When you graduate from college and start working your first job with a real salary, budgeting for your new lifestyle is tricky. Many of us tend to overspend or justify unnecessary purchases with our new income and sense of freedom.
Here are a few ways you can take control of your finances post-graduation:
Try to keep your fixed expenses as low as possible.
Even if you could technically afford it, the lower you can make these expenses, the better off you will be. Try living with a roommate or living at home to cut down your contribution to fixed expenses. Remember it isn’t forever.
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No matter how much money you make… save!
As a general rule of thumb, you should save at least 10 percent of your income – regardless of the size of your paycheck. Set up an automatic transfer each month from checking to your savings when you get paid. Automating the process makes it decidedly easier for you to save instead of spend.
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Write down your expenses and actually keep track of where your money is going.
You can’t live on a budget if you don’t have one! Some people prefer to track their budget in a spreadsheet or online with a service like Mint. Others prefer to do it by hand. Whichever camp you belong to, the important part is that you are keeping track of your expenses.
Write down your fixed expenses (including savings!) and your variable ones to identify where you are living beyond your means and where you can cut back. Try a No Spend Challenge and see how it helps curb your spending habits.
Make financial goals and focus on achieving them.
It’s tough, but it will help you establish better spending habits. Start saying “no” to coffee everyday and instead treat yourself once or twice a week. Say “no” to spending your paycheck at Forever 21 when you’ve had a bad day at work.
Being disciplined will not only keep you from spending unnecessarily, but it will help you break the emotional connection you have with splurging on material items.
Avoid using your credit cards.
Unless you already have low expenses and control over your spending, stay away from credit cards. Don’t close them if you already have them (having long-term credit keeps your credit score up), but don’t open any new ones until you are responsible enough to not spend beyond your means. It’s too tempting to fill a credit card up and think you’ll pay it off—it only ends with you feeling guilty and with a pile of debt.
Learning how to budget takes time, but once you learn the basics you’ll have control of your finances in no time.
Nicole Booz is the founder and Editor-in-Chief of GenTwenty. She has a B.S. in Psychology. In her free time she enjoys training for half marathons, planning her next great adventure, and reading any book she can get her hands on.