Nov 19, 2012

Graduates—Kick Off the Next Chapter on the Right Foot

It’s a big jump from college or other technical schooling to “the real world.” Here’s a free graduation gift … five smart money moves for graduates. 

Smart Money Move #1: Don’t Buy a Car

Most students have either gotten by with no car or a clunker car during their college years. Now that the prospect of “getting a job” is a reality, a car might seem like a good investment. However, be cautious … you don’t need a NEW car to have adequate transportation to and from work. A new car may be unnecessary and will keep you on a tight budget (with that hefty monthly payment) for years. Instead, consider buying a car that’s gently used, one to three years old. It’ll look like new but save you a lot of money. And if you’re looking for something to save for, think about a starter home.

Smart Money Move #2:  Get in the Budget Habit

Don’t let the “b” word scare you. When you have fun things you want to do or items you’d like to splurge on, a budget really comes in handy. A budget is like a spending plan that helps guide your spending and saving. This way you can set aside money for bills and necessary things and still have money left over for the “fun stuff,” without the guilt.

Smart Money Move #3:  Use Envelopes With Cash

Rent or mortgage payment. Check! Water bill. Check! Electric bill. Check! Loan payments. Check! If you’re afraid you’ll spend the cash when you first get paid, label envelopes with your payment category. Write out a check, and put it in each envelope. Then, stash the envelopes until payments are due.  Of course, have an envelope for your “mad money” too, but once the envelope is empty, your funds have run out, and you’ll have to cut back until the next pay period.

Smart Money Move #4:  Consider Moving Out on Your Own

Many college graduates return to their parent’s home to save money, but most of them lack the discipline to save and end up blowing their earnings on cars, entertainment, electronic gadgets, and their social life. You’ll grow faster and learn more by being on your own, even though it may be a struggle at first. It’s easy to let Mom and Dad take care of everything, and you may become too comfortable. Being on your own forces you to take your finances into your own hands and start making smart—albeit sometimes difficult—grown-up decisions.

Smart Money Move #5:  Educate Yourself About Finances

When you needed to learn about math, you took a math course and did math exercises, right? Same rules apply. The best way to learn about personal finance basics is to read a good personal finance book—one that covers all the basics without boring you to tears. You could also meet with your banker to get information and have them help you create a customized plan for you!

Sure, making mistakes is part of growing up, but why make costly financial mistakes if you don’t have to?  With a little common sense, and by following our five smart guidelines, you’ll be embarking on a successful financial future! A+

Watch this video to get more helpful tips from Bank of Luxemburg Chief Operating Officer Rebecca Edler.


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