11 Tips On Going From Student To Adult

While reading the article 10 Great Ways For College Graduates to Start Off on the Right Track with Their Finances, I started to think about the mistakes that I have made, both personally and financially, as well as some of the things that I did correctly. Based on my experience and the article, I thought it would be best to compile a list of things students should do to smoothly transition into adulthood.

The following is a simple checklist on what to do.

11. Figure out the most aggressive possible schedule to pay down student loans

The biggest hindrance coming out of school is the dreaded student loan so figure out the fastest possible way to pay it off. Aim for 80% of your income, and see how long it will take to pay it off. Get the loan gone!

10. Take the amount of time you calculated in the last step and multiply by 1.5

What were you thinking? You are never going to be able to pay it back that quickly, which just means that you are going to break you budget which could lead to everything falling apart. Multiplying your original timeframe by 1.5 should make things much more reasonable and manageable.

9. Minimize your costs

Look at the things you can do to minimize your budgeted costs. One of the best things you can do is tomove back in with your parents, or if you live with them already, resist the temptation to move out. It seems so uncool, doesn’t it? Even if you are living with your parents, you should be paying room and board - it will not only be appreciated, but it will help you to develop practical budgeting skills.

8. With your reduced costs, set a savings budget and stick to it

You should be able to pay down loans, pay room and board to your parents or rent to your landlord and save still money. Being able to equitably split your income is an invaluable skill. You should learn it as soon as possible.

7. Take your savings amount and divide it in 3

Just as you need to save money, you need to save money for different reasons. Keep track of what you are saving for and keep the savings separate from each other, so you do borrow from one to pay for other expenses. A great place to start is saving for treating yourself, saving for life items such as a car or house, and saving for an emergency fund.

6. Don’t necessitize

Figure out what you truly need in your life and have everything else come out of a savings fund, be it a special one for travel or electronics, or maybe the fund the treating yourself. A great way to determine what you really need is to go a month (February is a good month for this because it’s short) and not spend any money you don’t absolutely need to. This will aid you in setting the bar low and show you exactly what you need to live.

5. Get in the habit of checking your finances daily

There are several main benefits to this: you don’t get surprised by bills and your are a good deal less susceptible to fraud. As well you will always know exactly how much money you have.

4. Get in the habit of shuffling your money around

If you buy yourself a gift (a great way of looking at a non-necessity), then immediately transfer your bank account or credit card the money from the appropriate savings device. This means that there will never be shortfall.

3. Start building equity

Your savings are a great start, but you should also start saving for retirement. This is more than just nest egg for the future, it is equity that will come into play in the coming years when applying for various loans.

2. Consolidate your loans

It is not good to have 5 credit cards, a student loan, a car loan, and 3 personal loans. Try to get it down to 1 or 2 loans. Consolidating your student loans makes it far easier to budget. On the other hand, do not get rid of loans that have favorable interest rates or tax advantages just to keep the number of loans down. Strike a nice balance. Some banks offer very competitive student loan consolidation rates.

1. Don’t be in a rush to grow up!

This is the number one tip for a reason. Sure you aren’t in school anymore, but don’t be in a rush to leave the lifestyle. University years are the best of a lot of peoples lives, so don’t walk away from them by being in a rush to be an adult.

It is very tempting to want to grow up fast, but resist the temptation. Stay young. Beyond holding onto those fun years for a little while longer, there are other advantages. Living like a poor college student keeps the cost down. There is a great article on Why Some College Students Manage Their Finances Better than Middle-Aged Adults, and the answer is because they leave on the cheap. Resist the temptation to get a fancy apartment with new furniture, and a new car, and new clothes. Keep eating that KD, keep the posters on the wall, get your furniture from second-hand stores and enjoy that time in your life for a little while longer.