If you're reading this - congratulations! You made it to your adult life chapter. This time comes with many 'firsts' and new adult decisions, including how you will manage your money. You may have accepted your very first full-time job and you're thinking 'wow, I have SO much money now'. Although it may be true that you are making more than you ever have before, it's important to be responsible with your newfound paycheck in order to set yourself up for a life of financial stability and ultimately financial freedom.
Here's what to do to get yourself started off on the right foot:
1. Pay Down Your Debt
More than half of American students1 now need to borrow to pay their way through college. If you're one of those students, you probably are graduating sitting on a pile of debt - don't worry, you can pay this down quickly if you make it a priority. First, determine a monthly payment towards your student loans based on what your current income is. Next, go to your lender's website and sign up to make automatic payments to your loan account. Try to go well beyond the minimum payment (if you can) in order to pay your debt down fast. Remember, you don’t want this debt hanging over you forever and the sooner you pay it off the sooner you can start using your money for more exciting things.
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2. Automate Your Savings
Do you want one less thing to think about? If you answered yes, then automating your savings is a great way to take one less "to do" off of your plate. Set up your checking and savings account to automatically draft money from your checking to your savings every month so you don't even have to think about it. This way, you'll be saving money without having to do a thing! You should aim to save at least 20% of your monthly income.2
3. Pay Your Bills On Time
This may sound like a no brainer - but you would be surprised how many college graduates don't understand the importance of this. If you get in the habit of paying your bills late you can get yourself into a lot of financial trouble and your credit score can take a major hit - and fast. To avoid this, make sure to pay down your balances as fast as possible.
4. Contribute To Your Retirement Savings Plan
If you're thinking that you're far away from retirement - you're right! However, now is the time to start contributing to your retirement savings plan to make sure you have built up a large nest egg for when the day comes that you do retire. Think of it this way: if you start saving earlier, you will only have to save smaller amounts at a time versus large chunks at a time later on. Trust us, you'll be avoiding stress down the road if you start saving for your retirement now.
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