Financial Steps for Graduates

Posted by: Meredith K. | Mar 04,2008


Sometimes there’s nothing better than making an itemized list of what you want to accomplish.  Know that phenomenon “The Secret”?  I’m not going to talk about if the Secret works one way or the other, but one of the basic precepts of the Secret is you need to write down what you want to accomplish – or have a picture of something you want to achieve, like a new car.  When it comes to dealing with money, this isn’t a bad idea.  Just thinking “I want to be out of debt,” isn’t quite sufficient.  You’ve got to have a determined plan that you can work out in writing.  

Think about someone who’s really serious about going on a diet.  You could just think about a ball park figure of the number of calories in a particular meal or you could itemize each and every calorie in a spreadsheet.  Not only will this lead to faster weight loss, but it will get you in the habit of counting calories.  The same thing goes for counting money.  If you just have a vague, general idea about how you want to get out of debt, this will not be effective.  

Instead, you need to budget down to the dime.  Spend a week itemizing all your expenses – making sure that it’s a typical week (no rare payments).  Itemize every cup of coffee, every cab ride, every gallon of gas, every dollar for food, and so on.  Once you do this, you will have a figure of how much you can spend and still afford a reasonable quality of life.  Now you’ve got to think like a calorie counter: add up the money you spend every day and make sure that it never goes over a certain number on any given day.  It’s like giving yourself a stipend.  If you go over one day, you’ll know how much you have to save on another day.  

Remember, it’s crucially important to put some of that money towards aggressive debt repayment and possibly investments.  If you’re right out of college, investments may not be on the forefront of your mind.  Often, debt comes first – most often student loan debt and credit card debt accrued during school – so this has to be a part of your monthly budget.  You shouldn’t just look to see how much you spend every month to just get by, but how much you can afford to pay above the minimum payment on high interest debt.  

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