After graduating, there will be responsibilities such as paying rent, bills, and student loans. Therefore, as you head out in the corporate world, you need to plan your finances before graduating. A financial plan will help you finish paying your student loans and still manage your living expenses.

If you are among the lucky ones to land a job before graduating, it will help you transition to the outside world smoothly. However, your choices regarding your finances, whether it’s setting up your 401(k), setting aside emergency funds, paying off private student loans, or saving, will carve your path towards financial success.

These tips will help you plan your finances before graduating.

Plan Your Finances | Create a Budget

This is usually the first step for every person who needs to control their finances. The best part is that you don’t have many expenses as a new graduate; therefore, creating a budget should not be a tricky affair. If you don’t have a job already, it would be best to live with your parents and significantly reduce your expenses.

However, if you already have a job, you must estimate how much it will cost you to move out, buy furniture, make a deposit, and rent. You also need to budget for other expenses such as food, clothes, and transport.

Make a Plan to Pay off your Student Loans

Most college and university graduates finance their education using loans, such as SoFi private student loans. 

So, when you are creating your budget, make it a priority to pay off the loan as it improves your credit score.

Track Your Spending

When we graduate, we all tend to go off budget because we are done with books, especially if we land a job before graduating. This only derails your financial freedom—it’s not wrong to celebrate or treat yourself, but don’t overdo it. Some of the money you spend partying can help with your student loan or savings.

So after you create a budget, track your spending. Many free apps can help you do this as beginners, such as Spendee and Household Account Book. They show you the expense to prioritise and which to cut or reduce to achieve your long-term goal. 

Work on Building your Credit Score

Your credit score plays an important role when getting a car loan or mortgage. The first step in establishing a credit score is by paying your bills and student loan on time. You can also consider taking out a credit card. 

The best choice is a secure card as it does not require any credit history, but the catch is you must pay a deposit of $200. Once you get a credit card, ensure that you are never late paying it off. 

Health Insurance

Before you graduate, you are under your parent’s health insurance plan, but you are on your own after graduating. Nothing is as important as your health, so make a point of taking out a health insurance plan. 

Don’t settle for any insurance company, do your research and opt for the one that meets all your needs.

Set up an Emergency Fund

As a new graduate, you will have new expenses cropping up now and then since you have not figured out everything. Therefore, it’s essential to set aside funds to tide you over during these situations. 

Every person living alone, with parents, or with family must have an emergency fund. Some people prefer to set up an emergency fund covering three months of expenses and above. 

For instance, people who had set aside funds when the pandemic hit were in a much better place than those who didn’t. You can start small and keep adding until you achieve your desired goal.

Final Thoughts

A solid financial plan will set you up for financial success before graduating. This is because you will not spend money on unimportant things, and your main goal will be to achieve financial freedom.

The plan will help you pay off your student loans and establish & improve your credit score. You can use the tips above to plan your finances before your graduation.