Congrats, grad! Now that you’re officially ready to enter the real world, use these financial tips for young professionals and enjoy a smooth transition.
Whether you’re a recent graduate of high school, technical school, or college, you’re likely in for many big changes on the financial front as a range of responsibilities shifts into your hands. While you’re probably celebrating your newfound independence, you may also be wondering how to juggle bills, savings, and manage your finances, especially on a starter salary.
With the right mindset (and a handful of helpful pointers), you can take big strides toward giving yourself a good financial footing. Here are our top five financial tips for new graduates and young professionals to build sustainable money management plans:
1. Build a Budget … and Stick to It
Studies suggest that two in five indebted young adults ages 18 to 24 struggle to pay off what they owe. That’s why many financial advice articles for new graduates include budgeting tips. Managing your spending can pave the way to financial freedom. There are plenty of easy-to-use tools to make this task manageable, from basic budget worksheets to complex mobile apps.
Experts stress the importance of creating a budget you can follow, regardless of which tools you use to manage it. Young professionals new to paying student loans, monthly rent, utilities, and other living expenses are better prepared to stay on top of it all when they have a budget for a roadmap. Calculating necessities and tracking your discretionary spending helps you plan effectively and avoid missed payments, which may result in negative consequences. If poor money management habits from the past catch up to you, consider whether an installment loan can help reset your finances to get your budget back on track.
2. Plan To Manage Your Debt
Despite $150 billion in student loan debt being canceled or paid off over the past year, research shows that the average debt balance of adults ages 24 to 39 is a whopping $78,396. When a young professional’s debt load includes high-interest loans and credit cards, they may need to increase their financial management and monitoring to keep their bills in check.
While we hope you won’t need to understand the ins and outs of debt collection right out of the starting gate, educating yourself on the consequences of mismanaged debt can offer insights to help you improve your financial well-being. One financial consideration for new graduates managing various loans, credit cards, and other bills is to consider securing a traditional installment loan to handle unexpected expenses, such as a vet bill, car repair, home maintenance, or even purchasing essentials like a new laptop or TV. This loan can get you through a crisis, so you don’t need to dip into funds budgeted for other necessities.
3. Prepare for the Unexpected
While a lot of financial experts’ advice for new graduates involves paying off loans and credit cards, it’s also smart to save money to prevent incurring debt. Even with a well-thought-out budget, it’s challenging to anticipate all of life’s expenses. Building an emergency fund can help you pay for medical bills or appliance repairs, but not everyone has extra money to set aside.
A new graduate or young professional may not have had a chance to build emergency funds yet. If that’s your situation, an installment loan can be a dependable option for quick cash to help with nearly any situation.
4. Invest in Your Future
Even though certain milestones (children, retirement, etc.) may be years away for young adults, it’s smart to start planning sooner rather than later. And reaching many long-term financial goals — such as saving for retirement, setting money aside for a child’s college education, and accumulating the funds needed to put a down payment on a home — often requires putting away small sums consistently to build savings over time.
Financial experts recommend that young professionals consider long-term investment vehicles, including stocks, bonds, mutual funds, annuities, and CDs (see these helpful resources from investor.gov, sec.gov, and tiaa.org). The power of compound interest can help people improve their future financial wellness, but these investments are designed for long-term needs and not tomorrow’s emergency. When you need help in the meantime, consider an installment loan to pay for emergencies or essentials so you can keep your money invested.
5. Take Steps To Establish Good Credit
Good credit is one factor for qualifying for a loan to buy a home, purchase a car, or start a business, and a solid credit score also offers a range of additional benefits, including:
- Securing approval for rental applications
- Lowering the interest paid on mortgages, credit cards, and traditional loans
- Getting better insurance rates
- Raising the credit limits and loan amounts you’re qualified to obtain
A smart financial move for young professionals is to learn the methods to improve their credit score — and put them into action as soon as possible.
Experts suggest two important steps to establishing good credit are paying off loans on time and keeping your balances on established credit low. As an installment loan provider, Security Finance reports your borrower information to credit-reporting agencies such as Equifax and TransUnion each month. Paying your installment loan on time is a good step to start building a positive credit history.
Responsible money management habits can do wonders for new graduates, but if you haven’t achieved your dream credit score yet, an installment loan may help. Don’t hesitate to contact your local Security Finance branch to discuss your borrowing options.
We’re happy to answer any installment loan questions you have. Our loans can be obtained quickly (usually within a single day), applications can be started online for added convenience, and they offer more flexibility than what you’ll typically find at a bank. We don’t require our borrowers to have a bank account or a high credit score, and our loans follow set terms that make the monthly payments affordable, without balloon payments or prepayment penalties.
Visit securityfinance.com today to learn more about our loan options and find the solution that’s right for you.
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