Graduating from university and landing your first job is an exciting time. You’ve finally gained your freedom and now, you’re finally ready to take on the world. Or are you?
There are bills to pay and things to buy, student loans to repay and an entire slew of problems that you haven’t anticipated.
If you fall into one of the following categories, then you really should read on:
1. You’re a fresh graduate just starting his/her new job
2. You’re about to graduate from university but don’t have a job
3. You’re in your early 20s and have been working for a few years now
4. You’re looking to improve your financial literacy regardless of how old you are
More often than not, fresh graduates find themselves floundering in this brave new world. All of the things you’ve learnt in university won’t save you now.
Fortunately, we at CareerGuide.com, have been through it all, and we’re prepared this handy guide to get you started.
- Utilize the 10 percent rule
When I first started working, one of the things my father told me was to set aside a percentage of my salary every month.
Being young and foolish, I questioned the wisdom of this and was hesitant to do so. Fortunately, common sense prevailed, and I opened a savings account which automatically deducted 10 percent from my paycheck every month.
In the early days it was extremely difficult as fresh grads were (and still are) paid miserably. However, as time progressed, I realized that I had a sizable sum put away as a kind of nest egg.
If there’s one thing I learn from this is that automated, forced savings are the best way to save cash. Having a standing instruction put on your bank account lets you automatically put aside a sum of cash every month and prevents you from coming up with any excuses not to do so.
- Start investing early
For the uninitiated, passive income is money derived from activities that do not require any direct input from an individual and it illustrates why it’s always a good idea to get your money to work for you.
If you’ve followed the first step, you’ll now have a sum of money parked in the bank with nowhere to go.
From here, you’ll be able to use this cash as seed money for your first portfolio. Invest in low-risk funds such as fixed deposits, debentures or government bonds.
While these investments do not have a particularly high rate of return, they are essentially risk-free which means that it’s highly unlikely that you’ll lose your seed money.
Continue building up your portfolio and in the long-term, you’ll have built a steady stream of passive income.
- Don’t go into debt
Credit cards can be a godsend for the cash strapped fresh graduate trying to make ends meet. However, more often than not they end up being much more trouble than they’re actually worth.
Shockingly, a recent study revealed that 50 percent of fresh graduates had some form of credit card debt that they were unable to pay off. A combination of poor spending habits, financial illiteracy, and extortionate credit card interest rates have led to this sorry state of affairs.
So, if you’ve just landed your first job, maybe consider putting the credit card on the backburner. Pick up the basics of budgeting and learn how to stretch your paycheck each month, thus helping you to avoid the trap that so many fresh graduates have fallen into.
Saving cash, building wealth and avoiding debt; these 3 tenets while simpler than guessing the NBA experts picks for the week. There are in fact one of the most valuable financial lessons that you should learn. It may seem difficult or even impossible at first, but the rewards of doing so are well worth it.