So, you’ve managed to stay on top of your finances during college, but now it’s time to stay on top of them in the real world. You’ve lived inside your little bubble for two to four years and it’s vital that once the bubble bursts, you’re fully aware of what is expected of you and what your options are out there to see that you remain financially afloat. Here are a few points that you must remember once your degree has finished and you are thrust into the real world, as well as tips on how to deal with it.
There’s a Difference in Bankrolling Yourself
You may have used any number of, or a combination of, these options to bankroll your college tuition: you may have borrowed money via student loans, borrowed money off benefactors or your parents, or gained a scholarship. None of these options are viable in kickstarting the next stage of your life. Loans, especially if you are already in the process of paying back monthly the student loan you took out, should be avoided as you seek to set yourself up financially now. The payday loan (otherwise known as a payday advance, salary loan, payroll loan, small dollar loan or cash advance loan) is a short-term loan that is categorised as being unsecured, meaning that it is not protected by a guarantor. In the unfortunate event of bankruptcy of the borrower, or if they can’t pay back what they owe, the unsecured creditors who borrowed the money will have a general claim on the assets of the borrower. Now, with the student loan already looming, do you really want to be further in debt? Do you really want the added pressure of having to pay the loan and the added rates on top of it in order to stop somebody coming along and taking your world assets? As well as the pressure in setting yourself up for the next stage of your life, you don’t want the pressures induced by loans, so in order to give yourself a strong footing in the financial world outside of college you must seek to pay your own way. This means, as well as avoiding taking out a loan, you must avoid borrowing too much, or anything at all, from your parents.
Avoid payday loans
First of all, once you find yourself a job, you should become as economical as possible when it comes to your spending habits. The average annual cost of living in the United States for a single adult with no children is $28,458. With food estimated to cost $271, healthcare at $273, housing costing $560, taxes taking £372, transportation coming at a price of a whopping $493 and other necessities esteemed in the region of $401: the monthly cost of living in the U.S. is $2,371, and this is all without having to spend money on childcare! Because of this, you should try to cut into the costs, and definitely not exceed them.
You can start by becoming as frugal when it comes to food as possible. Whether you’re planning on eating alone, cooking for others, binging on snacks or making your lunch for work, there are many ways to do so. One bit of advice is to plan out your shopping trips and shopping lists before you head to the grocery store, and stick to them. But next up is the cost of making sure you have a roof over your head every night. This is the area that, understandably, drains the most out of your finances, as seen above with the monthly average being $560, but it doesn’t have to be quite as substantial as that. Instead of buying a home outright you can rent a place. The best time to look for a rental place is in the fall, since most families prefer to move over the summer. The options may be more limited, but landlords may be willing to negotiate a 20-30% decree in the price because of the lack of demand. And maybe, especially when you’ve gotten to a point where your finances have grown strong enough, you can look for a property for rent abroad.
And remember, there are no scholarships awarded for the real world — you have to do it all yourself.
You Shouldn’t Expect Anything to Come as Easy as It Did in College
But all of the above is based on the grounds that you have indeed found yourself a steady income. Remember how easy everything was in college? Well don’t expect it to be like that now. You may have been able to get yourself a number of part-time and casual jobs during your time at college, but you shouldn’t let this give you delusions of grandeur. Just because you were able to get three bar jobs without even interviewing for them, doesn’t mean that the same will happen to you when you begin looking for full-time jobs, even those that aren’t in your field of study. Coming out of college with the mindset: ‘I’ve always been able to get jobs easily so i’ll be able to get one now’ could be just as detrimental as coming out of college without a degree.
You shouldn’t expect to find housing arrangements that work the same way either. During your time at college, you had the option of staying on campus in the various houses and halls of residence that were dotted around or you could have moved away from the campus into a house of flats in the nearby town. Both of these ways were heavily supported by those who offered the residence in the first place. If you decided to stay on campus, then the college helped you out; if you moved out into the town, then there would have been a number of letting agents designed specifically for college students. Now, out in the real world, you should expect to find it a lot harder to come by things when it comes to finance.
Because of this, anybody who is fresh out of college should try and build up as much knowledge as possible about how finance and financial procedures work. For instance, you should pick up a book on the basics of money. Generation Earn: The Young Professional’s Guide to Spending, Investing and Giving Back, by Kimberly Palmer, is a great first step in gaging things such as where you should invest your money, your best options when it comes to housing and what kind of jobs to take on.
Also, there are taxes that you have to deal with. But, it doesn’t all have to be doom and gloom when it comes to dealing with them; there are ways that you and reduce the bills induced by tax. Firstly, you should check if you qualify for the earned income tax credit, which applies to low- and moderate-income taxpayers. Karl Frank, author of the book Go Tax Free, urges anybody who is earning less than $50,000 a year to check whether this credit applies to them. However, if you want to take matters into your own hands, then you could start a start-up business. Becoming an entrepreneur can improve your tax situation because business owners are able to take more control over how they pay taxes. They have the option of keeping more money in their company instead of drawing it down as income, and they can also count certain costs as expenses. But if this all seems a bit far-fetched for your liking, then you could settle down and start a family as there are a number of benefits of having children when it comes to taxation. Whichever way you go in trying to cut the costs of tax, however, be sure to avoid these ten common tax mistakes.
But Don’t Lose Yourself or Lose Sight of Your Goal
Finally, make sure to never let the financial pressures of everyday life, or the student loan that looms over you, make you forget why you went college in the first place. Remember to always find time to work towards bettering yourself, and don’t just always work towards making sure your boss’s goal is met. Whether this means coming home from work and getting straight into adding another 1000 words to the novel you’re writing, going to auditions to try and secure your first real acting role, or the continued study of the field you hope to one day forge a career in: do it! Even though you may com home from work every day feeling tired or rundown, just remember, if you don’t do anything about it, your life is only going to stay this way. And never, ever listen to any naysayers that you may run into in the ‘real world’; you probably already know the ones: the ones that tell you to ‘stick to the day job’. And remember, even if you do find that you’re just living to work in order to pay bills — it’s never too late to chase your dreams and reinvent yourself.