Adulting 101: How to Manage Finances in Your First Job Out of College
Start writing a post
Adulting

Adulting 101: How to Manage Finances in Your First Job Out of College

No more spending on booze and books - it's time for rent and bills.

28
Adulting 101: How to Manage Finances in Your First Job Out of College

Recent college graduates can make the transition into adulthood go a little smoother by learning about personal finance early in life.

By earning a degree, you started off life with an advantage. However, with that advantage comes responsibilities.

Each year, United States college graduates face a combined annual student loan debt nearing $2 trillion. As a new graduate, you'll likely accrue debt before you land your first job. However, you can handle it – with a little guidance.

Building a Solid Financial Foundation

Undoubtedly, you'll learn a lot in college. However, unless you took a course in personal finance, it's unlikely you'll know much about the topic.

Still, learning about personal finance is essential for new college graduates. The way that you manage money will influence the quality of your life greatly.

College students graduated with an average of $37,000 in student loan debt in 2016. A tiny percentage of students did manage to earn a degree without accumulating debt. For instance, the government provides loan forgiveness programs to encourage students to choose a handful of high-demand careers.

However, if you're like most grads, you'll need to figure out how you're going to repay your student loan. You can begin by figuring out the type of payment plan that works best for your current situation.

Federal lenders give you ten years to pay back your student loan. However, private lenders offer varying terms. Some lenders can base your payments on your current income.

The rate and terms of your loan will affect your payments. For example, you must understand whether the rate is variable or fixed.

Fixed-rate loan payments will remain the same. If you took out a variable rate loan, however, it helps to know that your payments may change.

The financial habits that you develop right after graduation typically shape how you will handle money during your lifetime. Resultantly, it's a good idea to start developing sound financial habits right away.

Avoid bad habits such as accumulating excessive credit card debt. Also, learn not to spend your entire weekly income. It's always a great idea to set aside money for emergencies.

You should build saving into your monthly budget. You can make saving more intuitive by setting up automatic transfers from your checking account to your savings account.

Also, it's advisable to grow your nest egg to cover three to six months or more in living expenses. That's a considerable amount of savings, but you don't have to do it all at once. In the beginning, try to build a small $1,000 nest egg, and then grow your savings over time.

Health Equals Wealth

Analysts forecast that global healthcare spending will reach $3 trillion by the year 2025. Sometimes, it can cost a lot to maintain your health. However, your health can affect your ability to earn a living, and your ability to earn will affect your ability to live.

If you managed to land a job right after college, your best option is to find out if you're eligible for employer-sponsored health insurance. If not, the Affordable Care Act allows your parents to keep you on their health insurance plan until you turn 26. Of course, this is something you'll need to discuss with your parents.

If parental health insurance isn't an option, try to secure health insurance through the Health Insurance Marketplace until you can find a job that provides healthcare coverage. Some recent college grads may even qualify for Medicaid sponsored coverage.

The Health Insurance Marketplace may seem expensive. Furthermore, many young, healthy adults believe they don't have to worry about their health.

However, you're taking a significant risk by going without health insurance. If you don't believe it, ask someone you know who's recently used hospital services if you can see a medical bill. The bill will show you how much it might cost you to pay for medical services out-of-pocket.

You'd be surprised at how much health services cost. Sometimes, treatment can reach tens of thousands of dollars – or more!

Planning Ahead – No, Further Ahead

Many new graduates worry about how they're going to pay off student loan debt. Intuitively, they devote everything they can to paying off that debt as soon as possible.

However, creditors consider student loan debt as good debt. There are ways that you can use this to your advantage. For example, you can write off up to $2,500 in student loan interest every year.

If the interest rates for your student loans are reasonable, you may want to divide your focus between saving for retirement and gradually paying off your student loan.

It's never too soon to start saving for retirement. The earlier you start, the better off you'll fare when you're ready to retire. An accountant can help you navigate the intricacies of tax deductions.

By investing for retirement while you're young, you can pursue a more aggressive strategy and save much more toward your retirement. You can also take advantage of additional tax breaks for contributing to your savings.

Unfortunately, debt is the norm for most new college graduates. However, with a calm demeanor and a good plan, you can develop financial habits that will help you maintain a desirable quality of life.

Report this Content
This article has not been reviewed by Odyssey HQ and solely reflects the ideas and opinions of the creator.
Health and Wellness

5 Simple Ways To Give Yourself Grace, Especially When Life Gets Hard

Grace begins with a simple awareness of who we are and who we are becoming.

