I find it a bit shortsighted to suggest that new graduates are leaving their education behind and “entering the real world.” Students have had to contend with the financial realities of the “real” world since they decided to enter into their studies – often grappling with the long-term effects of student loan repayment, effective budgeting, and the costs of renting out housing in university or college areas.
For newly graduated students this June, the time is now to build upon these fundamental skills, rather than to suggest that the departure from education is the originating point for personal finance competencies. Students go through their academic lives with a keen eye on their credits. Each course is carefully weighed in the broader consideration of what it will take to graduate with a particular degree or qualification – and the same care, forethought and planning should go into financial planning for new graduates.
Start Saving Right Now
It’s never too early to start contributing to savings accounts, TFSAs and even retirement planning funds. Balance your budget to include debt repayments if needed, account for personal expenses, and be sure to leave a little bit extra at the end of each month to put away for the long term. It may be challenging, but it will be worth it – whether you need to tap into a little extra money during a longer-than-expected job search, are thinking about travelling for a gap year, or making any other plans for the future.
Evaluate and Audit
Graduation is a transitional moment in our lives: use this as a signpost at which to re-evaluate your personal financial position. Do an audit now that your academic responsibilities are cleared up – you may be surprised at what you find. Checking your credit score and outstanding balances, as well as scheduling an appointment with an advisor, are great steps to take.
Live For Your Own Goals
Some of your friends will make more money than you while others will make less. If they want to live a luxurious lifestyle and purchase everything they could not while they were in college, let them. “Lifestyle inflation” will become the main reason you spend more than you can afford. Stick to your plan and budget you established earlier. You may know some people with a glamorous life, and maybe some of them can afford it, but not all of them may be financially stable.
The pressure of finals has faded, but the pressures of adulthood in “the real world” do not have to press down on recent graduates as hard as they otherwise might, given the appropriate preparation and the use of money-smart skills accrued over time.