The hardest part about graduating from college isn’t the final exams or saying goodbye to friends from your dorm—it’s the more subtle process of transitioning from a student role into that of an independent adult. Life after college is full of questions—where will I live? What will I do for a job? How will I make ends meet?
Decisions you make now, including financial habits, will set the course for your post-college life. Here are three financial rules for college graduates. These tips will help establishing good financial habits that your future self will thank you for:
Make paying off student loans a priority.
Don’t get too comfortable during the grace period after graduation—those six months will fly by, and monthly bills for your federal loans will kick in before you know it. Instead, spend that post-college grace period finding a job that will allow you to pay more than your monthly minimum in order to get rid of your debt sooner (and save you a significant amount of interest over the life of the loan). Once the repayment period begins, always send your payments on time and make sure you’ve got enough in your bank account to cover it, even if that means skipping a fun concert with friends. Defaulting on your loans comes with serious consequences.
Live within your means.
Though it’s tempting to slide a credit card across the counter when you see a jacket you think you can’t live without, don’t. Racking up credit card debt will only make establishing financial stability more difficult. Instead, buy only what you can pay for, and only after your bills are paid. If you think this might have a serious impact on your lifestyle, start looking for easy ways to save a few bucks here and there. How about brewing your own coffee in the morning instead of buying Starbucks? Checking out books and CDs from the library instead of purchasing them new? Or bicycling to your Saturday errands to save on gas? Small, smart choices can have a collectively large impact on your budget without affecting your daily life.
Establish a strong credit score.
A good credit score is a must-have for major life purchases like a car or a home, and an excellent score can sometimes help you qualify for better interest rates on loans. Even renting an apartment requires you to have decent credit—landlords aren’t shy about rejecting applicants who have a patchy financial history. Paying your bills on time and not spending more than you have are the two best ways to protect your credit score. But did you know that no credit is often just as unappealing as bad credit in the eyes of lenders, car dealerships, and landlords? In order to show that you’re capable of paying bills on time, open a credit card and use it every month or two, paying it off in full each time. Don’t rack up a huge debt or skip payments—remember, you’re using the card to demonstrate your sense of responsibility, not to purchase big items you can’t afford.