With graduations wrapping up across the country, many college students find themselves wondering what to do next. With the comfort of meal plans, student housing and endless parties behind them, graduates leave their campuses behind and jump into the mythical “real world” they have been hearing about for the last four years. Most college students walk across the stage and right into student loans and false ideas about how to build a savings and manage their money.
The public policy organization DEMOS did a study released in May of 2013, which demonstrated that the employment rate for those Americans between the ages of 20 and 34. The study found that between the ages of 20 to 24, the employment rate is a little above 60 percent, whereas the employment rate for the 25 to 34 year olds are around 75 percent. Though this gives hope to those impending grads who are stepping into the working world, it demonstrates the importance of money management right out of college.
With most college students graduating with some form of debt, preparing for post grad finances are becoming more pivotal then ever. In the same study done by the DEMOS organization, it was found that the most common debt for generation Y was student loans (42 percent), followed by credit card debt (35 percent) and medical bills (27 percent). With this in mind, students are walking away with debt and degrees and no real idea how to manage their expenses.
4 Ways to Better Manage Your Money After College
Create a Budget for Yourself: Having an idea of projected expenses and income helps better understand personal cash flow. Generating a budget where you can see and manage all expenses such as bills, rent, loan payments and discretionary spending gives you an idea of how much you are saving or need to save for emergency situations or long term purchase goals. With better control over your finances there is more opportunity to establish a savings and protect yourself from future financial downfall or a period of unemployment.
Keeping an Eye on Your Cash: Impulsivity and 20s go hand in hand, which can make keeping an eye on outward cash flow, a lot easier said then done. Avoiding impulse purchases is an important key in managing finances, particularly post graduation when they are low. Keeping personal short and long term goals in mind help minimize the damage. Gambling can be another draw for many college-aged Americans. The lights and glamor of it all can be very enticing when the reality is that more often then not people are going to loose their hard earned money.
Understand Your Student Loan Terms: While typically there is a six-month grace period for college graduates before they have to begin making their payments, there are many grads that have still not secured a job. By understanding the terms and conditions of individual student loans you can determine if deferment, forbearance or income based repayment plans are an option.
Get Rid of all High Interest Debt Immediately: Getting credit card and other high interest debt paid off is not only going to be beneficial in the short run, but the long run as well. Having debt in general impedes a person’s ability to reach goals as well as make future purchases, but having a low credit score on top of that can generate a compounding effect.
With all the glitz, glamor and fun that comes with being in your 20’s and apart of the Generation Y, many young American’s either forget, or don’t have the time to focus of their finances. With just a few moments a week or a month of organizing and understanding they can be better prepared and more stable then ever before.
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