Money lessons every student should learn before graduation

Students nearing graduation may be more focused on finishing their final exams and fixing their resumes to send out to prospective employers than considering the state of their finances. While those things are important for graduates, preparing their finances is also something that they should not overlook.

After graduation, the financial transition is difficult. The real world will bring on new and unexpected expenses as they start living their lives on their own. If students prepare financially before they graduate, these financial challenges may be more easily overcome. Being a recent graduate will bring many new expenses. Some of these expenses may include—student loan payments, apartment or housing rentals, groceries, utilities, and even credit card debt. Without a financial plan, college graduates can easily be caught up in a financial struggle, especially if their starting incomes are barely enough to cover their necessities. So if you are a college student nearing graduation, listed below are some of the things you should do financially to prepare yourself for the real world.

• Make a budget- While some students who already have job offers are given the opportunity to come up with a concrete budget, there are some students who do not have any plans after their graduation yet. Regardless of that, it is important that you make a budget even though your expenses are only estimates. Your budget should include rent, utilities, groceries, student loan payments and transportation expenses. This will give you an idea on how you should

manage your finances and a better understanding of how much you can actually afford. Budgeting is very important especially when you are a recent graduate, because all of the expenses will be yours to cover.

If you do not want to live from paycheck to paycheck with an income barely enough for your expenses, then you need to budget and adjust your finances accordingly. Making a budget is easy. You just determine how much money is coming in and then write your necessities down (the amount of money that is going out). Then, the rest of the money should go towards other financial aspects such as your savings and your personal expenses. Checking your credit reports will also help you manage your finances better. By regularly checking, you can keep track of outstanding debt, adjust your budget and limit your spending so you can pay debts off.

• Inquire about student loan repayment options- Recent graduates are given a grace period of about six months by lenders before they are required to begin to repay their student loans. This gives them a chance to find employment and begin to understand what is required to pay their other expenses. However, employed or not, recent graduates should inquire with their lenders about their different loan repayment options that are available. If you are in a financially tight situation, you can ask your lender about deferment or forbearance. If you are employed, you can bring up the income-based repayment plans and see if your lender allows those options. Knowing these options will help you financially, as these will give you more time to learn to budget, manage and adjust your finances without defaulting on payments.
• Pay off high interest debt first- It doesn’t matter whether it’s a student loan or credit card debt, recent graduates should always pay the debt with the highest interest first. Debts with high interests will be harder to pay off especially if you miss the payments. This will result in a bad credit history which will tarnish your chances of being approved of loans and new lines of credit in the future. Paying off debt may seem daunting, but it is a financial responsibility that needs to be taken care of and one that you can accomplish with a little effort.

Being financially prepared before you graduate can help soften the blow of financial challenges that the real world may bring. It is very important that you keep in mind the money lessons for students mentioned above so that you will be able to handle and manage your finances well. By being able to balance paying your necessities, debts and saving for your long-term goals, you can be assured that you can handle financial challenges that may arise in the future.

Author Bio:

Kedy is an active finance blogger who is fond of sharing interesting finance management tips to encourage people to manage their personal finances. More specifically, she advocates that people should check credit reports and scores regularly.