When I was in college I had very few financial concerns, in part because I had very few financial options. There was so little money coming in that all I had to do was make sure my bills were covered and find new recipes featuring oats and lentils. It may not have been sexy, but it was a no brainer.
Once I graduated, I realized that I was underprepared for non-student life and choices I’d have to make with a full time job. I made some mistakes and I didn’t take advantage of some opportunities available to me because I didn’t have access to the right information at the right time.
With graduation season upon us, I’m sharing my experiences so that you can succeed where I did not.
Figure out a realistic budget in preparation for your job search.
When you’ve been living on the aforementioned oats and lentils with 4 roommates on a combination of scholarships and student loans, any job with a steady salary can seem like a good job. When I first considered my job options, I added up my costs, and as long as the pay was more than the bills, I thought it was a great deal. Adding up all of your expenses, variable spending, and savings goals (and making savings non-negotiable) will help you get a better idea of whether the salary is actually going to cover your needs and whether it will allow you to create a solid financial foundation. (Your bills aren’t the best determinant of what you should make anyway, but that’s another story.)
2. Get on top of your student loans way before you have to.
Sure, you get a 6 month grace period after graduating before your payments kick in. But at the end of the day, I should have contacted the National Student Loan Database as soon as I was employed to certify my income and find out what my options were for repayment. Instead, I got a job, got an apartment, and made lots of fun plans based on my new income without actually knowing what my loan payment would be. This made it hard to budget and led to a number of lean months before I was able to get on an Income Based Repayment Plan.
3. Salary isn’t the only consideration when assessing a job offer.
I was so eager to make money once I graduated that I only looked at the prospective paycheck and I undervalued the benefits packages. I didn’t realize the value of paid vacation and sick days until I didn’t have any and had to deal with budget deficits when I took time off. I didn’t realize the value of a 401k match because I thought of it as a bonus but not as a form of compensation. I was more scared of having to save than I was motivated by being rewarded for saving. Truth be told, after living on so little for so long, reducing my paycheck by 3% in exchange for a 3% match would have been pretty painless and paid dividends down the line.
4. Just because your student loan balance is high doesn’t mean you can’t pay it off.
Depending on your situation, your student loan totals may seem pretty intimidating. I know in my case that I couldn’t imagine a payoff date, and that made it really hard to stay motivated to pay off the loans. Use a loan repayment simulator to estimate how much your payments would be and, as best you can, make a financial plan that takes payoff into consideration. This isn’t to say that I think that it will be easy or that our student loan system is fair, but until we see significant policy change, it’s what we’ve got to work with. Just like any big, nebulous number, without a plan it will seem impossible. Create measurable goals and a timeline so you can track your progress and have a payoff date to work towards.
You just accomplished something big, and you have a world of possibilities in front of you! Having a strong financial footing will allow you more freedom to build the life you want. Create concrete goals and a timeline for completing them, and stick to the steps you need to take to make them happen.