College students of years past used to spend four (sometimes five) years working to find their passion, build their skills and networks, and find a job in the “real world.” However, today’s college students have a whole new challenge to face: dealing with debt in a slow job market. With average student loan debt hovering just under $30,000, the pressure to find a job — and to find one that pays — is on now more than ever. So if you’re a college senior and getting worried about the financial future that awaits, read on for tips to help you prepare.
Plan Your Budget
The first thing you’ll want to do is get a plan in place for your budget. Start by tracking your spending for one month and evaluating your priorities. Imagine that whatever income you’re earning now is all you’ll earn for the next few years. What would you change with that knowledge? Would you eat out less, host more parties at home instead of going out, or rein in your shopping? How about allocating money to save each month or starting your retirement account? There’s a good chance that the pressures of school have prevented you from focusing too much on these things, but now’s the time to get started.
So take a look at the money you’re earning and create a budget that you can use after college too, including what your student loans will cost once your grace period has ended. Then you can sleep peacefully knowing that you’ll be OK even if it takes awhile to break into that first professional job.
Start Building Work Experience Now
Not everyone is able to work while they’re in school, but even if you don’t have time to work part-time, check out freelance opportunities in your area of expertise that will allow you to earn some money and build your resume.
If you have been working while in school, start thinking about finding more work that directly relates to your degree. That could come in the form of an internship, a part-time job, or maybe even taking a full-time job while you take the remainder of your classes in the evening. Since many college graduates have to start at an entry-level position to break into their field, you can get ahead of the curve by doing that now. Best case scenario, you graduate not only with a full-time job but also with a promotion! Worst case scenario, you’ve earned more money to put away and built up your resume and contacts in your field.
Get Ahead of Your Student Loans
One thing many young professionals wish they had done in college is to put any extra money they had toward their student loans. Even if you’re only able to pay a tiny amount, it can still make a big difference in the long run. Remember: any savings you make now can have a big impact in the future. So go ahead and throw whatever you can ($25 this month or $100 next month) at your student loans now before official repayment starts.
If possible, you could even start making full payments on your loans as though you were already officially in repayment. Want to make this easier on your budget and save even more in the process? Make biweekly payments instead of monthly payments. Paying biweekly causes you to make one full extra payment per year and can take years off the life of your loan after you graduate!
Don’t Go Into Credit Card Debt
It’s one thing to graduate with student loan debt, but an entirely more frustrating situation to graduate with credit card debt (at least student loan debt is tax deductible). If you don’t already have credit card debt then keep it that way. Better to have less money to work with for purchases you need than to be paying what money you have on interest.
If you do have credit card debt, then stop the cycle before you graduate. Don’t make any more purchases on your card and don’t open any new ones, unless it’s to move the debt to a lower-interest balance transfer credit card, which could be helpful if you do it correctly. Then focus on how you will pay off the balances you do have. One way to do this is to pay off the highest interest rate debt first, since this is the one that will grow the fastest. Not sure how you’ll find the money to pay off your debt before you graduate? Look for a temporary job waiting tables near campus — the extra cash you make adds up fast and there’s a lot more flexibility in the shifts you work (plus the ability to easily pick up new shifts if you happen to have some extra time during a given week).
The career and financial landscape may not be ideal for college graduates, but that doesn’t mean you can’t find both financial and professional success. By following these steps now you’ll be years ahead of the curve and won’t have to worry about playing catch-up as a young professional. And remember, getting started will feel like a painfully slow process but it will snowball if you stick to it. So don’t give up on the small strides you’re making now because they will pay off in the end.