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Basic Financial Decisions

Seven Financial Points Every New Grad Should Understand

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Taking control of your finances is one the most important things you can do. If you start as soon as your graduate from college, you will be financially ahead of most of your peers. Choosing to be responsible now, and making it a lifelong habit will benefit you in the years to come. These steps will help you as make your major financial decisions. Here are some of the basic ways to choose to live responsibly.

1. Budgeting

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The first step to living responsibly is to budget your money. Although many people have negative feelings towards budgeting, because they feel it is constrictive or controlling, you should realize that budgeting allows you more freedom. By choosing where you are going to spend your money before you spend it, you are controlling your future. Budgeting will help you to save for the future, and stop you from accumulating a lot of debt. If you do not want to constantly track your expenses, you may consider using an envelope system for your budget.

2. Finding a Your First Apartment

Once you are finished with school and start your own job, it is important to find housing for yourself. Generally you are better off waiting to buy at least one year. This will help you to establish job security, and make sure that you like the area that you live in. You may be ready to have your own apartment without roommates, or you may choose to still have one roommate. If you choose to live with your parents you need to have a plan so you can move out soon.

3. Paying Student Loans

If you borrowed money to attend school, it is time to begin paying on your student loans. This process may seem like it takes forever, but you can do things to speed up the process. Make it a goal to pay off your student loans early, so that you can free up the money you have to pay towards the loans. You can save money on your loans by consolidating them and locking in a lower interest rate. Additionally you may need to consider other payment options if your budget is tight.

4. Insuring Yourself

Now that you are truly out on your own, you are responsible for all of your expenses and emergency situations. You should make sure that you have health insurance, no matter what. Additionally you may be considering several different insurance options offered through your employer. Do not forget to get renter's insurance. This will protect you against theft and fire in your apartment.

5. Understanding Your Benefits

Now that you have your first real job, you may have all types of questions about your benefits and your salary. You should take advantage of your benefits. They can help you to save money both on your taxes and in your other bills. You may be wondering how to make your paycheck stretch a little bit further each month, you can do this by lowering your taxable income through a flexible spending account.

6. Managing Your Accounts

Managing your money from day to day is essential to finding financial freedom. Once you start working you have more flexibility with your money. You will have more money to spend, and more opportunities to borrow money. You should take these added opportunities seriously. If you have accumulated credit card debt while in college you should work on getting out of debt now. You should also learn how to manage the credit resources that you have available to you now.

7. Investing for Your Future

The most important thing you can do now is to make your money work for you. By doing this you can shorten the number of years that you need to work and retire much earlier. Additionally you will be able to live much more comfortably over the years. A little sacrifice now will have huge payoffs in the future. You should remember that accumulating stuff is different than building true wealth. You should also take the time to learn as much as you can about money and investing.

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