Solid Financial Advice for graduates entering the job market

Are you a graduate entering the job market and are you looking for financial advice? Don’t worry, we’ve got you covered.  It’s a fact that financial management is a key ingredient when creating a happy, sustainable lifestyle. As a new employee, you may want to go on a shopping spree and enjoy your new salary, but it’s also important to make the right financial decisions in advance.

Yes, you can spoil yourself, but it needs to be within budget, and it should not hinder you from reaching your financial goals now or in the future.

Since you are reading this article, you are aware of the importance of financial planning in your life. Either because you have witnessed someone making bad financial decisions or you simply want to learn more about basic money management skills as they weren’t taught to you in your schooling career. Continue reading to find money management tips to help you reach your financial goals. You might just find the financial advice you’re looking for.

Here’s some useful financial advice for graduates who are entering the job market:

Create a personal budget 

Whenever you look for financial management tips, the first thing you come across is creating a budget. Now, as tiring as it may be seeing this everywhere, there is a reason behind its importance.

As a college graduate who’s starting a new job, you may not have needed to create a budget in the past. Or you didn’t have as much disposable income to budget for. Now that you do, being without a budget can lead to bad financial decisions.

Many people feel restricted by a budget, but it shouldn’t feel that way. It should be a framework that allows you to enjoy your hard-earned money whilst ensuring you are not living above your means. When creating your budget, it is best to first track your monthly expenses to get an idea of where your money is going and if you’re overspending.

Make sure your budget is a reflection of your needs and wants, and not of anyone else’s interests. If you are going to seek advice from others, make sure that it adds value to your current lifestyle.

Start saving money

Here’s some solid finanical advice: Saving a portion of your income is important. Whether it is to save up for retirement, emergencies, travelling or a vehicle deposit, you need to contribute every month. Most financial experts believe in the 50/30/20 budgeting method.

This means you need to aim or allocate 50 percent of your income to your needs e.g. rent, car payments, groceries, insurance and utilities and minimum student loan debt repayment. The 30 percent is for wants, for instance going out, purchasing new clothes or new electronics.

Lastly, 20 percent goes to your savings and additional debt repayments. This is a simple method that will allow you to allocate your money and pay for your needs, savings and have some money put aside for entertainment.

If you struggle to stick to saving habits, try the following:

1. Pay yourself first before anything else.

2. Have that 20 percent deducted from your salary at the beginning of the month, so you don’t have to think about it each month.

3. Find ways to cut your spending and save that money.

4. Set short term saving goals for yourself as that will help motivate you to save more. Give yourself a time frame, amount and a reward once you reach it.

Opt for a second-hand vehicle

When you start working, you’ll come to realise the importance of a car. You need it to travel to and from work, and run errands.

But, as important and beneficial it is to make your life easier, you need to remember that vehicles depreciate and buying a brand new car at the start of your career isn’t a good financial decision. Opting for a second-hand vehicle will work just as well as a brand new vehicle while allowing you to save more money.

When buying a new car, remember the following:

1. To budget for running costs like your monthly instalment, petrol and car insurance.

2. Always save for a deposit as it will allow you to have lower instalments.

3. Balloon payments aren’t for everyone as those lower monthly instalments but mean a higher balance to pay off at the end of your financial agreement period so to make balloon payment easier you would have to save for it monthly so that you can pay it off at the end of the finance period.

4. A longer finance period equals a lower monthly payment but more interest would have been paid in total at the end of the finance term.

5. Rather buy a more affordable vehicle for you as a start

Keeping these things in mind when applying for vehicle finance will ensure that you are financially ready to own a vehicle. Vehicle finance for graduates can be tricky as this may be your first large debt apart from your student loans, but it is always essential to remember to choose a vehicle that fits your budget, and not to fit your budget around your vehicle costs.

Keep housing costs down

Apart from applying for graduate vehicle finance, you might want to consider moving out of your parents’ home and living on your own. While a sense of freedom might be tempting, you need to see if this works within your budget.

If you desperately need to move out, try finding shared accommodation where you can cut costs, or move closer to your work so that you reduce fuel expenses.

Either way, make sure it doesn’t set you back financially, or put you in an awkward position. If there is no rush to move out, then stay at home for as long as you can.

Since you’re working now, you can help around the house with groceries or electricity. At the end of the day, you will save more than you would if you were living on your own, as we know, renting in South Africa can be costly.

Don’t skip health insurance 

Insurance is one of those things that may seem silly until you need it. Although you are still young and full of life, you need insurance. Not only for illnesses but for accidents as they can happen too.

Having health cover will give you the peace of mind when you need to cover medical expenses, or simply need to visit your doctor for a general check-up. Always keep in mind that successful financial planning means planning for the future, and for things that may seem impossible now.

Plan for the life that you want 

When you start working, you will be bombarded with calls pre-approving you for credit cards and store accounts. When used correctly, credit cards can be beneficial for building your credit score, but graduate vehicle finance, can also be the first thing you take instead of those cards but always remember that this is borrowed money so learn to pay it back well and on a monthly basis to remain creditworthy.

When it comes to the latest gadget and those vacations, rather save up first for those. When you do use a credit card, use it for amounts you can pay off immediately, pay your bills on time, pay more than the minimum amount, and manage your debt wisely on a big purchase.

Final thoughts 

Starting in your career can be scary. Essentially, you’re entering a new phase of your life where debt is needed to purchase certain assets like a car, and this thought can be overwhelming.

But, the best personal finance tips / financial advice for graduates is to remember to plan for everything you purchase. This will make your personal finance management easier and will make you proud of every purchase you make.

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