For the majority of college students around the country Graduation just happened. At the school I work at, we just released 2600 newly minted students to the world to seek their fortunes. This is a scary time for most graduates. Entering the work force in the current economic climate is daunting, and they are faced with odds that are already stacked against them. And unfortunately, not a single one of those college classes taught them how to get out of debt.
Fortunately, there are specific steps that new college graduates can take to avoid falling into the consumer debt trap that so many of their fellow students find themselves in.
Continue your college lifestyle for as long as possible!
There is no shame in this, and the stigma of living on ramien noodles and single ply toilet paper is rapidly receding. In fact, I would say that adults who are long removed from their college years are increasingly moving back towards their “college spending” days to save money and avoid falling further into debt.
In college, you don’t need “stuff” because you have friends and real human relationships to occupy your time as opposed to china patterns and big screen tv’s. By avoiding the trap of lifestyle inflation as soon as you get a job, you will be able to establish a firm foundation, start paying off your student loans, establish an emergency fund, and even set aside money for your future (spouse, marriage, kids, house, new car, travel). Setting a plan, and understanding the downside of falling into lifestyle inflation will help you avoid these common mistakes.
Make a Savings/Spending Plan
One of the best pieces of financial advice my parents ever gave me was to set a strict budget and keep to it. Having a firm grasp of your budget and income needs will tell you very quickly the lifestyle you can expect to have.
In fact, if you have a Stafford Student Loan, you will be required to complete exit loan counseling when you graduate, and you will have the opportunity to create your first sample budget in that counseling session.
Understanding that a high income is got a right granted upon graduation will help you face reality, and plan accordingly. Sticking to your savings and spending plan, will help you keep that vision in check.