Taking Control of Your Finances After College

Taking Control of Your Finances After College

It’s time for you to graduate from college. Finally! That means you’re preparing to start your career and life on your own. Although your 20s are the time to explore, be wary of certain financial decisions. “While every decision you make won’t irrevocably change the course of your life, a few may,” warns US News. Graduation is an excellent time to prepare to get your financial life headed in the right direction.

Although the job market for new college graduates is slightly improving, the large amount of student loan debt will be a constraint in the financial lives of many college grads many for years, maybe even decades. According to the Institute for College Access and Success, 68 percent of students from four-year colleges graduated with debt in 2015, and the average debt amount was $30,100, up four percent from 2014.

Lifestyle

Adjust your lifestyle to meet your financial goals. Start by living within your means, or even living below your means when possible. Many people make the mistake of readjusting their lifestyle to spend more with each increase in income. A better idea is to increase your contribution to your 401(k) plan and stick with the same lifestyle as before the raise.

Although it was considered unusual a generation ago, many college graduates now opt to live with their parents following graduation. It’s a smart short-term plan since you won’t fork money over for rent, utilities, and an internet bill. Instead, you can build up a savings account for a car, rent deposit, down payment on a home, graduate school, or even a once-in-a-lifetime trip.

Establishing credit and using it wisely are important financial steps, and one way to enhance your credit score is to always pay your bills on time. Also, be sure to monitor your credit profile. College students are the most prone to identity theft because they have such a substantial online profile.

Savings

Be sure you learn about personal finance and investing. Research online or read books on how to manage money and the different ways to invest. Take advantage of employer 401(k) plans by contributing as much as you can, or at least the same amount that your employer is willing to match. Otherwise, you’re missing out on free money from your employer. Obviously, the sooner you start, the more compounding interest works in your favor. Starting at 22 as opposed to 32 can be a world of a difference.

Having a retirement plan can even save you money on taxes each year. This means you can save extra income or even earn a refund that can be deposited into your savings or retirement fund. Many people find it beneficial to work with a financial planner or tax software so they’re sure to get all of the maximum tax deductions they’re entitled to, which helps their hard-earned money go even further.

Also, have money automatically withdrawn from your paycheck and distributed into a savings account or 401(k). This is most important in the first few years, as it gets you into the habit of this lifestyle. Furthermore, by having it automatically withdrawn, you won’t be tempted to spend the money.

Beyond the Bills

Choose your friends wisely. If you surround yourself with people who spend their money foolishly, it is likely to rub off on you. This is especially true with dating; marrying someone who doesn’t share your financial values is unwise. Learn to cook so you’ll eat at home more, which will save you money. Eating at home can also be healthier, which can lower medical expenses.

Before deciding to go to graduate school, consider the costs versus the benefits. For some fields, such as education, a master’s degree is a necessity. For others, having a master’s degree doesn’t offer any real career benefits. Accruing additional debt without increasing salary is ill advised.

Of course, none of this is to say you shouldn’t have fun. It’s OK to splurge on experiences. In fact, spending money on experiences is advisable over spending it on “things.” After graduation, take the chance to travel and try new experiences. Just stay focused on your overall financial plan to have a well-balanced and healthy budget while saving for your future and living a sensible lifestyle.

Moving in with Mates: How to Break All the Myths and Truths

Moving in with Mates: How to Break All the Myths and Truths

Renting a house/apartment with one or several friends is a great way to save money and enjoy the company of other people. However, while this step is rather common during college and after high school, it’s rarely considered a long-term arrangement. As soon as one roommate gets married or is able to afford their own place, they go their separate ways. What if there’s no marriage in sight and the financial prospects of each individual involved are not enough to get their own property? Well, if the present roommate situation works, and you get along well, buying a house with your friend(s) can be a smart investment. Before you make that big move, you need to be aware of some things.

The Pros of Buying a House with Your Friends       

We’ve already mentioned some of the reasons people make this decision. The financial benefits are obvious. A joint property means that you’ll share all the costs including the deposit, transaction costs, mortgage payments, decoration, maintenance, monthly payments, repairs and household bills. Due to high prices on the housing market, many people don’t even consider purchasing a house. Joint ownership can be a useful solution for two families who could, in that way, afford a bigger property.

Agreeing on the Things that Matter

Agreeing on the Things that Matter

When the ownership status is regulated properly (each tenant can own different shares of the property and tenants can choose to leave their shares in a will or sell them, etc.), owning a property with a friend can save you a lot of trouble. It’s important to agree on things that can largely impact your co-habitation, especially money-related issues. That can include setting up a joint bank account for paying the mortgage or any other agreed shared expenses. A household rulebook is also a crucial point of discussion. You need to be very clear on the rules regarding guests, partners, pets, smoking, etc.

