Whether it’s this May or many semesters down the road, graduation is a day that students look forward to with mixed emotions. The prospect of a new beginning is exciting and scary, especially if you plan to move out on your own, but with these simple steps you can learn to make it without your parents by your side.
Start Budgeting
Students with part-time jobs may be familiar with this concept, but budgeting is more than just siphoning money from your savings when you need it.
“I use the Mint app and it shows me how much I spend each month. I mostly put all of my money in savings and basically dip in when I need it,” said senior Lauren Magenta, who has automatic bill pay for her car and insurance payments.
Resources like Mint.com make budgeting easy. To start, track your spending for one month-record every item and identify what spending was necessary, like gas and groceries, and what was inessential, such as entertainment.
“What I normally do is picture my week and see what I need the most, if it’s food or something, but no shopping unless I’m hanging out with friends,” said sophomore David Amoakoh.
Then, make choices. Do you spend too much on take-out? Do you have enough money to go shopping for clothes? These decisions will all go into making your budget. By figuring out how much money you need to and can spend, you can avoid overspending and build a better savings.
“You think to yourself, ‘Holy cannoli, I spend X amount of money each month and when I get a job I need to be able to afford everything,'” Magenta said.
Save the money you don’t spend. Experts agree that saving a minimum of 10 percent per paycheck is a great way to build a savings without hurting your budget. According to The Nest, a blog that details information for financially independent adults, this percentage can have positive results even on a minimum wage salary. They also suggest a slightly more aggressive savings plan of 50-30-20, which allows 50 percent of your wages to go to necessities like bills and food, 30 percent to go to niceties and 20 percent to go into savings.
“I’m cautious with what I spend, but I don’t make a budget,” said senior Katie Bruno, who saves half of everything she earns at her part time job. “I definitely plan to live at home for a while. All of the expenses I’ll have once I’m on my own crosses my mind, but the thought makes me sick.”
This strategy may be doable for college students who have arguably fewer expenses than those who live on their own. Once out of the house, it may be more difficult to save, but this is where your 401(k) comes in. According to CNN, “A typical employer offers 50 cents for every dollar you contribute up to 6 percent of your salary,” which means if you’re saving 10 percent of your wages, you’re earning on the money you save. This value can change over time, but if you start saving when you begin working it will grow into a large retirement savings.
“I try to save what I can, definitely, but it’s not too much,” said Amoakoh.
Establish Credit
Before graduating, this can be accomplished without difficulty. Find a credit card that will meet your needs using creditcards.com, a site that outlines the rates and perks of each card. Once you apply and get approved for a credit card, use it for small purchases and pay off your balance each month. This not only avoids the cost of interest payments, but also builds good credit.
“I just got my first credit card and use it to buy mostly personal items from CVS or Harmon’s… but I have no idea what kind of interest rate I have,” Magenta said.
Credit cards often have introductory interest rates that will provide zero percent interest for the first year. This is one of the benefits to look for when picking a card.
Learn to Cook
A very easy way to cut costs and save extra money is to buy groceries and cook for yourself. A $12 burrito meal at Chipotle can be made at home for $2 dollars per serving when buying fresh ingredients and storing leftovers, according to a recipe provided by Trader Joe’s. Grocery stores offer customers recipes used with sale items in their online circulars. Coupons can also be accessed by manufacturer websites or even websites like retailmenot.com and coupons.com. Then experiment with recipes of foods you know you enjoy. Website like Pinterest have users who submit copycat recipes of your restaurant favorites.
Be Your Own Handyman
Avoiding emergency spending will always be a challenge, but you can limit that if you know how to fix certain things on your own. This can range from a broken toilet to changing a flat tire; if you know how to repair it on your own, you won’t need to pay someone to do it for you. The best way to prepare for these instances is to practice when they arise.
The next time something breaks, watch the person repairing it and ask questions. Your parents can also be a helpful with these at-home projects. There are plenty of resources including tomboytools.com, Lyn Herrick’s book “The Woman’s Hands-On Home Repair Guide” and Martha Stewart’s series of home maintenance books. With some preparation, anyone can learn to replace a broken window or light switch on their own.
Graduating is a time to get energized about the possibilities before you, so by preparing yourself financially you can reduce the stress that surrounds a new job.
“Your first job will most likely not be your only job,” said Cahill Center Director Beth Ricca. “This is a time to learn, listen, develop your work style and determine your next steps; so work hard. Volunteer for extra assignments, ask for additional work, take time to listen to others about the company/organization and avoid office politics. It’s time to prove yourself and demonstrate what a great hire you are.”
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ecummins@ramapo.edu
