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Now that you are a college grad and looking for a job, you should realize that you financial independence is about to take full effect. Once you find your first job, there is not much sense in staying with your parents any longer. As soon as you start earning, your thoughts would probably be on how you can start living on your own. While this is a very exciting time for you, there are a couple of things that you must learn.
Financial independence is great but that entails a huge responsibility. You need to be able to spend for all your needs without asking for help from anyone. Some people got into a lot of trouble because they failed to learn the right lessons about financial management.
Financial tasks and decisions you have to make
There are a couple of financial lessons that you need to understand before you can really enjoy financial independence. Being in control of your finances means you have to implement some financial management habits that will help you make the right decisions in your life. Here are the basics that you need to learn.
Creating a budget. The first step towards financial independence is budgeting. The chances of you learning this habit back in college is quite high. But even if you haven’t, now is a great time to do so. A lot of young ones failed to realize the various things that they have to spend on like rent, insurance, utilities, food, groceries, and a whole lot more. By learning how to budget, you can make sure that your income will pay for all these priorities before you start spending on your entertainment. Learning this habit will help set you up for a financially responsible future.
Looking for your first home. One of the first responsibilities that you need to look for is your home. Obviously, you will be renting your place. Ideally, you want to look for a home that is near your workplace so you can save on your commute. Also, be open to the idea of getting a roommate or flatmate. That will help keep your costs down. Unless you will rent a furnished home, you have to think about buying appliances for yourself. If you parents can help you out, that will be great but if not, you need to find a way to buy stuff. Try not to be too picky. Go to yard sales or buy your things online so you can save on costs. As much as possible, you have to keep yourself from buying your stuff with credit.
Paying your student loans. If you are like most graduates, you will probably be burdened with student loans. This is one of the reasons why you should not buy your things by using credit. 6 months after you graduate, the bill for your student loans will start to come in. Use this time frame to save up for your debt payments or boost your emergency fund. Create a payment plan that will help you pay off your student loans.
Get an insurance. You need to be prepared for any event and this is when an insurance can help you out of tight spots. The primary insurance on your list should be your health insurance. If you do not have one with your employer, then get your own. At least, your finances will be one less worry in case you get sick or require any medical attention. When you own a car, have that insured as well.
Know the benefits that you are entitled to. A lot of us are entitled to some sort of benefit and you need to understand yours. Inquire with the company that you work for regarding benefits that you are entitled to. You can also check out Benefit.gov to see the federal programs that you can rely on for assistance. You may be missing out on a lot of things that should be yours for being a taxpayer.
Learning financial management
The bottom line here is you need to be able to learn how to manage your finances. That is the true test of financial independence. If you are not careful with your decisions, you can end up with a lot of problems - especially concerning debts. You want to avoid this so you need to learn the basics. Here are some of the important financial management information and skills that you need to learn:
Knowing where to put your savings - finding the right bank.
Learning how to invest - mutual fund, bonds or stocks?
Using your credit cards wisely - how to keep your debt payments from overcoming your income.
Aiming for financial stability - having an adequate amount on your savings and emergency fund.
Prioritizing your expenses - ensuring the priority costs are always funded.
As you grow older in managing your money, you will learn more tricks and techniques to help you make end meet. Keep on learning about financial management so you can head off any problems in the future.
Here is a video that you can watch about the testimony of a parent who recently had her son move out of the house. She talks about the different financial realizations of her son as he went through this phase and what she thinks young adults should do when they are moving out of their parents’ home.