Graduate money advice: Top tips for financial independence after university
1. Budget responsibly
Perhaps the most important tool at our disposal for financial well-being is practicing budgeting.
Budgeting is not only integral in helping us pay our bills and determining what we can afford, but also helps to keep an eye on how much money we’re spending.
To determine a budget, it’s best to start out by taking a look at your paycheck and bank statements, and seeing how much money you are getting after taxes.
Whether you’re paid weekly, bi-weekly, or monthly, you should be able to look at your monthly income.
After you’ve done so, add the balances of all your monthly expenses – this might include rent, utilities, groceries, travel passes or petrol.
By looking at these figures side by side, you should be able to gauge your necessary expenses, and also determine how much you can spend on entertainment, such as dinner, drinks and events. Read our guide to budgeting in London here.
2. Bank smart
It’s a good idea to use a bank that best aligns with your lifestyle.
There are many different financial institutions out there, so it is important to research what different banks can offer you.
With the interconnectedness of our daily lives in 2019, you should consider banks that offer mobile banking, which can make it easy to deposit checks, view your balance, and perhaps most importantly, track your spending.
When choosing your bank, look into what sort of fees they charge for their services, including costs of opening an account (either checking or savings), overdraft fees, and other membership dues.
Certain banks can also limit the amount of transfers you can make from account to account and can penalise you with fees for overusing these services.
You should also look into overdraft fees.
By figuring out which banks exercise these policies, you can select the best institution for your particular needs, monitor your accounts and avoid fees.
3. Build your credit
Establishing credit and building it up can pay off massively in the future.
Building credit can be done in a number of ways, but the term generally refers to how likely you are to pay off your debt; this is where credit scores come into play.
Whether you’ve made payments on a vehicle or have purchased a large-ticket item, such as an appliance or musical instrument, the payments you make on these will begin to impact your credit and overall score.
When you begin to build and improve your credit, lenders will be more inclined to approve you for big loans, which is especially helpful when trying to purchase a house, real estate or vehicle.
When utilising a credit card, be sure to use only 30% of your credit line, and never fall behind on your monthly payments.
Also, be mindful of the interest rates that credit cards carry – find one below 20% annual percentage rate (APR).
4. Think about your financial future
Graduating from your university is an exciting time in your life, and starting to earn a living wage is a great time to start budgeting your money effectively.
Whether you’re currently looking for graduate jobs, or working as a young professional several years after graduation, these financial tips can be used to budget effectively and prepare for the future!