Graduating from college is an exciting time, but also a time of uncertainty for many. It is estimated that by 2022, 10 million people in the UK workforce will be in professional occupations and according to The Institute for Fiscal Studies, an estimated 83% of graduates will not fully clear their debt within three decades.
This discrepancy can be frightening whether you have a job nailed down, or are in the search process. Getting your finances in order from the start will give you a solid platform on which to launch your life and career. Regardless of how much or how little you make, these steps are crucial to your future financial success.
Get a grasp on your debt
Student loans are one of the first things on your mind when you graduate college and can be overwhelming to think about. Still, it’s important to take time to look over your loan information and review your interest rates. Universities can charge up to a maximum of £9,250 per year for an undergraduate degree, so understanding the amount you’re responsible for is key and may impact your job search. Additionally, student loan interest rates have risen to 6.3% from September 2018. Certainly, reviewing your loan information will give you some insight as you begin to make other post-graduate plans.
Set financial goals
Think about what you want to accomplish in the next five years and write those goals down. For many young people in the UK right out of university, goals are focused more on the immediate, such as securing a good job and flat, and less on the future, considering retirement, and so on. Yet, you can outline simple goals informed by your life goals. Do you want to own your own house, pursue graduate school, start a business? Think about these things and reframe money should be seen as the means to your end, not the end entirely. So, whether it’s saving for graduate school, making large payments on your loans, or building a travel fund, identifying these goals is a key step to financial stability.
Create a budget
With the student loan repayment threshold increased in April 2018, there is hope that recent graduates can get a grasp on their finances before having to factor in repayment. Financial experts advise that half of your income can be spent on living expenses and bills, the other 30% is for personal expenses, things that enhance your lifestyle like a gym membership or a holiday, and the final 20% is what you should save.
With the high cost of living in places like Bristol and Cornwall, saving based on this model may not always be attainable. Still, the 50/30/20 rule may be helpful in mapping out what is essential for you to live a comfortable life, and what you can live without. If living in a nice flat is your priority, your budget can reflect that. If you’re more focused on spending your time off on holiday, you can factor that in, too. Learning to budget now will save you a lot of headaches as you get older and your finances become more complicated.
Get a side gig
The Institute for Financial Studies estimates that students in England will be able to collectively pay back less than 48% of their total debt. Not being able to pay back debt can negatively impact your future, so it’s best to be prepared and organized to make those payments. Still, your full-time work whether at one of the many multinational companies or a smaller start-up may not cover it all.
Picking up another job on the side to do some extra work can help alleviate a financial strain. Whether it’s related to the field of study or something entirely different, earning extra money will help to put you in a healthy financial situation and perhaps even bolster your career. Ultimately, experience on the job is what most companies are looking for. Your degree is a stepping stone, but experience will help you land new and better opportunities.
With these simple steps you can become financially stable and confident that you’re working toward your purpose. Let this financial planning be the start of a successful future.
Article by Casandra Miller
Photo by rawpixel on Unsplash