Starting from Scratch

Different people have different needs. Finding a property to meet the needs of one person (with or without a family) is hard. Finding a property that will suit two different people is next to impossible. If that’s the case for you and your friend, building your own home may be a better idea. This way you will be able to make everything just the way you like it from the ground up. The design can be adapted to provide you both with the privacy you need in order to lead independent lives. According to custom home builders from Brisbane your home can be built to individual specifications, but it can also be changed during the building process, so you can follow the construction and make decisions that will make cohabitation easier.

Consistency in Décor

Consistency in Décor

Congratulations, you’ve bought/built your own property. Once the moving in process begins, you will need to decorate the place. Much like with the very design, it is difficult to choose one décor style that suits different persons. Of course, your bedroom, bathroom and other personal spaces should be off limits to the other tenant, and vice versa. If there is a common area, it should be decorated in a neutral manner, except if both tenants agree on one specific style. Although you and the other tenant will decorate your own spaces based on your preferences, keep in mind that there should still be a certain consistency in décor, so try to settle on one color palette or design era.

A Trial Period

A Trial Period

You and your best friend get along great. You love spending time with each other, drinking coffee and hanging out in a cocktail bar. That seems as a great foundation for buying a house together, right? Wrong. If you have never before tried to live together you can’t be sure that your relationship will remain just as ideal. Maybe you’ll hate that your friend is smoking in the morning, or they will dislike your early bird habits. Maybe one of you is irresponsible with money. There are too many maybes to count. That is why it is better to have a trial period of renting a place, before going down the more permanent road.

Buying a house with your friend(s) can be a great decision, both financially and when it comes to social life. Still, there’s the danger of losing both a friend and an investment, so be very careful.

The Best Ways To Prepare When Planning For The Future

The Best Ways To Prepare When Planning For The Future

Few of us want to think about planning years down the road, especially when the world around us seems so unstable. It’s hard to imagine what we’ll need or want a decade from now, or what the best thing will be for our children in later years. However, taking the time now to sit down and prepare for the future is imperative, as you don’t want to be stuck in a hard situation when an emergency comes up or when it’s time to send your child off to college and the money just isn’t there.

Fortunately, there are many things you can do to ensure that your family’s future is taken care of, and it doesn’t have to be an overwhelming task. Taking care of these small things now will help you plan better for the years ahead and give you peace of mind. Here are some of the best ways to go about it.

Consider a college account

Higher education doesn’t come cheap; between tuition, books, supplies, transportation, parking passes, and housing, even smaller colleges will cost the average student thousands of dollars per year. Get a head start on the bill by opening up a savings account specifically for your child’s education. With a 529 college savings account, you’ll receive special tax benefits and the money will grow tax-free until your child is ready for school. The only drawback is that if he or she decides not to go to college or receives a scholarship, the money may not be available to you. If you’re unsure at this point whether your child will want to attend school, open up a basic savings account at your bank in his or her name. It won’t garner much interest, but the money will be safe and can be used for anything your child wants when the time comes.

Plan for your estate

No one likes to think about not being here, but planning for your estate now will save your family from being involved in a lengthy legal battle. Sit down with legal counsel and work out the details of your finances, your home and other assets, and your will. This way, should something unforeseen happen, your children will be taken care of and your estate will be settled easily.

Save now, reap the benefits later

Saving money isn’t always easy, especially if you’re one of many Americans who lives paycheck to paycheck. However, it’s important to do what you can now to save anywhere you can. This can include utilizing coupons as much as possible, taking your lunch to work or school instead of eating out, carpooling to save on gas and wear-and-tear on your car, cutting back on expenses such as cable television and fancy phone plans, and only buying things when they’re on sale. Pinching pennies now can really add up at the end of the month, and anything you save can go directly into a savings account.

Prepare a 401K

Most employers will offer a 401K plan, so if you don’t already have one, ask your HR rep about it. These plans don’t require much from you–the money is taken directly from your paycheck and put into an account–and you’ll receive statements now and then that show how much money your retirement fund has accrued.

Upgrade when you can

If you own a home, spending can get out of control when appliances, furnaces and A/C units, and hot water heaters reach a certain age. It’s never fun to think about, but it’s much easier to save up and upgrade when possible so you won’t have to worry about an emergency down the road. If you have older appliances in your home, consider replacing them even if they still work; this will save you a lot of grief down the road when something breaks down in between paydays.