Tips for Budgeting After Graduation

Develop Your Own System:

Have you ever heard of developing your environment to successfully build a new habit? Just like you might make a morning workout habit stick faster if you lay out your gym clothes the night before, you can take actions to set up systems that make building good financial habits easier post graduation.

In terms of your finances, developing your environment means taking steps like:

• Building and using a budget

• Tracking your spending

• Automating bills and other transactions, like monthly student loan payments

• Automating transfers to savings

Using a budget creates a framework within which you can use your money. Tracking your spending makes you more aware of how you’re using your money within that budget. And automating transfers between your checking and savings accounts makes it easy to save your money.

You can use a number of tools to help you develop and stick with a money management system that works for you. For example, a tool like budgeting applications provides a comprehensive overview of nearly every aspect of your finances, from your budget and spending to your credit score and investments, which makes it a great place to start.

Another app to consider is Digit, which makes small-automated transfers from your checking into your savings. If you’d rather get a jumpstart on investing, try Acorns too. Acorns works in much the same way as Digit, but instead of putting small amounts of money into a savings account, the app invests the money for you.

Remember that there’s no right or wrong way to set up budgets, track spending, or create automated savings plan. What’s important is recognizing the need for a structure, and developing one that works for you.

Manage Your Money Wisely When You Make More:

After graduation when you start your career you’ll likely be making more money than you did back in your college days. This is great for you, but it can also cause some financial problems if you don’t think ahead. In other words: mo’ money, mo’ problems

The biggest pitfall of earning more is succumbing to lifestyle inflation. This happens when you spend more as you earn more. Essentially, you build a spending habit and not effectively developing a savings habit. And this is a problem because it’s extremely difficult to cut back your spending once you’ve adjusted to a certain level of luxury or lifestyle.

If you avoid lifestyle inflation from the very beginning and make saving at least 10% of your income a priority, you’ll always find it easier to save money no matter how much you make. You don’t have to start off saving 10% right away, but it’s a great goal to work toward as your income increases.

You should also take advantage of a full-time job with all the benefits it comes with as you start your career. Don’t wait to open a 401(k) or other employer-sponsored retirement plan if any are available to you. If your company offers to match your contributions, put in at least enough to get the full match. That’s free money!

If you don’t have access to an employer-sponsored retirement account, you can still save as soon as you start working. Open a Roth IRA and save what you can. And remember, as you earn more; contribute more to retirement (instead of getting caught up in spending more).

Continue Educating Your Financial knowledge:

You may have just graduated from college, but don’t let learning end here. The best way to set yourself up for financial success in life is to continually seek and learn more about your money. Ask questions and seek answers. Do research. Get multiple opinions and consider different perspectives.

There are more resources available to you than ever before. In addition to personal finance, money management, or investing books that you can buy, tons of information about these subjects is available for free on blogs and podcasts. While most bloggers are sharing from personal experience, there’s a lot that you can learn from what other people have tried and if nothing else, tuning into the conversation can keep you inspired and motivated to continue your own financial goals.

Staying interested and involved in your finances will help you better manage your money on a day-to-day basis and for the long-term. No one will care more about your cash than you do, and continuing to learn is without a doubt a great stepping-stone for building wealth.