So you have just graduated from college, and even managed to land a decent job, with a not-bad pay cheque. But it’s not all rosy-cozy yet; there’s a pile accumulating behind you… your student loans, maybe even some credit card outstandings. So what do you do? How will you manage your money and make it earn some little extra so that you can pay your loans off and start creating a retirement nest egg?
- First of all, make the decision: to save, and invest. Set a goal; maybe a Caribbean holiday, or those fancy wheels you’ve been seeing on TV, say, 5 years down the line. Then tighten your belt, and start working towards that goal from day 1.
- Make a budget, and stick to it. Live frugally. Prioritize paying off your loan installment first, and then spend.
- Room up with a buddy, use public transportation or carpool, pack your lunchbox, do your own laundry. Use Craiglists to discover furniture or equipment at throw away prices, even free sometimes.
- Have a checking account so that cashing your checks becomes simple. You also will need a savings bank account, preferably one that is high yielding and/or has no minimum balance requirement; set up automatic payments for your loans and credit cards.
These are the initial steps you could take, the groundwork, so to say. Once your savings bank account shows a decent balance, explore what you can invest in:
- Yourself: use your spare time to take courses that will improve job prospects or promotions. Buy yourself good formal clothes that will create a god impression on current and prospective employers.
- Invest in the money market; sure it’s not speedy Gonzales, but it does accumulate interest over time, and it is low risk. Very well suited for a new kid on the block like you. A slightly higher investment than your savings bank account may be needed here.
- Mutual funds: You’ve always dreamed of playing the market: But it’s not a place for the absolutely uninitiated. It’s a complex and competitive world. Your best bet is to invest in mutual funds; this allows you to diversify your portfolio, spread your risks, and what’s more, you can be free from the worry of following the market. Let the expert investment managers do the worrying for you.
- Once you get a hold of the stock market, then you can start investing in stocks yourself. Make sure to do a little digging on the company before you invest in it.
- Bonds, especially tax free municipal bonds, are a good investment option. The yield, while not spectacular is pretty decent, and it’s tax free.
This is a guest post by Mark Dwayne of buytimewarnercable.com, a site that offers savings and current information on time warner internet.