When I graduated college, my grandparents, both successful people in their fields, told me to “invest in myself.” At that time, I had absolutely no idea what it meant, and what I should be doing.
Of course, being the giddy 20-something that I was, excited to start my life as a proper adult, just said yes, and attempted to live my life as I saw fit. Boy, was that ever wrong?
Over the years, I slowly learned what it meant to “invest in myself.” There were many times in my life where I told myself, “Wow, I wish I knew about this when I graduated!” I’ve made a lot of financial mistakes, but that didn’t stop me from looking for solutions to my problems. Gradually, I learned what my grandparents meant by “investing in myself.”
If you’re a fresh grad, this might help you build a stable future for yourself! Of course, not all our experiences are the same, so not all of these might apply to you. Still, it won’t hurt to read!
1. Start Your Own Savings Account
Starting a deposit account in your name is the first step to saving for the future. Open a bank account that’s separate from one where you can withdraw money from any time you choose just to buy yourself a new pair of shoes or a new set of clothes.
This savings account should go towards your retirement, or could serve as your emergency fund to help you prepare for unexpected events such as medical emergencies or home repairs. You never know what will happen in the future, so it’s a good investment.
Open a savings account that earns decent interest over time and keep putting money into it. It’s important that you don’t touch money in this savings account.
2. Pick Up a Financial Book or Two
Learn everything that has to do with money: taxes, investments, insurance, even stocks, and bonds. You might be thinking, “But I just finished my studies! Do you mean I should study some more?” Educating yourself on personal finance can help you live a financially secure future.
Taxation was never taught in college (unless you took up law) and it’s a very important and very fundamental financial concept. Reading up and learning personal finance can also help you understand the trade market, which in turn can help you start investing in stocks and bonds. If you want to be an investor someday, Wolf of Wall Street-style (or not), you can learn from the experiences of renowned success stories like Warren Buffet.
3. Budget Everything
Yes, everything. Be strict about your spending! Being free of college might mean being free of convenience store dinners, but that doesn’t mean money will be unlimited. Buying a car might be a good investment, but in the long run, you will be spending a lot on its maintenance, including gasoline, and upkeep. On top of that, there’s comprehensive car insurance to think about.
If you don’t budget your finances properly, you might end up scraping the barrel just to keep your car going. Adopt a strict budgeting plan, like the 50-20-30 system, where 50% of your earnings go to necessities, 20% to lifestyle expenses, and 30% to your savings. If you want to get even stricter, put 50% of your earnings into your savings. Don’t forget to budget the amount you put for necessities as well. These include paying for rent, utilities like water and electricity, and food.
4. Reduce or Stay Away from Debt
If you don’t budget properly, all roads lead to debt. Debt is the result of reckless spending and bad financial decisions. It’s one of the biggest reasons why you need to budget your money. Paying off accumulated debt eats up most of your finances and you’ll be left grasping for straws and scraping the bottoms of barrels just to keep yourself afloat day-to-day.
If you’re in debt, or have debt, make sure to set aside money to pay it off at the soonest possible date. Stop spending for unnecessary things until your debt has been cleared. Keep in mind as well that just because you’ve cleared your debt doesn’t mean that you can start spending big again. Remember: money spent is money lost, so be very careful where you put your money, or you might end up in bigger debt!
5. Insure and Invest in Yourself
Even if you’ve just graduated, you have to invest in yourself as a professional. This enables you improve your prospects for a better income range than the usual. Investing in yourself also means setting aside time and money for you to learn more about your profession to improve your performance in your field of expertise by taking extra training, online classes, seminars, industry certifications, and so forth.
In the long run, these will pay off in the form of higher pay and promotions on the career path of your choosing. You should also avail of life and health insurances. Don’t let the monthly payments and interest scare you. These types of investments help your financial stability and security.
Kyle Kam is an online marketing specialist for Moneymax.PH, the Philippines’ leading financial comparison website. Whenever he’s not working, he’s busy at home watching MMA videos the whole day. You may follow him on Twitter @undisputedkyle