At Freedom Debt Relief, we strive to help young people make smart financial decisions as they start their lives as independent adults. That’s why we wrote 5 Money Tips for Recent College Grads. To continue this education,, we wanted to add to this series and provide some money tips for 2020 college graduates, especially since 2020 is no ordinary year to be a grad.
If you’re a recent college grad who is unsure of how to handle your finances during these turbulent times, we hope the money tips will help you as you start out.
Reevaluate your expenses
It may be tempting to rent a luxury apartment or lease a brand new SUV, after all, you’ve worked hard to earn your degree. As indicated by the famous marshmallow test, however, delaying gratification could help you meet long-term goals. These goals may include major life milestones such as paying off student loans, buying a house, and/or retiring.
You’ll find that living in a simpler apartment and driving that old Honda into the ground could pay off in the long run, by giving you the opportunity to save more cash and start setting yourself up for a more financially secure future. Therefore, it’s essential to take a close look at your expenses and figure out where you can cut back, or at least keep it tight. Here are some ideas.
- Opt for more affordable housing: Housing will likely be one of your largest monthly expenses. To keep it affordable, you may have to forgo the granite countertops or choose a studio instead of a two bedroom. You may also have to be more flexible with location and live in a less trendy area.
- Limit dining out: It’s okay to grab lunch and happy hour with co-workers, but doing it too often can take a serious toll on your finances. Make an effort to pack your lunch and cook at home as much as possible.
- Get rid of unnecessary memberships and subscriptions: If you don’t use your gym membership, or have dropped it due to quarantine, cut it out for good and exercise at home. Put an end to other memberships and subscriptions that you no longer need or want; you can download an app like Wants & Needs app to help you sort it all out.
- Stay away from convenience stores: Yes, convenience stores are convenient, but you’re paying extra for it. Did you know that you could pay double or nearly triple for a bag of chips or sugar infused coffee drink at a convenience store than you would at a grocery store? You may also have to pay extra just for using your credit or debit card. By eliminating trips to places like 7-eleven, Speedway, and Sheetz, you could save your hard-earned money and be strategic about how you shop for groceries.
Create a custom plan for your student loans
Due to the CARES act, you likely won’t have to pay back federal student loans until September 30th and interest won’t accrue during this time. If you have a job, however, it’s a good idea to continue to make your payments as all the money will go toward your principal and allow you to become student loan debt free faster.
In the event you have yet to find employment or are worried about having enough money to cover your expenses, make a custom plan based on your personal situation and goals. Consider the following:
- Consolidate and refinance your loans: If you consolidate multiple student loans into one, you’ll only have to worry about a single payment every month. Refinancing may also be also wise as it could help you reduce your interest rate and ensure more of your payments go toward the principal.
- Look for a job that offers student loan forgiveness: While they are limited, there are some jobs out there that will forgive all or part of your student loans. These jobs are usually in fields like healthcare, education, and public service.
- Earn extra money with a side gig: Your full-time gig may be a great place to start your career, even if it doesn’t pay much. If this is the case, it may take more than a full-time job to pay off your student loans. Supplement your income with a side gig and allocate all your side gig earnings toward your loans.
Save, save, and save
Substantial savings can give you some much needed peace of mind during a recession, pandemic, civil unrest or all of the above. Work to build and maintain an emergency fund that you can turn to if your car breaks down, you lose your job, or another unexpected financial situation comes your way. Store your emergency fund in a high interest savings account or similar account type that you can easily access at any time.
Find cheap or free ways to have fun
You deserve to enjoy your post grad lifestyle, so make sure you make some time for fun. Even if your funds are limited, try to set aside some money every month to do the things you love. This way you’ll always have something to look forward to and feel motivated to continue to save, stick to your budget, and pay off debt. Here are some ideas that can help you have fun without breaking the bank.
- Host a bonfire: Invite some friends over for a bonfire. You can easily social distance outside and enjoy each other’s company without overspending. Take your bonfire up a notch by providing graham crackers, chocolate, and marshmallows, affordable ingredients to make s’mores.
- Explore nature: If you like being outside, find new parks in your local area that you can go to with friends and family. You’ll get to take in the beauty of nature, spend time with loved ones, and get in a good workout without spending a dime.
- Go camping: You don’t have to book a night at a five-star hotel in order to get away from everyday life for a bit. Although some campgrounds do charge fees, they are usually quite affordable and can give you the chance to go somewhere new for a day or two.
- Cook and bake: Rather than going out to pick up food or even eat out during the coronavirus era, experiment with different recipes in the comfort of your own kitchen. Check out Pinterest for new recipe ideas.
Job hunt with an open mind
Right now, the job market is more competitive than ever before. Therefore, you may not be able to land your dream job right off the bat. So when you apply to jobs, have an open mind. Even if a job doesn’t pay the best or the company doesn’t excite you, it’s likely still worth applying to. It may open the doors to new opportunities you never even thought of and help you pay your bills in the meantime.
Check out our blogs for more tips
For more money tips for recent college grads (and everyone else), we encourage you to check out our various blog posts. They are loaded with practical advice that can help you pay down debt, save more money, and meet your short and long-term financial goals.
- Financial Advice to Ignore During a Recession (Freedom Debt Relief)
- Why Millennials are Being Hit Hard by the Covid-19 Recession (Freedom Debt Relief)
- Learn a New Language During Quarantine: The Language of Money (Freedom Debt Relief)
- Six Personal Finance Tips for College Grads (MarketWatch)