Hello Graduates!
If you are currently in the same position as I was few months back - sending out resumes, attending interviews after interviews, not knowing whether you'll hear from HR, or starting your first day of work - CONGRATULATIONS! You are finally spreading your wings and taking your first few steps into adulthood!
Here are 8 financial tips on entering adulthood as a graduate:
1) Start Handling Your Own Finances
If your parents have been paying your telephone bills, insurance policies, allowances, etc., it is time to take charge. Budget allowances for yourself every month, how much you are going to spend, save and invest. You can micro-budget to how much you will spend for different activities - food, shopping, transport etc. However, for me, I just give myself a lump sum budget every month and make sure I don't overspend.
2) Dream Big, Yet Be Down-to-Earth
“Be practical as well as generous in your ideals. Keep your eyes on the stars, but remember to keep your feet on the ground.” - Theodore Roosevelt
Have aspirations, goals and find out what drives and motivate you. You may have a certain company or a certain role in mind after graduating, but don't forget, there are thousands of graduates like yourself - you might not get what you want right after graduation, but don't let this deter you or cloud your view, consider other opportunities! There are many paths you can take to achieve your goal.
3) Separate Your Savings From Your Spending
Like all Singaporeans, we all have a POSB Account ever since we can remember. Growing up, we use this account for everything, spending, saving, some of you - investing. As you step into adulthood, keeping your savings with your spending money is going to tempt you to spend more than you budget for. Have at least two accounts - one for saving, the other for spending.
For Savings: I use OCBC 360 Account - 1.5% interest per year (credit salary + pay 3 bills).
For Spending: I use my POSB Account (ATMs are plentiful all around the island).
4) Sign Up For Credit Cards
"Credit cards?! So many people end up with huge credit card debts!"
This is what you hear a lot of the time. Taking note of Point (1), plan out a monthly budget and stick to it. Stay committed to your budget, don't give in to temptation. There are many credit cards you can compare online that give good rebates/rewards (
perhaps a post at a later date).
5) Stay Protected
Insurance policies. Don't listen to people who tell you insurance is a waste of money. Also, don't listen to that agent who tells you what policy you should buy. Instead, understand your financial situation and evaluate for yourself based on your needs.
You don't want to be paying a premium of $10,000 when you earn $40,000 a year.
This is also the time to review the policies that your parents might have bought for you. Ask yourself:
- Do these policies still fulfill your needs?
- Are there better or cheaper products on the market for you?
6) Prepare for Rainy Days
Apocalypse, World War, Retrenchment or anything that could cause you to lose your rice bowl. A good rule of the thumb would be to ensure that you have about 6-12 months of your monthly expenses kept away as an emergency fund.
DO NOT USE THIS FUND FOR ANYTHING (not for investment, not for buying a house, and certainly not for buying that beautiful convertible). I place my emergency fund in my OCBC 360 Account to get bonus interest on it.
7) Pay Your Bills On Time
Telephone Bills, Credit Cards, make sure to pay them on time, you don't want to end up paying extra on late payment charges.
8) Invest Your Extra Money
Have that extra cash? Invest! Use your extra money to make money, don't let it idle in the bank. Investing does carry risks, therefore it is best to evaluate your risk appetite and also ensure that you are not dependent on the cash that you may lose. Before deciding on the medium you plan to invest in, understand it and the different strategies you may adopt.
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As a fresh graduate, it is time to rise and conquer the world! You have little financial baggage, nothing is holding you back, the possibilities are endless!
