Once you’ve started your career, you may be tempted to go out and buy all the things you couldn’t afford in college. The novelty of a regular paycheck, as well as the pressure to keep up with your coworkers, can make sticking to a budget especially hard. But if you manage your finances wisely, you can come out on top.
1. Pay down your debt. If you needed student loans to help you get through college, stay on top of your payments. This is one of the best ways to build good credit, which will be extremely important when it comes time to think about applying for a mortgage or car loan. Choose a repayment option that you can manage comfortably and, if possible, consider accelerating your payments. That way you can get out of debt faster and pay less in interest.
2. Know the difference between smart debt and dumb debt. It can be tempting to try to compete with the material possessions of your peers. But don’t forget that while some people have generous salaries, others use credit to live beyond their means. Smart debt is borrowing money with an eye to the future -- like getting a mortgage to buy a home, or taking out a loan to further your education. Borrowing money at high rates to buy expensive luxuries, on the other hand, is dumb debt, and it will make it difficult for you to achieve your other financial goals.
3. Start saving and investing. This is critical to your financial future, and the earlier you start, the easier it will be later in life. Once you begin your career, leave room in your budget to contribute to a 401(k) plan or an IRA, even though retirement may seem a long way off. Don’t be discouraged if you’re only able to sock away a little each month. Thanks to the power of compound interest, even the smallest amount will grow large over time.
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