Just graduating from college or university? Congrats! You are now entering into a brand new world of financial freedom (or responsibility). Chances are that your financial situation is going to change drastically as you now have that degree in hand. But how do you budget effectively as a recent graduate? In this article, we'll discuss some helpful tips and best practices to ensure that you stay on top of your finances.
Make a Plan
The first step to successful budgeting as a recent graduate is to develop a plan. Before you can even start to allocate money to different areas of your life, you have to figure out where the money is coming from in the first place. Start by writing down any income sources that may be coming in, like a salary from a job or money from your parents, and then subtract any debt you owe (like loans, credit cards, or other expenses). Make sure to also account for any upcoming expenses you may be facing, like rent or other bills, and generate a weekly or monthly budget depending on how often you tend to need money.
Track Your Spending
The best way to make sure you are staying on budget and keeping to your plan is to track all of your spending. It might seem tedious, but it's the only way to truly ensure that your finances are in order. Set up an app on your phone or computer, or simply keep track using pen and paper. Log each purchase that you make and categorize them into their respective categories, such as "entertainment," "clothing," and "groceries," so that you can easily keep track of how much money you spend in each area. This will help you quickly identify any areas of your budget that might need tweaking or extra attention.
Prioritize Your Money
Now that you have an idea of where your money is going, it's time to prioritize. Decide what needs to be addressed first, and then make sure that those areas are always taken care of before anything else. This could include rent and bills, as they are usually the most constant and necessary. If you have any debts, make sure they are paid down as soon as possible, as the interest can quickly add up.
If you have any extra money left over after that, you can begin to allocate it into more flexible areas like entertainment, travel, or savings. I recommend setting up a savings account to stash away some of that money for emergencies and future investments.
Avoid Impulse Spending
It's important to remember to be smart with your money even after you have a budget in place. Impulse spending can quickly drain your accounts and drive you further from your budget, so try to be mindful of the way you spend. Before making a purchase, ask yourself if this is something that is absolutely necessary or something that can wait. If you are still unsure, see if you can find a better deal by looking online or wait for a sale.
Get Help If Needed
Budgeting can be tricky, and it will most likely take some time to get into the habit of doing it correctly. If you find yourself struggling to create a budget that works or adhere to one, consider reaching out for help. There are countless resources available online and within your community to teach you all about budgeting and money management. You might even consider seeing a financial advisor or taking a personal finance class at your local college. It never hurts to get a little help if you need it.
Budgeting as a recent graduate can be intimidating, but if you follow these tips it doesn't have to be. Take your time to make a plan, track your expenses, prioritize your money, avoid impulse spending, and don't be afraid to get help if you need it. With these best practices in mind, you'll be able to stay on top of your budget in no time!