your loan agreements, familiarize yourself with each and every term to the last detail. Know what interest rates to expect, and figure out how much you'll ultimately be spending over your repayment term. In eight months, if you haven't budgeted for your first (of many) payments, you might find yourself a little shell-shocked. College may have been an amazing experience, but your student loan won't be. Spend these next few months getting to know your loan so that you can pay it off as quickly as possible. (For more insight, see Student Loan Debt: Is Consolidation The Answer?)

2. Start saving for the short term. Unless you have a job lined up for the day after you graduate, you need to prepare yourself for some instability. Unless you're moving home, you'll probably need to find a place to live. Plus, you'll need to put food on the table. Don't make the mistake of relying on your credit cards and racking up high-interest debt. Instead, start saving money wherever you can. In three months, you'll thank yourself for creating that cushion.

3. Start saving for the long term.
Even if you have a job lined up, rainy days happen and you should start setting aside funds for them now. You never know what could happen in these next few years, and if you're lucky enough to not need the money, you'll have a head start on your retirement fund. (Find out just how much those early savings can add up in Delay In Retirement Savings Costs More In The Long Run.)

4. Decide whether you really need a car.
Car payments, gas and repairs are extremely expensive and sometimes unsustainable on a student budget. Instead of moving to a place like Los Angeles where you absolutely need a car to get around, consider a place with a good public transit system as an alternative. These days, a car can be too much of a headache for someone with an entry level salary. (Find out why a car may not be the best place to put your money in Buying A Car: The Worst Investment?)

5. Live with a roommate or family while you still can.
Unless you are really lucky, you won't make a whole lot of money in your first year out of school. Regardless, your first year out of school is a crucial time to start building your career. You might need to take an internship or two to get to where you want to be, and you don't want to live an unsustainable lifestyle while you get there. Live at home or with friends, and embrace the fact that you'll get to spend this next year with the people you love.

6. Ask about benefits.
Health insurance, dental insurance, vision insurance, employer-matched retirement plans and other subsidies are just as important as your salary. Don't just let the best salary win your heart - take a look at the big picture before coming to any conclusions. (Get more tips in Job Hunting: Higher Pay Vs. Better Benefits.)

7. Figure out a budget. Next time you have a few minutes, sit down with your computer and research the cost of living in the areas where you want to live. Approach your research with a blank slate - without any assumptions. Dreaming too big will only hurt you, so sit down and get practical.

Life outside the school is harder than you think. Once you stepped outside your school campus and started to apply for a job, you will realize that what you have learned by book is totally different from what is actually happening. You are now in the real jungle. Real experiences. Real battle. And the result of this battle at the end would depend on how prepared you are. It will never be a destiny. It would always be a journey.

Source: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/03/17/investopedia51293.DTL

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