By Rachel Madray
As graduation approaches, college students are faced with a tough question. Now what? Perhaps the three most considered options are taking a year off to travel, going to graduate school or getting a job. There are financial pros and cons for each option so careful consideration is important before making a decision.
Travel
Matt Goren, a University of Georgia professor who teaches personal finance, said traveling for a year may not be as expensive as it seems. Making a budget for the entire year is the first step. After making your budget add at least 25 percent more because there are always unplanned expenses. The costs of living in other countries can be lower than in the United States. For example, Numbeo shows the costs of living in Germany as significantly less than the United States. The cost of groceries is 31.86 percent lower, while the cost of rent is also 35.36 percent lower.
Goren suggests for those who choose to travel to cut their costs and to work part time to make extra spending money. He advised going to websites like nedwallet.com to get credit cards that do not have foreign transaction fees, while also letting you earn money back. If you are qualified, try to take on some freelance work to make more money, he said.
If you cut costs by staying in hostels and using an overseas cellphone to avoid data charges while earning money, then the difference between costs of travel and money earned could end up being small.
Graduate School
The two best ways to attend graduate school, if it is not necessary for your profession, is to go into the work force for a couple of years, save some money, and then potentially have your company either pay for your graduate school or have them pay you while you attend. This will ensure that you do not accumulate the thousands of dollars of student loans associated with graduate school. The biggest financial obligation to consider with graduate school is student loans and interest on these loans, said Goren.
Work
The worst thing you can do if you have a job right after graduation is letting the “lifestyle creep” happen. Goren said many people are overwhelmed with how much more money they make and opt to buy new cars, pay more on rent for a larger apartment and have higher credit card bills. Beware of the lifestyle creep because investing money early can result in millions later in life.
There are different financial burdens associated with each post graduate option. Traveling for a year could create a large deficit in your savings. However, you could live more fruitfully after experiencing different cultures. Going to graduate school will cost you thousands in student loans, however, there are ways to help with this if your company is willing. Finally, heading straight into the workforce could give you those crucial few years of savings if you play your cards right. However, be aware that your fixed expenses do not accelerate unnecessarily.
Rachel Madray is majoring in journalism at the University of Georgia’s Grady College of Journalism and Mass Communication.
