Graduating from university is an exciting time, but it can also be overwhelming when it comes to managing your finances, along with the stress of student debt, finding a job, and getting used to a new lifestyle it can all feel like too much. Yet, with the right resources and planning, you can build a solid financial base for the future. Here are some tips and advice on how to manage your finances after graduation.
Create a Budget:
Making a budget is the first step in managing your finances after university. A budget allows you to keep track of your spending and make sure you aren't overspending by outlining your income and expenses. Calculate your monthly income first, considering any salaries or earnings as well as any additional sources of revenue. Next, make a list of every expense you have, such as rent, utilities, transportation, groceries, and other bills. It's crucial to be truthful about your spending patterns so you can create a realistic budget.
Once you have a clear picture of your income and expenses, you can begin to adjust your spending. Find areas where you may make savings, such as cutting back on eating out or switching to public transit over owning a car. Keep in mind to budget for savings because doing so will enable you to achieve your long-term financial objectives and accumulate an emergency fund.
Manage Your Student Loans:
Finishing university with student loans can feel daunting and leave you feeling confused and panicked about when you need to pay this back. However, UK Student loans are super easy and understanding how they work is important to managing your money and salary expectations.
UK Student Loans work where you only started paying them back after you earn over a certain threshold which depends on when you graduated. Once you’re earning more than the threshold per year, the earliest you start paying back is the April after graduation. For example, if you graduate in June 2023 and start a job in September 2023 with a salary of £28,000, you’d start paying back your loan in April 2024.
Once your salary is over the threshold, your monthly or annual student loan repayment obligation is based on your income, not the amount you borrowed. So, you must pay back 9% of your annual earnings above the threshold every year. However, this is all worked out by either the HR of your company or, if you’re self-employed, you’ll need to let HMRC know that you have student loans.
Build Credit:
Building credit is an essential part of managing your finances after graduation. You may be able to apply for loans, credit cards, and even rental properties if you have a high credit score. Check your credit score first, then verify your credit report for any mistakes or inconsistencies. You can get a free credit report annually from each of the three credit bureaus: Equifax, Experian, and TransUnion.
Consider obtaining a credit card and making on-time monthly payments to establish credit. Use your credit card for little purchases and pay the monthly payment in full to avoid paying interest. Consider applying to be an authorised user on a parent or guardian's credit card as well, as this can aid in building your credit history.
In conclusion, maintaining financial discipline after graduation can be difficult but is crucial for securing a bright financial future. By creating a budget, managing your student loans, and building credit, you can establish good financial habits and achieve your long-term financial goals. Keep in mind that establishing financial security requires time and dedication.