If you’ve just graduated from college or university, congratulations! This is an amazing achievement that you undoubtedly worked very hard for, and we hope you’ve taken a moment to reflect and take pride in your accomplishment.
As a new grad, you’re probably hearing a lot of talk about “the real world” right now but in truth, you’ve been living in the real world all along. After all, you’ve probably had to manage school costs and pay bills while living independently—that’s pretty real!—and now, you’re simply moving on to the next chapter of life. In an effort to help you make that chapter go smoothly, here are three simple but effective pieces of financial advice for new grads.
Address any student debt
If you owe money after graduation, you aren’t alone—over half of Canadian graduates have student debt. The average college student graduates with a debt load of over $15,000 while the average university graduate owes nearly $30,000 after earning a bachelor’s degree[1]. If you attend postgraduate school, that number may be even higher.
To start your working life on the right foot, make a plan to reduce and eventually eliminate your student debt. It’s important to understand the terms of your repayment plan (interest, minimum monthly payments, timeframes, etc) so start by reviewing your loan agreement in detail. Then, map out how long it will take to eliminate your debt if paying only the minimum required each month. Next, identify how much you can reasonably pay off each month (ideally, significantly more than the minimum required) and map out how long it will take to eliminate your debt if you sustain those payments. You can play around with the numbers within your budget until you have a plan that works. If you’re struggling with any of this, reach out to an Interior Savings advisor for personalized advice.
Create a budget
We just mentioned budgets—and with good reason! A detailed budget is critical to financial success, particularly when you’re young, servicing debt and still working towards building wealth. Here’s a great read on creating and staying on budget. You may also want to review these pieces on eliminating debt, making smart financial decisions and working with an advisor (a great idea at every age). If you make a commitment to improve your financial health, we’re here to support you—just contact us. In the meantime, consider these posts your homework!
Invest in your future
When you’re staring at a mountain of student debt, it can be easy to hyperfocus on the goal of paying it off. While that’s a great objective, don’t forget to invest in your future in other ways. Speak to an advisor about investing in a TFSA or other high interest savings vehicles, or opening an RRSP. Even a small monthly contribution adds up and can make a huge impact on your retirement. The younger you start, the more effectively you can save. It doesn’t matter if it’s $50 a month or a lump sum from your tax refund—invest something in your future and watch it grow.
You should also consider building a rainy day fund and putting insurance policies in place as needed. Our team can help guide you through these elements of your financial plan and help create a strategy that reflects your budget, needs and goals. Congrats again, new grad—here’s to a wonderful (and financially secure) future ahead!