5 Steps to Budgeting as a New Graduate

You just graduated and got your first full-time job, which means you’re about to receive your first full-time pay package.

Wow! It’s time to celebrate. While giving yourself permission to spend a lot on yourself is fine for a short period of time, you don’t want to get into the habit of regularly spending your salary by the end of the first week.

Here are some tips to help you develop a love of budget as much as you love $10 burger night at the pub.

5 Steps to Budgeting as a New Graduate

Know your current financial picture

Student life is a lot of fun, whether it’s a night out at the college bar, participating in social clubs and sports teams, or just having coffee with your classmates. But no matter how big or small the effect all that fun had on your current finances, it’s always good to take a look at where you are once you trade morning classes for morning meetings.

As a first step, make a map of how much money you currently have and how much you owe. Then review your banking products. Does your bank account have the features you need for your working life? Are you gaining a competitive advantage? savings interest rate? Evaluate your banking options now and make the switch to ensure you’re paying low or no fees and earning interest.

Prioritize debt payment

Chances are, you’ve been relying on some sort of student loan to get you through college, which you now have to start paying off. What you owe should be high on your post-college to-do list, because the sooner you say goodbye to debt, the sooner you can start saving your money and living your best life.

Just remember to make sure you receive all loan payments on time, that way you’ll avoid late payment penalties. Also keep in mind that the longer you take to pay off your debt, the more interest it will accrue over time.

Work on building a good credit score

Building a good credit score when you’re just out of college is very important. Having a good credit score can mean that when it’s time to borrow money for a mortgage or a car later on, you’re likely to get lower interest rates and more options to choose from. Any current bills you have, whether they’re phone bills, credit cards, buy now, pay later installments, or even streaming membership fees, make sure you pay them when they’re due.

And also remember, credit reporting agencies and banks can often track much of your spending activity. So before you buy another round at the pub on a Saturday night, make sure all your financial commitments are covered first.

Draw a spending plan

What are your spending goals now that you have a fixed salary? Do you want to finally leave the nest and move, or do you want to buy your first car?

By mapping out the expenses you will have, you will also be able to focus on the areas where you can cut some of the excess spending. You’re not sure where to start? If you need a little extra help, check out Mozo Budget Tool Or download a budget app that can calculate the numbers for you!

Always set aside fun money

Bad budgets are like bad diets, if you’re too restrictive, it won’t be long before you go on a binge and ruin all your hard work. It’s important to set aside money for the things you enjoy doing. But it can be hard to prioritize saving, so one of the best things you can get in the habit of doing every payday is to pay yourself first. Think of it this way, if you save $200 a month for an entire year, you would have at least $2,400 in savings. That could be a plane ticket, or two!

There are plenty of other ways to jumpstart your savings, too. You could go old school and make small changes, like opting for generic brands when you shop or eating just one a week.

It’s a good idea to keep your savings out of the reach of your day trading account. You don’t want to be tempted to be able to submerge easily. It should be seen more as a “hard days” fund than an “I’ll dip into this every week to pay my rent” account.

Author Bio: Fleeting Polly

Polly Fleeting is a money writer at financial comparison site mozo.com.au. Whether helping recent graduates find smart ways to save or finding the best travel money options, Polly keeps readers informed of her so they can live life and make better financial decisions. When she’s not checking out the latest banking news or writing detailed money guides, she’ll find her over coffee with friends or at home looking for her next vacation destination.

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