When you’re fresh out of college and worrying about how to land your first job, it’s not easy to think about savings for emergencies, the future, and retirement. But believe it or not, you can take some simple steps right now that will jump start you on the path to financial security in your thirties. Invest some time and effort now and your future self will thank you, big time.

When you’re fresh out of college and worrying about how to land your first job, it’s not easy to think about savings for emergencies, the future, and retirement. But believe it or not, you can take some simple steps right now that will jump start you on the path to financial security in your thirties. Invest some time and effort now and your future self will thank you, big time.

    1. Know your number. Many of us have no idea what our expenses add up to every month. Find out your number. It will empower you to better align your spending to your priorities and zero in on ways to save. A simple spreadsheet can do the trick, or if you prefer, use an online money tracking service (like Mint or Quicken) to see all your financial accounts in one place and even create your first budget. Do this and you will always know where you stand financially. Some budget apps give you complete access to your data through a website and your mobile device, and even an eye on your money for you, sending you alerts to remind you to pay your bills or when you go over budget.

 

    1. Build a savings cushion, including an emergency fund. This is your #1 savings priority. Why? Unexpected expenses happen all the time, but if you have a cushion of savings, unexpected expenses don’t have to derail you. Instead of draining your long-term savings account or falling into debt, you can simply use your cushion to stay on track, then rebuild your cushion for next time.How much should you set aside? Ideally, your cash reserves should cover six months’ worth of expenses. Then, after you have this six-month cushion, you should also set aside a separate emergency fund, enough to cover 24 months of expenses for longer-term situations such as an extended illness. But for a new college grad, saving a six-month cushion and 24-month emergency fund probably feels like an impossible goal. So, start by saving two months’ worth of expenses. You may be surprised by how doable this is – and you’ll feel a lot better, knowing you’re prepared to handle an unexpected expense. Eventually, as your income stabilizes, you can work your way up to saving the full amounts.

 

    1. Have just a little credit card debt. This may seem counterintuitive, but at this point in your life, you do want to carry some debt, rather than none at all. Open a credit card with a modest credit limit and use it regularly, then— and this is key—be sure to make all your monthly credit card payments on time and in full. Doing this will help you build a solid credit history. You’ll need it to qualify for a loan someday, like when the time comes to buy a house.

 

    1. Refinance your student loans. To pay off your student loans faster and more cost-efficiently, refinancing your loans is one of the best options. When you refinance your student loans, you’ll have one consolidated loan with a single monthly payment and a lower interest rate, which is important so that more of each payment goes towards paying down the balanced owed. Companies like SocialFinance (SoFi) have a strong refinancing offering. For more ideas, I also like Student Loan Hero’s The Ultimate Guide to Paying Off Student Loans Faster.
      • If you decide to go ahead, the first step is to find a reputable bank you’re comfortable working with and see what they can offer (ask friends and family for banks they do business with).
      • If you’re interested in paying off your student debt off faster, it’s smart to compare interest rates to see if you can lower yours. Just remember, extending the term, while it lowers your payments, will result in you paying more interest over time.
      • Be sure to steer clear of companies charging high upfront fees to help you consolidate your student loans or claim to be “approved” or “exclusive” servicers to special programs.”

 

    1. Save 10% of your income every year. If you regularly save 10% of your income, no matter how much you earn, you will always have the confidence of knowing you are living within your means. Regularly saving 10% of your income will make other smart money moves possible: for example, saving a down payment for a house, setting aside a college fund for future kids, or saving for your retirement. Think of saving 10% as the way you empower yourself to make ongoing investments in your financial health, year after year.

 

If it still seems too hard, set up automatic bank transfers for the beginning of every month. By doing this, money you have earmarked to save is transferred from your checking to your savings account before you have a chance to spend it on something else.

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