As graduation nears closer, so does “adulthood”—making more than minimum wage, paying taxes instead of getting a refund, freedom from homework, and starting student loan repayments. While some of the facets sound more appealing than others, there is a way to ensure you are paying your debts off efficiently, saving for retirement, and having fun.
Budgeting
I’m sure talking about the importance of budgeting sounds like a broken record playing—but maybe the 100th time you hear of it, you will finally begin. It all comes down to the fact that if you don’t know where your money is going, then you don’t know where your money is going. The three seconds per day that budgeting takes from you is worth the peace of mind you receive in return.
Whether you’re graduating or continuing your education, budgeting is essential. At Powercat Financial, we have spreadsheets to tailor to your specific situation.
Paying off student loans
Start budgeting today for the expenses you will have tomorrow. It will allow you to pay off your student loans in the most cost-efficient way possible.
Key facts:
- Federal subsidized and unsubsidized student loans have a six-month grace period upon graduating, meaning you will have six months to save up for future loan payments (note: Perkins loans have a 9 mo. grace period)
- You can ALWAYS over-pay your student loan monthly payments. Use budgeting to figure out how much you can absolutely afford and contribute your monthly extra cash flow to your student loans. Make any extra payments toward the principle of the loan with the highest interest rate.
- You can begin payments NOW. Schedule an appointment with a peer financial counselor to see how you can begin payments now and decrease how much you will owe in the future.
Saving for retirement
When it comes to saving for retirement, I always think of the quote, “Begin with the end in mind”. Yes, your career is just starting, but the contribution phase for retirement is as well. This means that the more you save now, the more you will have later!
You may be offered a variety of different savings vehicles for retirement—401(k) plan, Employee Stock Option Plan, pension plan, etc. If any of these words sound intimidating, let a peer financial counselor explain the pros and cons of each of them.
Once you know your retirement saving offerings, add them to your monthly budget. This will ensure that you are paying your future self before spending the money on other items, like Chipotle and Starbucks.
Having FUN!
When it all comes down to it, money is simply a vehicle we drive through life. It helps us to live the best life we imagine possible for ourselves and shouldn’t be something that stresses us out. With that, everyone’s drive will look different. Some may make many stops because they love to travel, and some may drive a shinier car than others because nice cars bring them the ultimate joy. I encourage you to think of the top three things you want to spend your money on that will give you the most fulfillment out of your life and save each month for those items. As long as you budget for them, you will have the money for them (do you see a theme?).
Healthy financial habits are like healthy eating habits:
Is it common sense to eat fruits and vegetables instead of potato chips? Yes.
Is it common sense to know where your money is going? Yes.
If some of these money tips sound too easy, it’s probably because they are easy, and the key is to simply begin them. Schedule a free and confidential appointment with Powercat Financial to begin to “do it all”.
Allison Becker, Peer Counselor III
