Money Management for Recent Grads & Job Hunters
The Bureau of Labor Statistics said the U.S. added no new jobs last month. While the most recent report was a major disappointment, individuals must focus on what they can manage instead of what they cannot control. While job hunters cannot control the overall economy, people can manage how much they spend and of course how to strategically apply for jobs. In this volatile economy, new entrants to the job-seeking pool must be as wise as a soon-to-be retiree, according to personal finance expert Manisha Thakor.
Here are Thakor’s top tips to stay out of the red while you are fresh out of college:
1. Expect your standard of living to drop – many college campuses these days have sports and student centers that rival four-star spas. When you get into the real world, your starting salary may not allow you to live as comfortably as you did in college. Your parents had to work for years to reach the standard of living you enjoyed pre-college, so don’t expect to have the same right out of the gate.
2. Know your flow – when it comes to your money, knowledge really is power. Use Mint.com to keep track of your budget. A clear understanding of where your money is going will enable you to make sure you are spending your hard earned dollar in the places that will bring you the most joy.
3. Keep your mandatory expenses to 50% or less of your take home pay – this includes housing, transportation, food, and insurance. If the things you NEED to spend money on every month are much higher than this, you won’t have much left for WANTS and the all-important SAVINGS category.
4. Strive to save 20% of your take home pay – that number may sound gigantic. But if you can get into the habit of saving 10% of your take home pay for retirement and another 10% for nearer term needs right out of the gate, you will put yourself on the path to financial nirvana.
5. If you have student loans, make sure you know when you have to start paying and that they have your current address – often when you sign up for loans for people with bad credit with you put your parents or your school address. Then you graduate, have a grace period, get an apartment and whoops! You forget to notify your lender of your new address and you miss your very first payment and it puts a big dent in your credit score. Simply knowing when the first payment is due and making sure your current address is on file can save you a lot of agony.
6. If your budget is tight, consider living at home – no, it’s not glamorous, but especially if you have a heavy student loan burden it can be one of the best financial decisions you make. Use time at home as a way to turbo charge either your debt pay down or your savings build up.
7. Educate yourself about your personal finances – chances are you weren’t offered a course in money management while in school, but you did learn how to learn. So whether it’s a magazine like MONEY, a blog like GET RICH SLOWLY, or a website like DailyWorth… commit to learning more about your personal finances.
To continue strengthening your grip on managing debt, as well as managing your cash flow when you finally do lock in that job and salary, subscribe to Manisha Thakor’s Blog.
By Tanya, Wall Street Services Reporter