Five Things To Start Saving For After College
Maybe you landed your dream job right out of college. Or, maybe you’re stuck working at the Auntie Anne’s pretzel stand at the mall while you interview for mid-level accounting positions. Whatever your job status after graduation, saving up your money at this point in your life is crucial.
You may not realize it at the age of 22, but some big things will be coming your way as you meander through the next decade of your life. Here are the top five things to start saving for after college:
After you graduate, the repayment period on student loans you’ve been racking up kicks into effect. You may be able to defer some of your loans for a short period of time while you look for work, but this grace period will eventually run out. Unless you plan on going back to school, starting to save for student loans as soon as you’re out of college (or even while you’re in college!) will help you avoid trouble later on. It’s not uncommon for graduates to have monthly student loan payments in the $600-800 range, so even if you land a good job, these payments will eat out of your monthly paycheck pretty harshly. If you aren’t able to make the monthly payments on your student loans, contact the creditors to work out a payment plan that does work for you so that you don’t fall behind and default on your loans.
During college, you may have had a hand-me-down from your parents or a clunker just to get around campus and drive home for holidays. After college, you may need a much more reliable mode of transportation – especially when interviewing for a job or commuting for work. If you think you might be in the market for a new car within a few years of graduating, start saving so that you can purchase or lease a new or pre-owned car that will get you where you need to go without worry.
Maybe you had to move back in with your parents after graduation, or maybe you are renting and splitting the lease with a few friends. If you’re in a situation where you are able to work and save money, you may be in a position to start saving for a house. Buying a house might seem like a pretty big deal, especially if you’ve been living in a dorm for the past few years. However, purchasing a house can be a good idea for many. Mortgage payments can be a lot less than rental rates in many places around the U.S., so buying could actually save you money long-term if you plan to live in a location for a significant amount of time. If you buy, you could also in turn rent a portion of the house out and make rental income. Use this passive income to pay the mortgage and you are pretty much set. And, even if you aren’t in the market to buy shortly after graduation, chances are that you will be in the not-too-distant future.
In a serious relationship? Want to be? Getting engaged and having a wedding can be pretty pricey depending on where you live. According to CNN Money, the average wedding cost in 2012 was $28,400, factoring in numbers from places like New York City (where the average is $76,687) and Alaska (where an average wedding is $15,504). Wherever you live, getting engaged or having a wedding takes a sizeable chunk of change. If you’re a guy, set aside some funds for that special ring and the big day. If you’re a girl, save up for your ideal dress and big day. By starting to save early, you’ll make sure you can afford all the little details you imagine having on your wedding day.
An emergency fund can mean different things for different people, but whatever the reason, an emergency fund is a great thing to have. Put money in a separate savings account with your bank and make a promise to yourself not to touch the money unless absolutely necessary. For some people, this will mean saving up in case of a car accident or unplanned dental surgery. For other people, this will mean saving up for a last-minute trip with friends or a new dress for a New Years Eve party. When you set up a savings account for your emergency fund, make some conditions for when and why you will withdraw money from the account, and don’t break those rules. You’ll be thankful you didn’t make any unnecessary withdrawals when you really need that money.