After College: Budgeting For Real Life

If you thought paying for college was a challenge

, wait until you discover the joys of making ends meet on an entry level salary. While you may not find yourself to be financially comfortable for a few years, you can start off on the right foot by setting a budget as soon as you negotiate your salary of your first post-college job. Make sure that you sharpen your pencil (and get rid of all luxuries) if you find that you won't have any fun money left after meeting your obligations. The next steps are below:

1. Always pay your bills on time. Not only will you avoid late fees and interest charges, you'll establish good habits and protecting your credit rating if you always pay your bills by the due date. Why is that important? It's hard to rent an apartment, get a home or car loan or sometimes even a job if you have a low credit report rating. A good rating can also ensure better interest rates on loans and lower car insurance premiums. Think of your credit report as your grade point average. A few bad marks will lower the whole thing.

2. Don't get carried away with credit cards. While you may be old enough to obtain a credit card without a co-signer, you need to demonstrate true restraint if you don't want to wind up over your head in debt. It's a good idea to accept a credit card as a way to start building a positive credit history, but be sure to pay the full balance every month. You'll avoid paying interest and won't find yourself buying more than you can afford. Using a credit card for online or large item purchases is smart because you can dispute the purchase if something goes wrong, but don't let yourself linger in paying off the balance.

3. Save, save, save. It's hard to find money to tuck away for a rainy day when your living expenses come alarmingly close to your net pay every month, but it's a good habit to get into. If you have some savings, you won't have to go into debt when little emergencies like car repairs creep up. The easiest way to save is through a savings program, like a 401k, through your employer. You won't even miss it from your check and it grows faster than other types of savings because the employer chips in as well.

4. Don't fall into the debit card trap. A debit card may look like a credit card, but the funds come directly out of your checking account. If you don't keep track of what's coming out by balancing your receipts every other day or so, you could fun into an overdraft situation. That means you don't have enough money in your account to pay for your debit card purchase. The result is fees on top of fees. Think about this: a latte at your local coffee shop could end up costing you about $40 if you don't have enough money in your account.

Independence, financial and otherwise, is what you've worked so hard for all these years. Protect your identity by keeping your social security number to yourself and shred your mail with financial account numbers on them. Spend only what you have and push yourself to save along the way. It isn't always easy to be financially responsible, but it is always rewarding.

by: Jon Ross

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