Financial Tips for New Graduates

Congratulations on graduating university and entering life in the real world! :) I graduated a year ago, almost to the day, and I have some financial advice to share with you! It's strange going from student life to working to earn more money than you ever had before, so it's important you pay attention to what you're spending to live happily within your means.

Live at home if possible, rent a cheap room if not – It's not glamorous, but living with your parents for a year or so while you save some money will save you so much money! I pay my parents £40 a week in rent and bills, which is a lot cheaper than even lodging would be. If that's not an option for you, try lodging or getting a flatshare with some friends. 

Start an emergency fund – The first thing you should do when you start earning money is put at least 10% of your wage straight into a separate bank account, to provide a buffer in case of emergencies. You might need it for expensive car repairs or job loss or visiting a sick relative, but ONLY use it for emergencies! Save about £1000 before focussing on repaying your overdraft/credit card debts.

Look for the perfect job, but get ANY job to tide you over – First things first, apply for Jobseekers Allowance. That's what it's there for, so don't feel embarrassed! Spend most of your effort hunting for that perfect job, but apply for any high-turnover job you see too; earning minimum wage is better than getting just £56 a week on the dole. Over the past year I've worked as a chambermaid in a hotel, in McDonald's and as a waitress. It's lame but it pays the bills while you get something better!

Don't pay off your student loans early! - I encourage you to blatantly ignore your student loan! :) In April you will begin repayments of 9% of whatever you earn over £15,000 (which will be automatically deducted from your wages). If you have any spare money you should put it into a savings account (like an ISA) rather than paying down your loan, because you'll make more in interest than you save yourself by lowering the debt. This debt does NOT affect your credit rating. 

Do pay off other debts ASAP – Unlike your student loan, your overdraft and credit cards WILL affect your credit rating. You will also likely be charged interest on credit card debt, and while your overdraft might be interest-free now it will not remain so forever. After building your emergency fund, pay these debts off aggressively (as much as you can afford, not just the minimum payment!) and save yourself a LOT of money in interest!

Avoid having a car – If you can use public transport to get to your job, DON'T get a car. Including £300 of repairs, buying and running my old Peugeot Jools has cost me around £3000 this year! OUCH! Don't even THINK about buying a brand new car! Put what you would pay in car payments into a savings account and pay cash for a second hand one in a few months time!

Don't buy things you can't afford – Purchasing things using credit means you often pay through the nose in interest. Credit cards are great for building a credit rating IF you pay them off in full every month. If you can't trust yourself to do that, don't use them!

Keep a spending diary – Do you wonder where your money goes? Of course you remember the big things, but a few pounds here and there really does add up. Keep a record of your spending (it only takes a couple of minutes a day) and use it to stay in control of your budget!

So there you have it. Good luck out there in the real world! It's strange to finally leave education (maybe that's why I'm going back again, haha!) but it's a new chapter in your life. Make sure you start it right!