- 22 Oct, 2024
- 0 Comments
- 3 Mins Read
Your finances after university
Graduating from university is an exciting milestone, but stepping into financial independence can feel overwhelming. Whether you have landed your first job or are still searching, managing your finances wisely is crucial to building a stable financial future. Here is a guide to help you navigate your post-university finances.
- Create a Budget
One of the first steps in managing your finances is living by a budget. List all your income sources (e.g., salary, side jobs, etc.) and your essential expenses such as rent, utilities, groceries, transportation, and loan repayments. Then, allocate money for savings, investment, and emergencies.
Start by using the 50/30/20 rule as a guideline:
- 50% of your income goes to essentials (housing, food, bills).
- 30% for non-essentials (dining out, entertainment).
- 20% for savings, Investment and debt repayment.
Tracking your spending with apps like YNAB (there is a fee for this, but is a worthwhile investment as you know where your money is and what it should be doing because you’ll be following the plan you created, making decisions much simpler and easier) can help keep you accountable. You should adjust those percentages as you get comfortable with budgeting. My personal ratios look more like 40/20/40 and I am working very hard on increasing the investment number with time.
- Tackle Student Loans
Many graduates leave university with significant student loan debt, making it essential to have a plan for repayment. Understand the terms of your loan, including interest rates, monthly payments, and repayment options. We recommend that you start making extra payments to reduce the principal faster, saving on interest in the long run.
- Build an Emergency Fund
An emergency fund acts as a safety net for unexpected expenses, such as car or home repairs. Aim to save at least three months’ worth of living expenses in a separate, easily accessible account. This will prevent you from going into debt in the event of an unforeseen situation.
Starting small with even £50 or £100 a month is better than nothing. Gradually, you can increase this amount as your income grows. We recommend that this money is kept in a high yield savings account (HYSA) that you can access easily. A HYSA is not a crypto project or anything that requires a few weeks or months before you can access funds.
- Get Life Insurance
It might seem weird to be thinking about life insurance now, but your biggest bargaining tool right now is your age. Getting life insurance when you are young is a cheat code as you get to lock in a lower premium and ensure financial security for your loved ones in case of an unexpected event.
- Build Credit Responsibly
Your credit score is an essential financial tool, affecting your ability to borrow money, secure a mortgage, or even rent a flat. Start by responsibly managing any credit cards you have. Pay your bills on time and in full every month to avoid high-interest charges.
If you do not have a credit card, consider getting one to build your credit history, but be cautious about overspending. If you struggle with overspending, seek therapy first to understand why and get tools to manage this before getting a credit card. We recommend Babb’l Hubb for effective and affordable therapy. Though U.K based, they offer services to people all over the world online.
Managing your finances after university may seem daunting, but with a plan in place, you will build a solid financial foundation.
If you require 1-2-1 help, join one of our coaching programmes that will walk you through a bespoke process that empowers with all the tools to make the right decision for you.
Stay healthy and Wealthy
Written by: Anjie Enabor, FCCA
Reviewed by: WordsMaestro