Money Tips for Recent College Grads: Inflation Edition

When you’ve just graduated from college, it’s important to find your footing. You may be juggling a world of new expenses, like rent and car payments, while juggling student loans. All on an entry-level salary. 

But with the right strategy, you can take control of your finances and start off young adulthood on the right foot. Here are some money tips for recent college grads, at a time when living costs are high.

Make Sure You Follow a Budget

You’ve probably seen on the news that inflation has been higher than usual. As a result, everything from housing to food to transportation is more expensive than it was a few years ago. Even to the point of leading many consumers to seek debt relief. 

That’s why one of the best money tips for recent college grads is to follow a budget. And doing so may be easier than you’d think. 

Here are some budgeting options:

• Track your spending on a spreadsheet. Update it regularly. Taking a hands-on approach can help you understand what your expenses really look like.

• Use an app. There are a host of budgeting apps (like PocketGuard, EveryDollar, and YNAB) that can help you track your expenses and make sure every dollar you earn is being spent well. That way, you don’t have to guess where your money goes every month.

• Use the envelope system. Envelope budgeting means allocating cash to different expense categories. It’s an effective way to budget for hands-on people who prefer a more old-school approach to managing their money.

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Evaluate Your Expenses Regularly

You worked hard to earn a college degree and get a job, so it’s natural to want to enjoy some of your money. But as tempting as it may be to rent a nicer apartment or sign up for a bunch of subscription services, keeping your expenses on the low side could help you get to a great place financially early in life.

If you can live below your means, that could help you avoid new debt, build savings, and tackle student loans. So, to that end, take a look at your spending from time to time, and ask yourself if there’s anything you can cut back on.

Some ideas include:

• Opt for more affordable housing. If you don’t need a bigger apartment, rent a studio if it saves you a few hundred dollars a month. And be willing to live in an area that’s perhaps less trendy but more affordable. 

• Limit dining out. It’s okay to grab lunch with coworkers, but doing it too often can take a toll on your finances. 

• Get rid of unnecessary memberships and subscriptions. If you sign up for the gym and find that you aren’t using it, cancel and find free ways to exercise (walking doesn’t cost a dime). And if you can’t remember the last time you signed into Netflix, it’s a sign you shouldn’t pay that recurring credit card charge.

• Stay away from convenience stores. They are indeed convenient, but you’re paying extra for the things you buy. Aim to shop at traditional supermarkets to stretch your grocery budget. Better yet, shop at discount grocers if you have any nearby.

• Give up your car. If you’re moving to a city with decent public transportation, you may not need a vehicle. AAA puts the average cost of owning a new vehicle at $1,024.71 per month, so you might enjoy huge savings if you stop driving and start taking the bus.

Create a Custom Plan for Student Loans

It’s not uncommon to graduate college with student loans. But the sooner you’re able to pay them off, the better off your finances will be. And it could really work to your benefit to pay off private student loans ahead of schedule, since you’re probably paying a higher interest rate.

To pay off your student loans efficiently:

• See how your monthly payment fits into your budget. If you can afford to pay more, it could be worth doing so. If you can’t afford your current federal student loan payments, find out if you qualify for an income-driven repayment plan.

• Consolidate your loans. If you have multiple student loans, consolidating could spare you from having to keep track of different due dates. But pay attention to refinance rates, because right now, borrowing rates are high across the board. 

Be sure to consolidate federal student loans with a federal consolidation loan, or you could use benefits like income-driven repayment plans. 

• Look for a job that offers student loan forgiveness. Certain fields, like healthcare and education, may offer student loan forgiveness down the line. 

• Earn extra money with a side gig. Since living costs are up right now, much of your paycheck may be going toward essential bills. A side gig could make it possible to cover your student loan payments more easily. 

Save, Save, and Save

Another key money tip for recent college grads is to build an emergency fund. An emergency fund gives you a pile of cash you can raid when surprise expenses pop up. It can also help you avoid debt if you lose your job.

To build your emergency fund:

• Pay yourself first. Set up an automatic transfer to your savings account so that money lands there each time you get paid.

• Bank your raises. As your income increases, send your extra money into savings right off the bat. 

• Make the most of windfalls. Whether it’s your first tax refund or a generous cash gift for the holidays, putting extra money into savings could get you to a solid emergency fund in no time.

Generally speaking, it’s a good idea to aim for enough emergency savings to cover three to six months of living costs. And as a bonus, right now, high-yield savings accounts are paying nicely, so you might earn a big chunk of interest on the money you tuck away for emergencies.

Find Cheap or Free Ways to Have Fun

As a recent college grad, you deserve to enjoy your life—and that means spending some of your paycheck on fun expenses. Even if money is tight, try to set some aside every month to do things you love. This way, you always have something to look forward to. 

Here are some ideas that can help you have fun without breaking the bank:

• Host potluck dinners. It’s expensive to feed a crowd because grocery prices are up. If everyone chips in with a dish, drinks, or dessert, it’s an easy way to enjoy great food and company on the cheap.

• Explore nature. If you like being outside, find hikes or parks in your area that you can check out with friends. 

• Start a book club. Reading becomes a more social activity when you meet up with friends to discuss the latest novel you’ve consumed.

Job Hunt Strategically

Today’s labor market is pretty strong. If you don’t have a job yet, approaching your search strategically could make it easier to land the perfect role. 

To find the ideal job:

• Think about your passion. If you love helping people, you may want to look for a job at a nonprofit. If you’re the creative type, you might thrive at a marketing or advertising agency. 

• Think about the work-life balance you want. Working in the financial industry might give you a large paycheck, but it might also mean long hours and little downtime. Set priorities and choose a job that won’t take up more of your time than you’re comfortable with.

• Figure out your minimum income needs. If you’re not yet working, you may not have an apartment rented. But you can look at local rents in your area and figure out what food, transportation, and other expenses will cost to figure out what minimum salary you need. 

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 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.