1840
Photo by Brooke Cagle on Unsplash

If there's one thing I'm absolutely terrible at, it's giving myself grace. I'm easily my own worst critic in almost everything that I do. I'm a raging perfectionist, and I have unrealistic expectations for myself at times. I can remember simple errors I made years ago, and I still hold on to them. The biggest thing I'm trying to work on is giving myself grace. I've realized that when I don't give myself grace, I miss out on being human. Even more so, I've realized that in order to give grace to others, I need to learn how to give grace to myself, too. So often, we let perfection dominate our lives without even realizing it. I've decided to change that in my own life, and I hope you'll consider doing that, too. Grace begins with a simple awareness of who we are and who we're becoming. As you read through these five affirmations and ways to give yourself grace, I hope you'll take them in. Read them. Write them down. Think about them. Most of all, I hope you'll use them to encourage yourself and realize that you are never alone and you always have the power to change your story.

Keep Reading... Show less
Entertainment

Breaking Down The Beginning, Middle, And End of Netflix's Newest 'To All The Boys' Movie

Noah Centineo and Lana Condor are back with the third and final installment of the "To All The Boys I've Loved Before" series

303938
Netflix

Were all teenagers and twenty-somethings bingeing the latest "To All The Boys: Always and Forever" last night with all of their friends on their basement TV? Nope? Just me? Oh, how I doubt that.

I have been excited for this movie ever since I saw the NYC skyline in the trailer that was released earlier this year. I'm a sucker for any movie or TV show that takes place in the Big Apple.

Keep Reading... Show less
Lifestyle

4 Ways To Own Your Story, Because Every Bit Of It Is Worth Celebrating

I hope that you don't let your current chapter stop you from pursuing the rest of your story.

190564
Photo by Manny Moreno on Unsplash

Every single one of us has a story.

I don't say that to be cliché. I don't say that to give you a false sense of encouragement. I say that to be honest. I say that to be real.

Keep Reading... Show less
Politics and Activism

How Young Feminists Can Understand And Subvert The Internalized Male Gaze

Women's self-commodification, applied through oppression and permission, is an elusive yet sexist characteristic of a laissez-faire society, where women solely exist to be consumed. (P.S. justice for Megan Fox)

92730
Paramount Pictures

Within various theories of social science and visual media, academics present the male gaze as a nebulous idea during their headache-inducing meta-discussions. However, the internalized male gaze is a reality, which is present to most people who identify as women. As we mature, we experience realizations of the perpetual male gaze.

Keep Reading... Show less
Lifestyle

It's Important To Remind Yourself To Be Open-Minded And Embrace All Life Has To Offer

Why should you be open-minded when it is so easy to be close-minded?

286101

Open-mindedness. It is something we all need a reminder of some days. Whether it's in regards to politics, religion, everyday life, or rarities in life, it is crucial to be open-minded. I want to encourage everyone to look at something with an unbiased and unfazed point of view. I oftentimes struggle with this myself.

Keep Reading... Show less
Swoon

14 Last Minute Valentine's Day Gifts Your S.O. Will Love

If they love you, they're not going to care if you didn't get them some expensive diamond necklace or Rolex watch; they just want you.

172244

Let me preface this by saying I am not a bad girlfriend.

I am simply a forgetful one.

Keep Reading... Show less
Student Life

10 Helpful Tips For College Students Taking Online Courses This Semester

Here are several ways to easily pass an online course.

114736
Photo by Vlada Karpovich on Pexels

With spring semester starting, many college students are looking to take courses for the semester. With the pandemic still ongoing, many students are likely looking for the option to take online courses.

Online courses at one time may have seemed like a last minute option for many students, but with the pandemic, they have become more necessary. Online courses can be very different from taking an on-campus course. You may be wondering what the best way to successfully complete an online course is. So, here are 10 helpful tips for any student who is planning on taking online courses this semester!

Keep Reading... Show less
Lifestyle

Take A Look At The Extravagant Lane Woods Jewelry Collection For Valentine's Gift Ideas

So if you are currently looking to purchase jewelry for yourself or as a romantic gift for your S.O., you should definitely look at the marvelous and ornately designed Lane Woods Jewelry collection

335093

Just like diamonds are a girl's best friend, so are pearls, rubies, gold, emeralds, and any type of luxurious jewelry you can get your hands on! A woman is incomplete without a piece of jewelry on her and it is a gorgeous accessory required for all occasions. So if you are currently looking to purchase jewelry for yourself or as a romantic gift for your S.O., you should definitely look at the marvelous and ornately designed Lane Woods Jewelry collection.

Keep Reading... Show less
Facebook Comments