New Graduates And Personal Finance

The moment you graduate from college, your utmost desire is to live your life on your own terms. No more preparation for exams, deadlines for assignments and spending a lot on books. It will be like a breath of fresh air for you. But you will face a tough situation outside regarding your finance irrespective of whether you have a job or are searching for one.

After college how you handle your finances for the coming few years is very important. There are three basic rules that can help you a lot in getting future financial security and support your lifestyle.

Credit narrates you

The financial world is going to analyze you in first contact by your credit score. To have a nice first impression you have to be a good credit scorer. Having a good history means more responsibility and that will help you in getting loans at lowest possible interest rates. It will also help you save a lot.

Similarly, a low score refers to a high premium payable every month as it entitles a heavy interest rate. Ultimately this will affect your financial standing in the form of insurance quote rates, your residential rent and your evaluation by the employers.

Debt for spending only is dangerous

The purpose of debt should be to build your wealth and not just to spend and support a luxurious lifestyle. If somebody takes a loan to finance his/her unaffordable lifestyle, it will only serve to add to your financial woes.

Commonly, fresh graduates tend to promote their lifestyle by spending a lot on things like renting a luxury apartment and filling that bachelor pad with friends to party. To have all these things they move towards debt in terms of credit cards end up with a large sum that needs to be paid off. Sometimes this amounts to almost double of what they actually purchased. If they have a bad credit history, this situation is going to worsen.

Invest as early as possible

The third rule for finance is to invest your money as soon as possible because it will help you in generating more profit. If you invest a large sum of money at some later stage, there will be a lesser time period and it will give you less advantage compared to less money invested for a longer period. This phenomenon is called compounding that refers to the process of generating money on money and it depends on the time period.

For instance instead of applying for a retirement plan by full payment it is better to contribute a lesser amount after a week or after any other fixed interval. This will result in a mass amount in the future for you and as the time period of that investment increases your money will grow more. But if you invest more in the mid stages of your job, then obviously your time period will be less and that will affect the total profit you can earn on your investment.

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