Graduation is one of the great milestones of life, one that truly merits the expression, “today is the first day of the rest of your life”. What follows immediately may be a short summer break or even, if you can afford it, a gap year where you see a bit of the world before getting down to the working life. It's going to be a huge change from what you're used to and you're going to have to get to grips with your finances if you want to enjoy this time. Here are some tips.
Get a Credit Card
One way or another, financial matters are going to come to the fore, and perhaps the first thing you will need to do is get a credit card. Let's say that thus far you've gotten along with your student loan and a debit card. Now you're going to need to raise the stakes a little. A word of caution is don't go crazy with greed when choosing a credit card for the first time. Learn the jargon about APR etc. and get yourself a good deal as far as repayments go, but keep in mind that if someone offers you a large amount of credit and you use it all, it will have a correspondingly large amount of interest attached. If you are doing a gap year, you will have to think about how you're going to make the monthly payments while you're away, spending and not earning.
Take Control of Your Student Loan
Once you're back and settled into this new life, at some point you may want to renegotiate your student loan. If you're earning more money than you expected, you may be able to pay it off quicker than agreed, but you'll have to see how the lender feels about that. Some loans come with a penalty for early repayment, because although getting rid of the debt is good for you, it means they don't get all the interest they could if it went the full period.
An alternative might be to transfer the debt to a different lender who may offer better terms. Do an internet search for info on what it means to refinance student loans. You will find companies that like doing this, but they will not be doing it out of the goodness of their heart, so look at all the details and see what the catch is. Debt is a fact of life and everyone from private individuals to huge corporations and even countries borrow from time to time to enable them to do things that take more resources than they have in the bank. So, it's not a bad thing if it is undertaken thoughtfully and handled responsibly.
Learn to Negotiate
Many in business live by the motto everything is negotiable, and although that might not be your default position, now that you are a bona fide tax paying citizen with an income, it is good to learn to stand up for yourself in financial matters. You know the deal: they want $100, you offer $50 and maybe you compromise at $75. Just don't be a pushover. This skill can help you build a successful career over time as well, many personal finance skills are highly transferrable.
Budget is Not a Dirty Word
Depending on your personality, you may or may not be good at living within your means, but it is an essential part of living a relatively stress-free life. Many set aside a certain amount for general expenses such as household shopping, food, and drink etc. Some families have a special purse to keep the money in, but if you are not in the habit of using cash, you may choose to have a different card that you load with a certain amount each month. Payment systems offer cards that enable you to pay (and receive payments) just like a bank card, so it may be worth checking them out.
Keep an Eye on Your Credit Score
Your credit rating/score is of great interest to many you may want to do business with. It's a sort of financial character reference that can be required if, say, you're buying a car on installments, so it pays to build your score steadily. At its most basic, this means repaying loans as per the terms of the agreement: on time and with at least the lowest amount, but preferably the full amount. What you don't pay off, you pay extra interest on, so it makes sense from that point of view too. Your credit score will follow you around just like your educational qualifications, but unlike them, it is not fixed, so keep it in mind and do yourself a favor in the process.
