The following article was produced and paid for by Commerce Bank:
College is done. The diploma is on your wall. And you’re looking forward to all the fresh opportunities ahead. But along with that heady sense of freedom comes new financial responsibilities.
Keeping up with an increased number of monthly expenses, trying to balance spending with saving and wondering where on earth your money goes every month — it can all feel overwhelming.
The good news: When you master fundamental money skills, you gain control over your finances. Ultimately, that means having the funds you need when you need them — for life’s essentials as well as the luxuries, like that bucket list trip, your best friend’s out-of-town wedding, or, one day, purchasing your first home. Let’s get started.
Create a Budget
Here’s the beauty of a budget: It clearly spells out how much money you have coming in every month, all the expenses you need to pay for and how much you have left to put toward your personal savings and for fun.
Start by adding up all your income and expenses. Keep in mind that you may have new expenses to account for like a work wardrobe, transportation, health insurance, rent and utilities. You can find more budgeting resources here.
Tip: Revisit your budget every few months and make adjustments as your income and expenses change.
1. Pay down debt. Keep debt under control and try to avoid taking on more than you can afford to pay back before interest fees start adding up. Focus on making larger payments toward balances with higher interest rates while paying at least the minimum on other debts.
For help managing federal student loans, visit studentaid.gov to learn about repayment options.;
Tip: Focus on paying off debts with the highest interest rate first.
2. Build an emergency fund. Setting money aside for unplanned expenses, like a car repair or medical bill, can help prevent you from derailing your budget or racking up debt.
Tip: Set up a separate savings account and contribute to it each month until you have enough to cover three to six months of expenses.
3. Save for retirement. Sure, you’ve only just started your career and retirement is decades away. But you could earn more for your retirement if you get into the habit of saving for it now. Take the first step by setting up a Roth or traditional IRA, or participating in your employer’s 401(k) plan.
Tip: Try to take full advantage of employer matching contributions. It’s like getting free money.
Life Hacks for Living Better Within Your Means
Living a lifestyle you can afford now doesn’t have to be all work and no fun. These tips can help you spend wisely — and stretch your paycheck.
Automate payments for deposits to your savings account and monthly bills. Basic principle: If you don’t see it, you won’t spend it on something else.
Pay bills on time to avoid late fees and build a strong credit history. A healthy credit score can help you qualify for lower interest rates — which can save you thousands on future large purchases like a car or a house.
Resist the urge to splurge if you get a bonus or a tax refund. Put at least part of the money toward savings goals or paying down debt.
Learn to cook, clean and handle basic auto maintenance like checking your oil and keeping tires inflated — so you don’t have to pay a pro to do it.
Look for free or low-cost local events and activities. Grab your friends, make a night of it, and you’ll have just as much fun as you would at, say, a pricey concert.
Ace Your Financial Future
As your paycheck grows, your financial priorities and goals will likely change. By starting your post-graduation life with smart financial habits, you’ll be better positioned to reach your goals more quickly and take advantage of new opportunities that come your way.