Establishing financial independence right out of the gate after college
Completing your college education and entering “the real world” is equal parts exciting and daunting. You are now free to do whatever you want (within the bounds of the law, of course), but you are also now responsible for so much more. One of the most challenging responsibilities you will have to manage is that of your personal finances.
Managing finances can be tricky for recent graduates because it can be difficult to nail down a good-paying job and recent graduates usually have a lot of debt to start paying off. Quickly, it may feel like debts, bills and other financial responsibilities bury you in a hole you may think you will never climb out of, but think again. It is possible for you to make a plan and establish your financial independence. In fact, now may be the best time of your life to get started.
Establishing financial independence after graduating
- Get control of your debt now — Debt is scary, and when you have just graduated, you probably have a lot of it. Make a budget, which is essentially a sheet that keeps track of all of your monthly income and expenses. Take a look at where your debt falls in on this budget sheet, and try to keep enough income set aside to stay on top of your debt payments.
- Do not spend more than you earn — Your budget sheet also helps give you a good idea of how much you spend and what you spend it on. Are you spending a lot and finding yourself cutting it close every month or even going over and adding to your debt? Review your expenses and identify ways you can cut, so you can start to manage your debts and save.
- Save, save, save — When you are young is the best time of your life to start saving for the future. Even if you have debts and can only save a little bit, it will all go a long way after some time. Retirement accounts generate interest over years and offer tax advantages that help you as well. Even if you can only contribute a little each month to your retirement account right now, you can always increase the amount you contribute later when you are more financially stable.
- Invest — If your budget has more room for options, you should start investing. The stock market and the financial world in general can be difficult to navigate, so you can always turn to a financial advisor for assistance on making wise investment decisions to build wealth to reach your short- and long-term goals.
- Start an emergency fund — You never know when disaster will strike. Your car might break down and you need to make repairs or buy a new one. Your home may need repairs. You might lose your job. You might need to cover expensive medical bills, and so on.
Set some money aside in a high-yield savings account that is easy for you to access quickly in the event that you need funds to cover an emergency. We suggest setting aside at least six months’ worth of your income to make sure you are covered for an extended period of time should something go wrong in life.
Talk to a ProVise CFP® professional about establishing your financial independence
At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.
Are you ready to talk to a professional about financial independence? Contact ProVise today to schedule a complimentary consultation.