Four easy ways to save money straight out of college
Congratulations, you’re now a college graduate, ready to unleash your hard-won expertise in the workforce! An exciting prospect, but probably offset by the realization that you’re now just another ordinary, cash-strapped adult, and one with a gigantic student loan. Here are four easy tips to help you start putting aside some savings and clear that debt.
Monitor Your Spending
Tracking your outgoings might seem obvious, but you’d be surprised at how few people do it. To begin with, simply make a list of what you typically spend money on each day. Very quickly you’ll see opportunities for savings—that $5 coffee takeaway each morning, for example, which could just as easily (and much more cheaply) be prepared with a no-frills coffee maker at home. Incentivize the process: just imagine what you could do with all that saved money! Once you know how and how much you’re spending, you can draw up a budget that suits your lifestyle. Often, going through this process will change the way you look at spending and even make saving fun.
Get Real About Your Indulgences (a.k.a. Live Within Your Means)
This is an advice that everyone should stick by. Living within your means will require an honest conversation with yourself. Sure, there’s the money that you need to spend—on groceries, health insurance, rent, and so on—but how much of your monthly expenditure is actually by choice? Those home entertainment subscriptions, for example, would your life really be incomplete without Netflix, Hulu, and Amazon Prime? Instead, could you divide these up with your roommate or family members and share the cost? Speaking of roommates, you’re already off to a good start if you have one (or two). Plus, together you’re likely to be able to afford a bigger home in a nicer area!
Be Sensible About Transportation
If you absolutely have to have a car, then look at buying a used one. Cars are notoriously depreciable assets: one that’s a few years old might be in near-perfect running order, but it will cost you a fraction of the original price. Even then, do you really need a car? If you live in a city, the answer is likely no. Sure, taking the bus might add time to your commute, but you’ll save thousands of dollars in ongoing costs each year—lease payments, car insurance, gas, etc. Think of it as a training exercise in short-term sacrifice for long-term gain.
Start Reducing Your Debts ASAP
Almost certainly, your biggest outstanding debt will be your student loan. Get to grips with the details: is it a private or federal loan? How much do you still owe, and at what interest rate? Keep a close eye on your credit card debt, too, and prioritize your monthly card repayments second only to covering the bare necessities. This will have the knock-on benefit of improving your credit score, and therefore reduce the interest rates offered to you on other loans, including hopefully one day a mortgage. As a general rule, target paying off larger debts first, especially if they have higher interest rates, to avoid being hit by hefty interest rate penalties.