5 Personal Finance Tips Every College Graduate Should Know
As your trusted financial resource at the Lake of the Ozarks, we are here to help you prepare for this exciting new chapter of your life. Here are a few quick tips all college graduates should know as they prepare to enter adulthood.
1. Start A Budget
First and foremost, it's time to set up a monthly budget. You will have a lot of financial obligations requiring attention once you are out on your own, and it's important to ensure that you properly allocate your income in order to cover your various expenses. Determine your net monthly income and divide it up among your expenses. Once you have a spending plan for your various expenses, stick with it. If you end up going over your budgeted allowance for one category, subtract money from a different category to compensate for it.
2. Start Saving For Retirement With Your Very First Paycheck
As we just discussed, you probably have several expenses on your plate as a recent graduate. As you juggle rent, car payments, phone bills, student loan payments, grocery bills, and more, saving for retirement may seem like a distant dream at best. However, beginning to save for retirement now will drastically increase the amount of wealth you can accumulate in the long run. Even if it's as little as $25 or $50 per month for now, you should still start making regular contributions to your IRA account at the Lake of the Ozarks as soon as you find employment.
3. Get A Credit Card (But Be Smart About It)
As an adult, you will quickly realize that a strong credit history is one of your most valuable assets. You will need it to apply for auto loans, mortgage loans, insurance, and countless other things. Credit histories take time to build, so it's better to get started sooner than later. Opening a credit card and using it for small purchases can be a great way to start building your credit history, but it's important to be smart about how you use your plastic. Treat it like cash; don't make any payments you couldn't afford to make with cash or a check, and be sure to pay off your balance in full every single month.
4. Pay Off Debts With The Highest Interest Rates First
All debts come with a different interest rate. This interest rate will determine how much the debt costs you; the higher the rate, the more money you will probably end up spending on interest in the long run. If you have several different debts, determine which one has the highest interest rate and start taking steps to pay it off before any of the rest. Once you get it paid off, you can take the money from its monthly payments and start applying it towards your other debts to pay them off faster.
5. Start Saving Now
There is never an excuse not to save at least a small percentage of your paycheck. Make it a point to direct at least 10% of your paycheck into a savings account or individual retirement account at the Lake of the Ozarks so you can start to build an emergency fund. Ideally, your emergency fund should be large enough to support you for three to six months without any income whatsoever. Life is unpredictable at best; it's important to always be prepared for whatever situation may arise.
First Bank of the Lake Is Here To Help!
If there is anything you need that First Bank of the Lake may be able to help with, please don't hesitate to let us know! Our banking professionals in Osage Beach MO have the tools and resources you need to set yourself up for a bright, successful financial future. Visit our website to learn more about what we can offer you: www.FirstBankLake.com
Congratulations on your graduation, and good luck!
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