By Rachel Madray
Many college students are not prepared for the financial obligations they will face after graduation. After relying on their parents for the past 20 plus years of their lives, the transition to becoming self-sufficient can be shocking to many, especially if they have not prepared for what to expect. Matt Goren, who teaches personal finance at the University of Georgia, has a list of areas for college students to consider when planning for life after graduation.
Budgeting
According to Goren, most people when thinking about a budget consider only about a month in advance. However, the bills and financial obligations most people have make it necessary to prepare an annual budget. Understanding the expenses you will have each month and then adding on some cushion for the unexpected expenses can help you stay out of the negative territory and perhaps even allow you to save a little money in the long run.
Inadequate job offers
Goren said many students make the mistake of accepting inadequate job offers right after graduation with a low salaries and little benefits. Do not let companies try to lowball you with their offers. The average college graduate makes around $40,000 to $50,000 annually. Be prepared to negotiate a salary standard for starting positions in the industry you are entering.
Avoid the new car
Some college students buy themselves a new car after graduation, but this can turn into a heavy financial burden especially if the car comes with large payments. If you need a car following graduation, Goren suggests buying a used model that is only a couple of years old. You will end up paying a lot less for the car and it will be in relatively good condition. As far as leasing a car goes, Goren advises to only lease a car if you know you will not be needing it after a few years. You end up paying a large amount in interest on your car payment each month when you lease.
Insurance
When you make that shift to self-sufficiency, you may no longer be under your parents health insurance, car insurance, and renter’s insurance (or home owners insurance if you buy a piece of property). These are ongoing expenses that must be considered when making a budget.
Living expenses
College students who have not had to pay for all of their own bills may have a harder time adjusting to the demands of becoming self-sufficient. Bills seem to always happen around the same time. It is important to make sure you include every possible bill in your annual budget. For example, phone bill, water bill, power bill, cable bill, rent, and car payments are examples of the seemingly endless stream of bills you will receive once you are on your own.
If you keep these five areas in mind after graduation it will be easier to have some extra money at the end of the year to put into savings. The most important aspect is to budget for the whole year and not just a week or a month in advance. If you are able to budget for all of these financial obligations and obtain a decent job offer after graduation then your shift to self-sufficiency will be smoother.
Rachael Madray is a journalism major at the University of Georgia’s Grady College of Journalism and Mass Communication.
