The first few years after college can be a challenge for anyone—especially when it comes to financial independence. Between finding a job and a place to live, paying down student loans, and maybe even starting a family, the financial decisions you make today can impact the rest of your life.
But don’t decide to move in with your parents just yet. By establishing smart fiscal habits in your 20s and 30s, you’ll be well on your way to enjoying a more comfortable lifestyle both today and in the future.
1. Finding a Job
The first step toward financial independence for anyone is finding a source of income. Your salary will determine what you can afford in all other aspects of your life, including where you can live and what kind of lifestyle you can support.
- Be a creative job seeker, and don’t limit yourself to traditional job-search methods. Expand your network, be active and professional on social media, and attend industry events.
- Recognize that you may not get your dream job right out of college. You may have to pay your dues with one or more entry-level positions before getting to the position you’ve always imagined for yourself. And that’s OK – as long as you’re building a resume that supports your chosen career path, you’re on the right track.
- It’s important to know your worth and position yourself as a competitive job seeker in your industry. What are your peers making? What’s the average salary in your industry and region? Educate yourself so that you can intelligently campaign for fair compensation when it comes time to negotiate your salary.
2. Making a Budget
Once you have a steady source of income, you can create a budget to make sure you don’t overspend. Consider using a budget worksheet to make the process quick and easy on your journey to financial independence.
- Calculate how much you spend on set monthly expenses, including rent, car payments, insurance, student loan payments, and utilities.
- Look through your recent bank statements to estimate how much you spend on other expenses such as groceries, transportation, clothing, dining out, etc.
- Subtract your monthly expenses from your monthly net income to determine your monthly spendable income. This is how much money you have to spend on extras each month. Don’t go over this number unless you want to start dealing with the cycle of debt.
- Are you spending more than you make? Then it’s time to rethink your expenses. Where can you cut back? Should you take on a roommate? A second job? Be realistic about your finances and do what you can to avoid relying on credit cards to pay your bills.
3. Choosing Where to Live
Housing costs are generally among the most costly monthly expenses. Each of the decisions below will significantly impact your bottom line.
- Are you willing to relocate for work? While some people are set on living in one particular city, others are more open-minded when it comes to their job search. Opening up your search to other cities may give you better options both in terms of pay and position.
- How much does it cost to live in the city of your choice — and can you afford it? Some cities are notoriously expensive for renters, and it may be difficult to pay the high costs of rent on an entry-level salary.
- Will you live alone or with roommates? Obviously, flying solo can come at a high price, but living with roommates has its own set of challenges.
- Do you want to rent or buy? Buying can be a wise investment, but not all young adults are qualified to purchase a home. If it’s something you’d like to do in the near future, start by building your credit and familiarizing yourself with the real estate landscape in your area.
4. Managing Student Loan Debt
The average student graduates with about $30,000 in student loan debt. While you may be able to defer your payments while in school or residency, eventually you will have to start tackling those payments. After housing, this is often one of a graduate’s most significant monthly expenses.
- Your post-graduate student loan bill shouldn’t be a surprise. Know how much you’ll owe – and have an idea of how you’ll pay for it – before you even start college.
- Learn more about the federal loan repayment plans for which you are eligible and what your private loan payments and interest rates are at this time. Check your private loan statements or your lender’s website for this information.
- Consider whether refinancing your federal and private student loans can make your monthly payments and even your interest rate lower. With U‑fi, there are no application or origination fees and you could end up saving yourself thousands of dollars over the life of your loan.
5. Planning for the Future
While at times it may be difficult to imagine life beyond your next paycheck, it’s critical to think about your future financial independence.
- Family planning – Do you have plans to get married, start or expand your family? It’s a good idea to start saving for those milestones early on.
- Retirement savings – 65 may seem like a long way off, but you’ll eventually thank yourself for packing back even a small amount of money toward your future each month. Start early and it will add up quicker than you think.
- Insurance – You’ve enjoyed the benefits of your parents’ insurance policy for most of your life, but being an adult means buying your own health, car, and home or rental insurance.
Complete financial independence after college may seem intimidating at first, but it’s also exciting. Embrace the challenges, but reach out for help when you need it.