As another semester ends, another wave of college graduates descends upon the “real world,” complete with scarce jobs and student debt. Last week we talked about money-saving tips for college students, but now let’s focus on the grads.
You can make it through these penny-pinching times and live comfortably with a little readjustment to the way you approach your daily expenses. Live under your means now and you can afford a more comfortable lifestyle sooner than many of your peers.
Donate Your Car
Donate your car now, support charitable causes, and put thousands of dollars back into the bank. Gas and maintenance costs amount to thousands each year, even if you’re lucky enough to pay off your car loans. Rely instead on carpooling, biking, or public transportation and spend a fraction of the cost, freeing up the money you would have spent otherwise on your car. Heck, you could even Uber full time like I do.
Making a donation could actually lead to more money in your pocket than trying to find a buyer. Cars depreciate in value quickly; donate the car and deduct the cost on your taxes, meaning you’ll get a bigger tax refund or pay less on tax owed.
Make A Budget
Write up a monthly budget and stick to it. List all of the necessities and an average or exact monthly amount spent on each, including:
- Loan repayment (school, credit cards, car, etc.)
- Public transit or carpool contribution costs
- Savings (contribute at least 10% of your monthly income if possible)
Add up the total amount spent; the amount leftover is what you can budget for unnecessary things, like dining out, TV, and entertainment purchases. Do not go over this amount. Get receipts and keep track of everything throughout the month to remind yourself to stop when you hit the budgeted amount.
You have some flexibility; for example, if you hit your monthly entertainment budget early in a month because you go to a concert, visit the library for the rest of the month to check out books and DVDs for free.
Try out Personal Capital as a free tool to help you get started.
Move Back Home
If you don’t put away at least some of your income in savings, you’ll never move on to a more independent, adult life. Consider living with family for a short time if they agree to it. Having no rent or a smaller amount of rent to pay than you would in an apartment frees up more of your income for savings (not entertainment). Sharing grocery and utility costs frees up more of your budget, too.
When you move back in with your parents or another family member, proceed with caution. Set a deadline and stick to it — move out after six months, a year, or two years, whatever is agreed to. Be a responsible adult, not a child. Do chores, run errands, make meals, and contribute to the household by helping out at least if your parents agree not to charge rent.
Prioritize Paying Down Debt
Make your entertainment budget as small as possible early on and think of free activities you enjoy because it’s important that you prioritize getting rid of student loans, car loans, and credit card debt. Long-term debt can ruin your credit score and make it impossible to get loans for buying a home. The sooner you pay off your debts, the better position you’ll be in to live independently and raise a family (if that interests you).
Don’t Take on More Debt
If you stick to your budget, you shouldn’t have a problem avoiding new debt, but it should be emphasized: do not rack up more debt. If that means giving out homemade gifts for the holidays, do so. If it means not buying the latest electronic gadgets for years, that’s what it takes.
According to CNN Money, 36.7 percent of recent college graduates are “mal-employed,” which means they’re working jobs that they didn’t even need a college degree for. With unemployment at record highs, many college graduates feel grateful for whatever jobs they can get.
However, when you’re “mal-employed,” you’re making less than you need to jump into an independent adult life. Budget wisely and spend the first few years after college living under your means — and you’ll be prepared for independence.
What other money-saving tips do you have for recent college grads?
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.