Congratulations Graduate! Now it is Time to Learn About your Finances
Are you a recent graduate or gearing up to graduate this spring? While finishing your education is a huge accomplishment, and you are no doubt proud of the accomplishment, you may be feeling slightly daunted at the prospect of transitioning from student to employee- and some of the financial responsibilities that will soon be coming your way.
So how to proceed, once you’ve removed your cap and gown?
You may have landed your dream job (or a job!) already, in which case you are slightly ahead of the game (in the sense that you will have less of a delay until you start receiving cash flow).
You may have spent hours dreaming about what you’re going to do with your first paycheque. While this creates great fodder for daydreams, spending money before it even gets in your hands is literally the first step towards getting saddled in debt.
Take a few moments to dream- and then several more to plan.
Identify Financial Goals and Spending Centres
Perhaps you are planning on moving out on your own, and renting an apartment with some friends? Is this the time in your life where you want to take advantage of travel? Are you looking to make big-ticket purchases, like a car- or maybe even a starter house in the not-too-distant future?
Whatever your immediate and longer term goals, you need to sit down and look at what you’ve got coming in- and what you’ve got coming out.
When school is done, it is the perfect time to define your priorities (life and financial) and to determine what you need to do to get there.
Talk to an Expert
This is an excellent opportunity to sit with a financial advisor at your local bank or other institution to get some information about your financial future. Look at the implications/benefits of saving, spending and financial planning.
Getting off on the right foot when you are building up earning power can be a key component of your financial success in the future.
Success comes with knowledge. Do you know anything about investments? Do you know anything about borrowing (interest payments, etc.) and how they could figure into the picture of financial health?
Talking to an expert can help you articulate your goals the steps you need to take to get there.
Budget: What’s Coming in?
What is your new income going to be? Are you subject to a probationary period? What sort of salary increases can you expect with this job over time? Do you get bonuses? What time of year are they dispensed, and how are they allocated?
Budget: What’s Going Out?
Now that you are all grown up, you are likely going to have to start taking on a number of expenses associated with the cost of living (if you’ve not done so already). Look at rent/housing payments, food and utilities.
Chances are that you may be carrying some student debt as well too.
Once you’ve covered off all of these necessities, how much is left over?
If it’s not- look at how you might be able to reduce expenses (i.e. saving up to buy a car, rather than purchasing one now and having car payments or living at home for a few months to save before moving out with friends).
Speaking of student debt, if you are like the average Canadian, the amounts can be substantial (recent figures state that many students are walking around with upwards of 30K in loan debt upon graduation).
While there are many theories on how to manage student debt, truthfully it can take years to completely wipe it off your records. The key is to come up with a plan now- and to get help if you need it.
CanLearn.ca is a great resource for new grads (and current students) who are looking at student loan repayment. There are options available- and as with all debt repayment, the first step towards a fresh financial future comes with ownership, responsibility and planning.