Carla Seely Column: The Graduate
[Written by Carla Seely]
Congratulations! Job well done! You finally did it; you finished your university degree and you’re ready to take on the world!
Attending university gives you the education and confidence to dream big and believe anything is possible, and it provides you with the platform to launch yourself into a career. So, where do you go from here? Do you head back to your island home in Bermuda, or try to land that dream job in the Big Apple or Jolly Old London?
No matter where the path takes you as you venture into the working world, the reality is that many graduates who find employment will struggle in two main areas:
1. The transition from student to employee
2. Managing money after being a student for years
The transition from student to employee is an evolution over time. It’s not so much a skill that can be taught but rather a more transformational process that happens as you slowly mature in your new environment. As you grow into your new role in the workplace, you’ll discover – most times the hard way – the do’s and don’ts as they relate to your employer, your colleagues, and the working community as a whole.
On the other hand, managing money is a life skill that must be learned, and quickly to ensure your early working years are as financially productive as your later ones – I’m sure we’ve all heard someone in their fifties say, “If only I’d known how to manage my money better when I was younger, I would have less to worry about today.”
In your early working years, it’s essential to take the time to learn how to manage your money appropriately as time is a key ingredient for money management that will pay off in the long term. With proper handling of your finances, you can help yourself stay on top of your bills, put money into savings each month, pay off student loans, save for a car, purchase some furniture for your apartment, and even make voluntary contributions into your pension plan.
So where do you start? Well, the first step in taking control of your finances is determining a budget. When you create and follow a budget you’re ultimately developing a road map for yourself financially, which can serve you now and also into the future. Moreover, people who develop and actually stick to a budget are often:
- Less likely to end up in debt
- Less likely to be financially strapped when unexpected expenses arise
- More likely to be approved for a mortgage
- More likely to put extra money away for retirement
Creating a budget will take a little effort, but it’s a great way to get a quick snapshot of the money you have coming in and going out. To get started, you’ll need to work out how much you spend on the following typical expenses:
- Housing
- Transportation
- Insurance
- Food
- Entertainment
- Debt
- Savings
A great way to set up a budget is by using a spreadsheet. This will allow you to save, track, and tweak it over time. For a quick and easy start, here’s a great tool you can use to help you create yours: https://www.freisenbruch.bm/pension-tools/
Now, if you’re a typical graduate, you probably have some student debt right out of the starting gate. Although this may be your first financial hurdle, it’s nothing you can’t overcome. As a general rule of thumb, if you have loans or owe money on credit cards, it usually makes sense to pay off the debt that charges the highest rate of interest first. But, bear in mind that even if you’re focusing on paying off another debt first, you must still make at least the minimum monthly payment on any credit cards and other loans. If you do not meet the minimum repayment amounts, it will negatively impact your credit rating, which could cause problems when you need to borrow for major purchases such as a home down the road.
Another piece of money management advice that will help set you up for the future is to set a savings goal as soon as you get your first paycheck and stick to it. Once you’ve figured out your budget and determined that you have extra funds available each month, let your employer know that you wish to make voluntary contributions to your pension plan. Even if it’s only an extra 1% a month coming off your paycheck and going into your pension, it will pay off in the long term. The great news about voluntary contributions is that they are not locked in so, in the event of an emergency, you’ll have readily available access to them [depending on your company pension plan rules].
Fresh out of university, there will be a lot of firsts for you and still so much to learn as you’re launched into the realm of adulting. Taking control of your finances from day one will make a huge difference. If you can manage your money effectively from the beginning of your working years, it will provide you with the financial freedom in the long run that, sadly, some of your older counterparts still only struggle for even at the end of theirs.
- Carla Seely is the Chief Operating Officer at Freisenbruch. If you would like any further details, please contact her at cseely@fmgroup.bm or call +1 441 297 8686.
