Over my past few posts, I’ve highlighted key transitions that have financial ramifications in any college graduate’s life: The job search and managing life in your first apartment. Today, I will round out this series with some tips on how you can help solidify a strong financial foundation for years to come.
Even if you aren’t a recent college graduate, your finances (and future self!) will thank you if you adhere to the following suggestions for securing your own financial bliss:
“Budget” Isn’t a Four-Letter Word
Having a budget is one of the easiest ways to understand what’s happening with your money. Unfortunately, just the word ‘budget’ is one of the most emotionally-loaded in the world of personal finance. Rather than being overwhelmed or anxious when it comes to budgeting, the key is finding a way to create AND maintain a budget in a way that works for you. A budget should be a detailed, fluid, and personal entity.
Once you figure out a system that works well for your situation and preferences, make sure to consistently monitor it to ensure it’s balanced and appropriate for your current life circumstances. Do your budget a favor and use your well-known plastic cards less frequently to make purchases. Credit card companies are expert marketers and many consumers spend more lavishly when they use cards instead of cash.
Don’t Be Fooled By That Offer Letter
When you’ve just been offered a great job and have successfully negotiated what you think to be an amazing salary, it’s tough to be 100% objective when it comes to signing the offer letter. But before that figure goes straight to your head (with visions of new cars, vacations, and new wardrobes dancing through it), remember that your base salary is not what you’ll actually be taking home each week.
At the very minimum, you need to account for the bite that taxes, commuting, and professional expenses will take out of your paycheck. Then of course, you’ll be responsible for fitting all of your other living costs and savings goals into your budget with what’s left before adding in things such as fun and personal development.
Pay Yourself First–Nobody Else Will!
By this point in your education, you’ve hopefully learned about the beauty of compounding interest (if not, do your future self justice by reading up on it–yesterday). Essentially, the earlier you begin to save, the more money you’ll end up with over the long term. One of the easiest ways to ensure your future financial stability is to invest in your retirement beginning with your first job.
So while your peers may be speeding their ways to the car dealership or are spending long nights in expensive bars instead of filling out that 401K or 403b paperwork HR gave them months ago, remember than spending a half hour now with the boring logistics means literally setting yourself up for a financially sound future.
Save Enough That it Hurts
In addition to your retirement savings, you should also be setting up an emergency fund and long-term savings. Much like a budget, the amount you should be saving is a personal figure that you’ll need to decide based on your situation. Just make sure to re-assess your goals as your life changes so that you’re still on track for savings success.
Find Your Balance
If you’re reading posts like these, chances are you’re on the right track to educating yourself about personal finance as well as getting yourself set up for a financially sound future. While it’s excellent that you’re taking steps to set yourself up for success, it’s equally important that you’re maintaining balance in your life. Take care to ensure that while you’re setting and meeting aggressive financial goals, you’re also fitting in fun, personal development, social activities, and leisure activities. Doing so will give you a greater chance of avoiding burnout and keeping your motivation up when it comes to attaining financial bliss.
What steps are you taking to ensure your own financial bliss?
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 here and here.
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.