Whether you’re a fresh graduate or the parent of one, there’s a lot of change ahead. From picking courses to securing new living arrangements, the transition from high school to university, college, or technical school is a significant milestone in a young life. And with that comes a need to manage money matters.
Teaching financial literacy isn’t always on the curriculum, leaving many young people to learn money matters on their own, and the hard way. Poor planning, uninformed decisions, lack of budgeting, going overboard with spending or credit cards—all of these are problems that can mount up quickly, but take a lot of time and effort to overcome.
That’s why it’s so important for new graduates to start learning how to manage their personal finances early on. Aside from avoiding personal money problems or having to turn to mom or dad when things get messy, a solid base of financial knowledge and good money management skills can develop into a lifelong journey of financial success.
Here are a few tips and ideas for new graduates to think about when they’re starting out on their own.
Understand the basics
The road to lifelong financial literacy begins with the basics. Things like budgeting, banking and understanding how credit works are important starting points. Parents often try to teach their children the value of money, but sometimes that lesson isn’t learned and that’s where problems emerge. Taking a more tactical approach to money management can be a better method for learning.
BlueShore encourages greater financial literacy and as such offers a wealth of financial articles to help readers get a better grasp of managing, saving and growing their money. Take a look through the articles to explore some of the topics that match your questions and needs.
Live within your means
Balance is often the key to both life and money. A critical step for a new graduate is to build a personal budget. Begin by knowing what money is on hand and any income sources that will supplement it. Then take stock of the big costs and expenses—things that are set and have to be paid like tuition, housing, books, transportation and food. And finally, make a plan for discretionary spending.
There will always be a need for some wiggle room in a budget. Unexpected expenses pop up from time to time and costs and prices on some things change. Plus, you can’t ignore the need to have a little fun now and then. Good budgeting skills isn’t all about paying rent and utilities.
The key is knowing what you have available for funds, weighing that against what costs are ahead of you and making a plan that keeps all of life’s priorities in line. As Michelle Lublow from BlueShore’s Solution Centre points out, too many young people end up in a financial bind because they didn’t make a plan and have overextended themselves.
Think long term
A new graduate is young with all sorts of choices and decisions ahead. And while youth can often be about living in the moment, it’s a smart idea to think about the future. That means putting aside money now so that saving becomes a lifelong habit—one that compounds and grows.
When you’re young, time is on your side. Even a small amount of money put away each week or each month will grow, providing future value and opportunities that are harder to attain when you’re older. BlueShore Financial Advisor, John Cindric, recommends getting in the habit of putting aside the first 10% of each pay into savings. Then use the rest to live off.
Another item to consider is building a good credit history. Good credit can open many doors down the road. There are a number of credit card options available for students and young people over the age of 19. But remember, always use credit cards wisely, keep focused on the overall budget, and pay off the balance on time. A credit card is anything but free money and interest can add up quickly.
Seek advice from a professional
Starting out in life with possibly very little money, a new graduate might think they don’t have enough assets to merit talking to a financial advisor. But, what’s more accurate is that they have plenty of a very valuable asset: time!
Both Michelle and John point out that every financial journey is unique to each individual and there is no “one size fits all” solution. By talking to a financial advisor early on, a fresh graduate can get the information they need to get started on their financial goals, giving them a head start for success with money and with life.
Advisors can help with setting up a financial plan, offering options for credit cards and bank accounts, providing information on student loan and bursary programs, and much more.
So whether you’re a new graduate or have one in your family, reach out now to talk to a financial advisor. The team at BlueShore would be delighted to help set things up for a strong start.