7 Money Tips for New Grads
Congratulations! If you are one of the more than 150,000 Canadian students graduating this spring, you have finally earned the right to walk across that commencement stage and pick up your hard-earned University degree.
This is a huge milestone, and you should be very proud of your accomplishment. However, with the average student debt sitting at $27,000 and youth unemployment rates sitting around 13 per cent (ages 15-24) there is a good chance you are not prepared for a financially fit future.
Jeff Schwartz, executive director of Consolidated Credit Counseling Services of Canada, wants to help recent graduates prepare themselves financially for this next chapter in their lives.
“The Class of 2015 are arguably some of the best and brightest stepping into the working world,” says Schwartz. “Yet, when it comes to managing their money, most are still financial freshmen.”
In order to help these money rookies prepare for this new phase of thinking about money, Schwartz and the team at Consolidate Credit offer these tips to help graduates prepare for life in the real world.
1 – Make debt repayment a priority. The average Canadian student is graduating with $27,000 in student debt, and 14 per cent of those with federal student loans have defaulted within 3 years of leaving school. Not following through on debt repayments can leave a financial scar that will haunt you well into the future. Making these payments a priority today will not only help you eliminate your debt faster, but will also create good habits for dealing with debt in the future.
2 – Pencil out your budget. Whether you have landed a job or not, now is the time to start mapping out your budget. Figuring out how much you earn (after deductions) and how much you spend is the easiest way to determine your financial fitness. Start by adding up the essentials, like your rent, utilities, groceries, transportation and student loans. This will help you figure out how much is left over for spending and saving each month.
3 – Move in with Mom and Dad. After four years of freedom, the last thing you may want to do is move back in with your parents. But, if by having you back home you’ll be able to use the money you save on housing to pay down your debt and increase your savings. Who knows, you may even save enough to buy a car or make a down payment on your first home.
4 – Just say ‘NO’ to debt. This may sound redundant, especially if you are paying off large student loans; but the truth of the matter is, debt is your worst enemy. Not only does it create financial stress, but can also prevent you from taking a job you may love (because the salary is too low), and in some cases prevent you from getting a job altogether. Resist the urge to use your credit cards or borrow from lenders until your finances are in order, and you know you can pay the debt in full.
5 – Pay yourself first. When you do land that first job, make savings a top priority. A good rule of thumb is to set aside the equivalent of three to six months’ worth of living expenses (remember the expense side of that budget). You may think savings or rainy day funds are for older Canadians or those with families, but you never know when an emergency may arise.
6 – Invest in your future. You just graduated, and retirement is probably the last thing on your mind. But in all honesty, now is the perfect time to start investing and saving for your golden years. The advantage you have over those your parents’ age, is that you have many, many working years ahead of you. This gives you more time for your money to grow. Once you land that first job, talk to a financial advisor about setting up an RRSP, TFSA or other financial products that will help create a healthy financial future.
7 – It’s okay to splurge every now and then. You may be a financial freshman, but that shouldn’t mean you have to squirrel away every penny you earn. Create a ‘fun money’ account that you use just for yourself. However, make sure the things you splurge on are worthwhile expenses. Perhaps a new suit to give you the confidence to nail a job interview, or travel experiences that will stay with you for a lifetime.
Good money management is key to a successful future, but if you feel that you are flunking as a financial freshman, we can help! Call 1-888-287-8506 today to speak to a trained credit counsellor and find out how you can get your budget under control. You can also try our Free Debt Analysis online and a counsellor will reach out to you!