You probably have a lot of ideas about what life will be like after college. You will get that dream job, start making tons of money and just live happily ever after. That would be great, it’s unlikely, but that would be great.
You are going to have to face a few realities and doing so will set you up for success in the future. A future where you can eventually make a lot of money, own a great home and possibly look at retiring early. Here are some tips to get you there.
1. Look For Your Dream Job But Settle For Now
That dream job is out there but you are probably not going to land it straight out of college. You could hold out for it but you will be wasting a lot of time when you could be earning. Plus, student loan interest is not going to wait. You can defer the payment, but the interest is building.
If you can not land the dream job, look for one that is related so that you can get your foot in the door. You might see a lot of job listings for the job you prefer but people who have a relationship with the one doing the hiring have the leg up. You need to get your name out there and build connections, so take anything you can related to your choice of career.
2. Save Big & Save Now
People tend to spend everything they make and tell themselves that they will save when they get promoted and start earning more. That day usually never happens though. There is always an extra bill that comes in and your spending always seems to go up with your salary.
Start off on the right track by taking 20 percent of your take home pay and putting it into savings. Make it a habit now and realize that you are getting a huge leg up on most people. Saving 2000 dollars now will have a much bigger impact than saving the same amount of money in your 40’s. Start earning interest and/or profits on it now that will compound for decades.
3. Live Simple While You Get Established
That first job can get to your head. You start thinking about getting an apartment with granite counters, concierge service and a world of amenities. That new car keeps popping up in your head and it can be all too easy to go crazy. It doesn’t help that yo become target number one for credit companies looking for business.
Resist the urge to spend and live simply for some time, just like you have been doing in college. Get a modest apartment or even live at home for a year. Keep that old car if it is running well and if you must get a new one, go economy. Also, be frugal when it comes to entertainment, food expenses and unnecessary purchases or financing. Financing jewelry would be a bad call, live simple. Set a budget with a reasonable allowance for these things and your other bills and stick to it.
As your income increases, you will be able to gradually increase your spending. When this happens, you will be on a better footing with less debt.
4. Tackle Your Student Loans Head On
Remember, just because your loans are in deferment, does not mean that interest is not accruing. Start making payments as soon as possible and make additional payments when possible.
If you have 40000 dollars in student loans at 6.8% interest on a 20 year term, you will pay a monthly payment of $305. You would end up paying over 33000 dollars just in interest.
Add an additional 100 dollar payment a month and you would reduce that interest to just under 19000 dollars. Add an additional 200 dollar payment a month and further reduce interest to just over 13000 dollars. As you can see, paying just a bit extra will have a huge impact in how much interest you pay.
5. Keep Improving Yourself
This is the time to increase your skills. When you are young, you have less commitments from family and kids, so take advantage of the time. This could be going after an advanced degree, earning additional certifications or just added skills that you can market.
The great thing is that it has never been easier to improve yourself because you can do it all online. Get your masters, learn s foreign language, master excel and powerpoint. Whatever skills that you could use to further your career and improve your income can all be mastered from your humble laptop computer.
6. Take Advantage Of Your Employer 401K
At the very least, you should be maxing out your employer contribution. Not doing so is throwing money away. When you think about it, your employers 401K match is really a part of your salary. Not maxing it out is like saying that it’s okay not to pay you all of your money.
Keep in mind also that everything that you put in comes off of your taxable income. Your about to learn all about taxes and just how important this is.
7. Get Yourself A Side Gig
One day, you might look back and see just how much time you wasted in your twenties. You probably have a lot of free time right now and trust me, this will change.
Take advantage of the time to set up a side gig to increase your money. You may not need the money today but you can put it to good use. It can be used to build your savings or pay off that student loan debt. Drive for Uber, do some part time book keeping, sell freelance graphic art or web design, etc, etc. You might even find a side gig that you want to develop into a full time business.
8. Set A Financial Goal
There is nothing worse in life than wandering aimlessly. Set a goal now that you can use for motivation and direction during the next couple decades of your financial life.
Do you want to retire at 55 or even 40? Do you want to start your own business or perhaps a non profit charity? Your young, the sky is the limit, you just need a plan.