To the millions of college and high school seniors who
recently graduated (and to their parents, who weathered the ups and
downs of reaching that summit): congratulations on a job well done.
After the celebration dies down, you’ll no doubt be eager to embark on
life’s next chapter, whether it’s finding a job, preparing for college
or enrolling in military or community service.
Before you jump in feet first, however, let me share a
few financial lessons I learned the hard way when I was just starting
out. They might save you a lot of money in the long run and help you get
closer to your life goals, whether it’s buying a house, starting a
family or even retiring early – as far off as that may sound.
First, pretend you’re still a starving student. After
landing your first full-time job, the urge to go on a spending spree for
new clothes, a better apartment and a car from this decade will be
irresistible after surviving on ramen noodles for four years. But unless
you had generous scholarships or a rich aunt, you’re probably already
saddled with thousands of dollars in student loan debt.
After you’ve factored in rent, car payments, renter’s and
car insurance, credit card charges, student loan balances and other
monthly bills (not to mention payroll taxes such as Social Security tax,
which went up, your new salary probably won’t go as far as you’d like,
especially if you’re trying to save for one of those life events.
That’s where a budget can help. Find a way to calculate your income and expences.
Next, know the score, credit-wise. Many people don’t
realize until it’s too late that a poor credit score can trash your
financial future. After you’ve missed a few loan payments, bounced some
checks or exceeded your credit limits, you’ll probably be charged higher
loan and credit card interest rates and offered lower credit limits (if
not denied credit altogether), unless and until you can raise your
credit score. You may even have to pay higher insurance rates and harm
your ability to rent an apartment or get a cell phone.
To know where you stand, review your credit reports to
find out whether any negative actions have been reported and to look for
errors or possible fraudulent activity on your accounts.
Jason Alderman
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