Recent Grad Finance 101: Save Smarter, Not Harder
For us recent grads out there, saving for big ticket items like cars, houses, or an emergency fund can feel impossible. Not to mention that most of us have more student loans, lower entry level wages, and a higher cost of living than our parents' generation, but I digress... I finished my undergraduate degree in May of 2017, which means I'm well past my student loan grace period and know too well the woes of watching my paycheck go towards my student debt and other necessary expenses.
There's a lot of financial advice out there on how, when, and how much to save. Some people will tell you that to be financially successful you have to pay off all your debt as soon as possible, even if that means waiting to create an emergency fund. Now to an extent, this makes sense. If you have debt with high interest rates (credit card debt and some auto loans) then it's a good idea to get that paid off as soon as possible. But when you have "necessary" debt (subsidized student loans, some mortgages, etc.) with lower interest rates and you are already managing your monthly payments, it's a important to prioritize putting a little money aside every month for emergencies.
For example, I've got a little over $75,000 in student loans, 0 credit card debt, and no auto or home loans. Yes, my student debt is higher than the National Average, but I usually exceed my monthly payments, pay on-time every month, and my student loans have lower interest rates compared to other kinds of debt. In my situation, it makes more sense to prioritize planning for emergencies instead of waiting to pay off all my debt. No, I don't have the full recommended 3- 6 months worth of expenses sitting around in my savings account. But I've got enough to keep me covered on a rainy day.
About a week ago I had some car trouble where I found myself with some unexpected expenses. Because I've been putting away a little bit every month into my savings instead of putting that extra money towards my student loans, I didn't have to worry about the cash I needed for the uber home, car repairs, a new battery, AAA membership to jump/tow my car, etc. To be honest, I was lucky in the sense that the repairs could have been a lot worse. However, this experience made me realize that I want to be more proactive about my savings.
1 Comment
Dad
2/13/2018 02:10:57 pm
You go girl!!!! Here’s a thought about Amazon and other buying apps. If you want something, put it in the wishlist rather than the cart and leave kit there for a month or more depending on the cost. While you’re considering the purchase, try pulling the needed cash out of your weekly expenses. Drip coffee instead of a latte, etc. You may not cover the cost during your waiting period but you’ll see what you’re willing to give up to get it.
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AuthorEmma Neale: (young) adult, cat mom, and aspiring for adventure. Archives
February 2019
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