You might have finished college, but your independent adult life filled with new responsibilities is just be beginning. Andrea Woroch, a money expert and frequent contributor for The Today Show, breaks down the dos and don’ts for new college graduates who are just stepping out into the real world.
Don’t rip through all those cash-filled envelopes you get after graduating.
According to Woroch there are several ways to invest graduation money. If you have a job already, use the money to buy appropriate work attire. If you’re still on the job hunt, make sure you have all the materials you need for an interview, such as an interview outfit and the basics like a resume and cover letter. If you already have a job lined up, use the money to pay off a chunk of student loans or credit card debt. It also never hurts to have a backup emergency fund.
Establish rules about borrowing money from your parents.
Communication is key. Woroch says to establish that you’re actively hunting for a job from the get go. Be open about what your expenses are, such as rent or transportation, so your parents know you’re not just blowing money on unnecessary things.
If you’re still living at home, learn how to budget.
“Parents can be really great guides in terms of helping you save money,” says Woroch. “I know someone whose mother charged him rent while living at home towards college. It might have been around $300 – not a huge amount – but enough for him to realize that he had to stretch his dollars.” And keep track of your expenses so you can see where all your money goes. A free online money tracking system, such as mint.com, lets you see all your financial accounts in one place. The website uses easy-on-the-eyes pie charts and graphs to show where your money is going every month.
Decide which expenses are most important.
Almost everyone needs to have Internet and a cell phone for access to emails, job opportunities and basic communication. What recent college graduates don’t need these days is cable service. “Cut down on TV,” says Woroch, who recommends streaming TV shows and movies online. Also, you can save on a cell phone bill if you get a plan with your friends.
Consider joining a credit union.
“Credit unions are like a bank, but they are not a profit organization, which means that the money they make goes back to the members,” says Woroch. Credit unions have no hidden fees (usually lower if any), offer cheaper rates and higher interest on your savings account than banks. They can also offer lower interest rates on mortgage. “It’s a smart place for young college graduates to invest their money and keep it secure, especially considering they may have financial struggles.”
Don’t just accept, negotiate.
Do your research online and see how much money you should be making at the positions you’re applying for. Always try to negotiate your salary if there’s a possibility. But Woroch warns to not “always look at the money, but look what the position is. Look what your future opportunities are with that company.” Your best bet is to find an entry-level position at a company that offers upward mobility.
Don't just buy what you're used to.
Woroch says that one trap recent grads fall into at the grocery store is just grabbing the brands they know and putting them in their cart. When you can, buy the generic option instead of the name brand one. It will save you money at checkout.
A few more quick tips:
- Cut down on the electricity bill by unplugging appliances or electronics you’re not using. As long as a plug is still in a socket, it’s still sucking energy.
- When it comes to buying furniture, save money by looking into things that are used but in good condition.
- Shop smart and be aware of buying dry-clean only clothes, which can add up over time.