In true sense, you enter into the real world after you pass out from college with flying colors and get a job. You're happy and excited to begin your new journey. Finally, you're independent in the truest sense of the term and you're determined to enjoy the new phase of life with aplomb.
Well, it's good to be happy, but don't let yourself get carried away. You're entering into the big, bad and real world. It is quite expensive and to live in this world and you need to start planning your finances from now. This means you've to live on a budget and save. Check out the following 9 tips that can help you do so.
1. Think you're still at college and manage your money accordingly: Move in with your parents after getting a job. This would help you keep your housing costs low. Obviously, you can do so if your family has no problem with the idea and they don't charge a rent for it. If this option is not open, then rent a small apartment and share it with your friends. It would help you save a lot of money.
2. Stop splurging and avoid making unnecessary purchases: You don't necessarily need a new and big car when your current one is fine. If your current car can safely reach you to office, then there's is no need for a new one. You just need a vehicle to reach your destination and for that your old car and public bus are at your disposal. You don't need spend a huge amount on something that would remain parked for most part of the day. Moreover, the value of your car will start depreciating once you take it to your home after completing the formalities.
Read more: Why You Should Start Saving From Day One Of Your First Job
3. Use your brain and become more resourceful: It's a myth that you need to splurge to be happy. Small things like cooking your favorite dish, chatting with your friends (through various free applications in your cell phone), reading your favorite book, etc. can make you happy too. Engage yourself into free activities instead of shopping items you actually don't need.
4. Don't get frustrated and use all the benefits: Don't feel dejected if your salary is not too high. Check out the employee benefits and start taking advantage of them. Don't criticize your employer as he/she is compensating you for spending a big part of the day in office.
Once you have a clear idea about the benefits offered by the company, start utilizing them judiciously. For instance, if the company is offering a 401(k) plan, then try to opt for that. Other than that, if there's an option to keep aside the pretax money to splurge on items you're going to be spending on, then don't miss this chance.
Remember, company benefits can help save a big amount every year. This is turn help you stay on budget.
5. Stay away from debts to avoid troubles: Debts can kill your dreams and aspirations. You would be able to take advantage of different types of career options when there is no debt in your life. For instance, you may not do a particular job because the wage is less. You won't be able to meet your debt payments. Other than that, you may have to give up a good job offer simply because the employer doesn't like your credit report. .
6. Set up an emergency fund quickly: Save an amount that is equivalent to 3-6 months worth of your expenditures. It'll take some time to save the amount for the rainy days. So, you need to be patient.
Calculate the amount you've to spend every month on groceries, transport, education loans, auto loan, rent, etc. Next, get a correct estimate of your net income. Once this is done, map out your personal budget to know if you're spending much more than what your employer is paying you. Learn the tricks of following the budget so that you can afford to save every month.
7. Have realistic expectations: Don't have unrealistic financial expectations because you'll get nothing but pain at the end. In all probabilities, you won't begin your working life at the same comfort level as your father. Keep it in mind, you've just begun your career. On the contrary, it has taken your father 20-25 years of hard work to have the luxuries of life.
8. Save for the golden years of your life: When you're in 20's, retirement seems to be an eternity away. Who cares for what will happen after 30 years? You can always save later and enjoy the present moments. Right?
It is not right since once you cross 30, you'll have lots of responsibilities and associated expenses. You'll probably be married by then. You would wish to buy a house and have nice vacations with your family. This means you may not be able to contribute a big amount towards the retirement account. Now is the time when you've less responsibility. So make sure you start building your nest-egg from now onwards so that you can enjoy and have less responsibilities in future.
9. Eliminate student loan debt quickly: If you really want to lead a debt free life, then make additional payments on student loans. Your aim should be to get rid of student loan debts as soon as possible. If you've incurred credit card debt during your college life, then make additional payments to creditors every month. This will help you speed up the debt repayment process.
It is not that you've to sacrifice everything in the first few years of your career. You can splurge a little bit. For instance, you can save money and splurge that amount on something you've wanted to do for several years. You can go on a trip with your friends or even family. You can share those experiences, memories and priceless moments with your loved ones later.