Summary: After you graduate college or law school, you need to learn how to manage your money properly.
Many graduates joke that once you’re out of school, you’re in the “real world,” which is often very true when it comes to finances. Now that they’re out of school, recent grads often deal with things they never thought about before, such as mortgage payments, student loans, 401(k)s, and more. Here are five tips to help recent grads manage their money well:
- Understand your spending habits. Knowing where your money is going every month can be incredibly revealing. I use Mint.com to keep track of my budgets and it provides easy graphs to understand where you’re putting your money. Once you realize how much you’re actually spending in each category, you can set more reasonable budgets.
- Beware of credit card debt. This seems pretty obvious, but more and more people are falling into credit card debt and it’s just not worth the damage it can do to your credit. Credit card debt is called “bad debt” because it’s not tied to an appreciating asset (like a mortgage).
- Know your credit score. Your credit score is so important once you get out of school because it’s necessary to have a good score for things like car loans or apartment leases. Some banks add your credit score to bank statements now, or you can get a free credit report from several online sources.
- Understand your student loans. Student loans are a huge burden on people in their 20s and even in their 30s depending on your financial situation. Because there are so many different types of loans, they can become incredibly confusing. If you have loans, get on the phone with your lender and figure out how to make your payments manageable.
- Take advantage of your benefits. Your new job might have you most excited about your paycheck. However, some are lucky enough to get great benefits as well, and you might not be taking advantage of them. For example, if your employer matches your 401(k) contributions, you could be throwing away thousands of dollars by not taking advantage and at least making small monthly contributions.