Without a doubt, you’re entering an exciting time of life.
But sometimes the exuberance for it turns into cavalier spending habits that can take years to repair. Much like achieving your college diploma, financial responsibility takes hard work. But the good news is that getting a solid start is completely doable.
Here are some pieces of financial advice for doing so.
1. Limit comparisons to your peers.
Soon you’ll be out in the working world making serious coin. And it feels great! But keeping up with the Joneses can start to feel like keeping up with the Kardashians. Excessive blowout weekends and “must-have” designer shoes can rack up credit card debt that’ll take years to pay off. If your friends decide to go this route, so be it. You don’t have to follow them down the same financially slippery slope.
2. Make a budget and stick with it.
Developing a post-graduation budget will help you stay in control. You can crank open a spreadsheet template and make your own or use existing free ones. For example, Intuit Inc. (NASDAQ:INTU)‘s Mint.com can help you set goals, see where your dollars go each month, remind you to pay bills, and warn you if you’re going over budget. Getting into the habit of tracking your money on a regular basis will serve you well for years to come.
3. Build credit responsibly.
Open one or two credit cards and use them every couple of months to demonstrate that you can pay your bills sensibly. Pay them in full and on time — no ifs, and, or buts about it. Avoiding credit card debt from the get-go is the single greatest financial move you can make. Clearly separating your needs from your wants will help.
Many credit cards give cash back, while others offer rewards for on-time payments.
For example, JPMorgan Chase & Co. (NYSE:JPM)‘s Chase Freedom card offers 5% cash back on up to $1,500 spent on categories that rotate every three months. And Capital One Financial Corp. (NYSE:COF)‘s Journey Student Rewards card gives a 25% bonus on your cash back when you make an on-time payment. Both cards boast no annual fees and grant 1% cash back across all purchases.
4. Tackle student loan debt.
Since many student loans don’t require repayment until after graduation, paying them down is probably a novel concept. Making the minimum student loan payment is required. But paying more than that amount each month will help those loans disappear even faster. That way you can more easily save for future financial goals.