7 savings tips for grads

6 ways to save money as a recent grad

By Liz Keuler

May 2018

There are so many reasons to learn how to save money. Emergency funds. A car. Retirement. Travel. A down payment on a house.

As a recent grad (hey, congrats!), you might feel like budgeting and saving are things that “future you” will do. But it’s easier to establish good financial habits now and stick to them than try to make up for bad habits later.

Trust me on this; I’m a bona fide adult. At least I think I am, because people have started asking me for financial advice. After all, I was once a new grad with student loan debt facing a real salary for the first time. I made some mistakes, learned from them, paid off my loans, saved, bought a house and am still saving and learning. 

Here’s what I learned about how to save money in the 12 years since graduating college.

1. Track your expenses and create a budget. 

Setting a budget is the first step in creating those healthy financial habits. Read more about budgets and check out our monthly budget worksheet to help you get started.

2. Start a savings account.

It’s all there in the name. A checking account is like your pocket and a savings account is like a piggy bank. If you wanted to save money, would you keep it in your pocket?

3. Set up an automatic transfer from checking to savings right away (no matter how small).

Even $5 a month will make a difference. After you track your expenses and create a livable budget, you’ll be able to figure out how much you can realistically afford to save each month. Automating that transfer means you’ll start building savings in steady increments, without even really thinking about it.  

4. Be smart with credit.

Pay off your balance every month. A credit card is a good way to establish credit, which you’ll need for big purchases like a car or a house, but overspending and thinking you’ll pay back the balance over time can get you into trouble. 

Use your credit card for consistent expenses, like your phone and internet bills. You’ll need to budget and pay for these anyway, and you might as well build credit (and get rewards points) while you do it. But if something falls into the “want but don’t need” category, and you don’t have enough cash to pay for it right then and there, re-think that purchase. 

5. Don’t let student loan debt scare you.

It can be scary to graduate and find out just how much you owe each month. But those student loans were an investment in your future, and making your monthly student loan payment is good practice for making a monthly mortgage payment. It also helps build your credit. Like a mortgage, student loans are a fixed, predictable expense that you pay back over time (typically 10 years).

When I graduated college with an oh-so marketable creative writing degree and $18,000 worth of student loans (yes, I know it could have been much worse), I hated the idea of having that debt hanging over my head. I hated it so much that I scrimped and overpaid on those loans each month so I could clear out the debt in 3 years. 

It felt good at the time – but when I look back, I’m not sure it was the right decision.  I saved a little interest, but I may have been better off making the minimum payment and putting my surplus funds to work earning returns in a retirement or investment account. I let my fear of debt drive my decisions instead of working toward a future goal, like saving for a down payment.

Long story short: Student debt doesn’t have to dominate your financial decisions. You can still successfully save money, qualify for loans and make big purchases – even a house! Want proof? See Amy’s story of how she bought a house at 23.

6. As your income increases, live under your means.

Don’t deprive yourself, but don’t start living lavishly just because you can. Let’s say you get a raise (good job, you!) and start taking home an extra $100 each month. Increase that automatic transfer to savings by $75 right away, before you get used to spending it.

Then take the $25 left over and spend it on something nice for yourself – you deserve it for being a real, bona fide adult who’s making great financial decisions!

Jessica C

This is a great article! The advice is sound and practical for young millennials.

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Liz Keuler is the editor of Readynest. She spent a decade meandering through radio, nonprofits and the corporate world before convincing MGIC to hire her based on her staunch grammatical convictions. She lives in a charming 100-year-old bungalow on Milwaukee’s East Side. Her interests include old Ernst Lubitsch films, new action movies, 60s girl pop, Regency romance novels, word games, sewing and shallots.
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