Congratulations new college graduate!
Welcome to the real world, where there is no syllabus and the world is your oyster, whatever that means.
The big financial challenge with life after college has to do with the first decisions you’ll make immediately out of school.
You won’t have much money, even if you secured a job with a signing bonus (which is rare nowadays!), so let’s take a look at some of the areas you can save some cash. These savings can be extremely valuable down the road.
Let’s tackle your living situation first, since housing often eats up a third of the average budget. You might be tempted, especially if you’re starting a new job, to upgrade your living arrangements to be in line with your increased income. Avoid it at all costs.
If you are used to living like a poor college student, live that way for just another year longer. Put that money into savings and retirement so you can build up an investing war chest that will pay dividends down the road.
Find a roommate to split the costs of housing, rent a cheaper apartment or live in a less affluent area. If you can save even a hundred dollars a month on rent, that’s more money you can put towards your emergency fund or retirement account.
Next, avoid the temptation to buy or lease a fancy new car. Can you live without a car where ever you’re living?
If it’s a major city, you might not want the headache of finding a place to park each night. You’ll avoid paying for gas, insurance, parking, and all the maintenance headaches of using a car when you might be able to survive without one.
Before you rent an apartment, look up that area’s Walkability score. It’ll give you an idea of whether or not you will need a car.
It’ll tell you how far restaurants, schools, public transit, and other important landmarks are. If you have a high walkability score, you might want to forgo a car.
If you have a relatively low walkability score, you could skip the car and instead rely on a rent by the hour service, like ZipCar, for those times you do need a car.
Furnishing Your Apartment
I’ve long held the belief that you shouldn’t buy really nice furniture until you buy a home you will live in for 20-30 years.
I hate moving and every time I’ve moved, something has become a casualty. If it’s glass, it’ll break. If it’s nice wood, it’ll get an ugly scratch.
When you move into your first place, head to your local thrift shop or look on Craigslist to find your furniture.
You may have to borrow a truck, if you don’t have one, since most pieces will be assembled. This is a great way to find bookcases, chairs, and other very nice items.
If you move and don’t care for the furniture, or don’t care to pay to move it, donate it back. Most places will send a truck and move it out for you.
The only exception to this is your mattress. That’s the one thing you should buy new.
Don’t be frugal when it comes to socializing – bet you didn’t expect me to say that right?
If you’re moving to a new place, spend some time getting to meet as many people as possible. Join social sports leagues like kickball, broomball, and softball.
Go to happy hours and other social events in the city. Use some of the money you saved by not getting the best apartment possible and invest it in your social network.
Go to meetups for hobbies you have, create a meetup if one doesn’t exist, and don’t be afraid to budget some of your hard earned cash on fun.
Good luck and congratulations again!