6 Money Tips For Fresh Graduates
Updated: May 9, 2022
Congratulations, you’ve finally graduated! What lies ahead is an exciting stage in life where you need to take responsibility for yourself, both physically and financially.
If you believe that landing a job is the solution to all your financial worries, you might want to think twice because your finances aren’t just going to manage themselves! This is just the beginning of a life-long financial journey.
To help you with this, we’ll share our curated tips for beginners like you to save yourself from making painful financial mistakes along the way.
1. Take a look at your lifestyle
There’s no other way to manage your spending habits than to first take a hard look at them.
To become financially independent, you have to abandon your lifestyle and spending habits from college because more important things are at stake now, including bills, rent, food, savings, etc.
You will only realise the value of a dollar when you’re the one working hard for it. You’ll also realise that earning and spending your own money will feel quite different than spending the monthly allowance that was given by your parents. That should be enough reason to cut down on unnecessary expenses.
We’re not saying to deprive yourself of things, but rather to keep everything in moderation instead. It’s not necessary to purchase every clothing item or gadget that catches your attention. Do you really need those 5 pairs of shoes?
The key to financial stability at a young age is knowing what and how to prioritise - because you have to fend for yourself now.
2. Learn how to budget
As the saying goes, we should aim to live within our means. That’s even more relevant than ever now that you’re working for your own money. As a general rule of thumb, if you want to avoid falling into debt, spend less than what you earn.
Knowing how to budget is so essential yet neglected by many of us, especially young adults and young professionals. We were once guilty of this too!
Upon receiving your first paycheck, it’d be tempting to spend most of it to reward yourself, but what you do with it can actually determine your financial journey. Are you going to keep being an impulse spender or will you be a smart spender?
Instead, budget your monthly salary into these 4 areas:
This will consume a chunk of your monthly salary as it includes essentials like rent, utilities, groceries, phone bills, transportation, insurance premiums and more. You should allot money for these before anything else.
After you’ve paid off your monthly dues, you’ll then have a rough estimate of how much of your salary is left for savings.
We can’t stress enough how essential it is to set aside a portion of your salary for savings. If not, you’ll run the risk of spending what’s left unnecessarily. It’s one of the best budgeting tips for fresh graduates anyone could give.
The value of having an emergency fund is underestimated by many, not just young adults. In fact, we realised last year that we never know when the unexpected might happen. We may have a steady source of income now, but who knows if it will still be there tomorrow.
Also, our monthly expenses will always be there even if our stream of income stops. Aside from retrenchment, emergency funds could help us tide over in case of unexpected medical expenses too, because being hospitalised in Singapore is no joke.
A great measure of emergency funds is when you have saved up to 6 months worth of your monthly salary. We suggest reading our article on emergency funds if you want more tips!
For many of us, we tend to spend more money on ad-hoc expenses than we may realise, so it’s better to be prepared for them. They could range from a birthday treat for your friend to having your laptop’s parts replaced. These can even include your unexpected taxi trips when you’re too tired to commute!
Lastly, knowing what your needs and wants are is also useful to help you fine-tune your budget allocation so that you set aside enough for each area without feeling deprived.
3. Train yourself to build a habit of saving
Learning how to save money as a young professional can determine how your financial future will look like. By starting young, you’ll find that by the time you’re older, setting aside money for savings will come naturally. The financial skills you’re learning now will soon pay off in the form of being able to enjoy a comfortable and stable life without having to worry about your bills.
By having some savings, this will also give you a good starting point for future big-ticket purchases like your own home, or a wedding (which is important if you want to build a family in the future!).
We suggest opening a savings account to separate your everyday expenses from your savings. This way, you wouldn’t be tempted to dip into that stash for your impulse purchases. Have a look at the various local banks and their different offerings which may suit your financial goals and needs.
4. Protect yourself with insurance
Being financially independent also means that we’ve taken the steps to reduce the financial burden on our loved ones in the event of an unexpected illness or disability.
It’s not hard to find the right insurance plan as there are thousands of them these days, with different prices and coverage.
Take some time to look at life insurance and critical illnesses insurance options. There’s health insurance as well, which can save you thousands of bucks in a medical emergency.
After all, the best time to get insured is when you’re still healthy. The older you get and the more health issues you have, you’ll find that the more expensive your premiums will be.
5. Pay off your debts
Another vital budgeting tip for beginners worth remembering is to prioritise your debts and which to pay off first.
It is typically advised that you settle the ones with the highest interest rates first - which is usually your student debt. Statistically, university students in Singapore have an average debt of about $20,000 to $25,000.
While it may not be easy to set aside money each month to pay off your debt one by one, it’s better to start paying them as early as possible while there’s less weight on your shoulders. You’ll find that it’ll get harder to pay them off if you’re already at the age of thinking about getting married and also starting a family.
We also have another article on reducing your debt if you want a more in-depth discussion!
6. Educate yourself about investing
You probably have heard your elders telling lectures about the importance of investing early so that your money would have time to grow.
But we would also advise against rushing into it too. Otherwise, you might risk losing all of your hard earned savings.
Instead educate yourself first because investing isn’t an easy territory to enter. If you want to see growth, you have to be smart and strategic when it comes to where to place your money.
Take some time to find out how each type of investment works and learn to understand them. You can also consult with a financial expert to learn how it works, after all they do this for a living!
In the meantime, we have an article on how to start investing that can help beginners like you get started to learn the basics of investing before you dip your toes in.
Starting young is the key to financial stability
In sum, the best budgeting tips for fresh graduates we could give is to know your priorities and stick to them as early as now.
You'll find that every financial decision you make today will have a long-lasting impact on your future lifestyle.
While we’ve outlined great tips for you, it always helps to get a professional voice. If you want to learn more about financial planning as a young adult, don’t be afraid to reach out to us! We’ll connect you to experienced financial advisors who can guide you in your financial journey as well.