Graduation from college or university is supposed to be freeing. You’re supposed to feel relieved, but sometimes it can cause a new sense of financial pressure. Being a student no longer guides your decisions and perspective.
You become responsible for being responsible; often before you even have a good or reliable income.
Managing your finances as a post grad isn’t about having everything “figured out” right away. It is about creating and maintaining structure in your life.
First goal to manage finances after graduation
The first goal is not growth or moving back home; it’s reaching stability. What does this mean?
It’s knowing your monthly expenses and implementing safeguards to prevent financial emergencies. If you’re seeking financial stability but your income is unstable, it’s not necessarily a bad thing! But that instability alone deserves your complete attention.
Getting to a stable income will help you make better financial decisions in the short and long term.
Regardless, even if the best you can do is pay your bills, you are still making progress!
Understand your cash flow
Post grad, money can feel like it disappears as soon as it hits direct deposit into your bank account. It’s likely because it has no clear direction or system.
There’s no need for a fancy budget, just awareness. Awareness of how much of your money goes in and out of your bank account. This will allow you to make informed and rational decisions about money instead of compulsive or emotional ones.
If you want to take the extra mile, create an excel sheet with all your monthly income as well as monthly expenses, such as bills, loan payments, and car payments.
Build a small emergency fund
An emergency fund is a financial safety net that you set aside specifically for unexpected expenses or emergencies. For students, emergency funds are important because they cover the essentials needed to live and stay in school, without having to rely on credit cards, loans, or scramble for help from family members or friends at the last minute.
For students, a realistic emergency fund goal is between $100 and $1,000.
Learn about your debt without letting it overwhelm you
For post grads, student loans are sometimes inevitable. Managing finances after graduation means learning to accept and manage your debt, without feeling shame or some other negative feeling.
This only happens by taking the time to understand your loans. Understand the loan balance amount, the interest rate, the monthly payment that goes to the principal and to interest, and if you have repayment options.
With this information, you can make more intentional choices.
Don’t invest your money until it makes sense
There is so much information online that tells you to start investing early. While that is great advice and actually does work, timing is relevant for a post grad.
If investing your money would mean dipping into your emergency fund or the money needed to cover your basic expenses, it should not part of your financial journey at this point. Investing should support your other income streams and savings, not put stress on them.
One you have a stable income and an emergency fund in a safe place, then you can start investing in small amounts. When it comes to investing, slow and steady wins the race! There is no need to be aggressive or move quickly when you’re just starting out.
Don’t compare yourself to anyone else
Post grad finances can be so different from one person to the next. Some people choose to start working immediately, and start making money. Others take a gap year to travel abroad. Still, others choose to move back home and work at their local bookstore.
If you compare yourself to other people, it may bring negative feelings and lead to an inaccurate perception of your journey.
Managing your finances after graduation is just about having a good trajectory. If you are taking steps to improve your situation by learning, you’re on the right track!
Choose simple habits and systems over complicated ones
The best money habits and financial systems are simple. Life gets messy and complicated – you don’t need to overcomplicate one more thing. Your money habits should be really easy for the moments when life isn’t.
This looks like: setting up regular, automatic payments for your bills and debt, setting one simple savings goal instead of five different ones, and using just one account.
Develop a growth mindset and know that your financial state is temporary
Your current situation is not permanent; it is one era in the grand scheme of your life. You will advance through this phase eventually.
Your income, expenses, and goals will evolve all throughout life. You’ll get better at managing everything with consistency and practice.
Allow yourself the time and space to grow, make mistakes and learn from them – this is what your post grad era is for. Moving from a scarcity mindset to a growth mindset is crucial.
Wrap up
Thank you so much for reading my article! I am not an expert by any means, I am just someone who wants to slow down and understand the basics before taking any steps! Follow my journey if you’d like!
Check out the rest of the blog for personal finance guides, tips, and more!