How To Plan Your First Six Months After Graduation
You have dreamed about independence since you were 10 years old and here you are, fresh out of college, with $30K plus debt on your name, big ideas and not enough cash to fund them. It might not sound glamorous, but it’s the perfect moment to get a pen and paper and design a plan. At least a short term one, as you make the transition into real adulthood, with perks and bills.
We focus on the first six months since this is the general time frame you are excused from repaying your student loans (except Perkins who award 9 months). Use this period to network, get the right job, and living arrangements in place. It’s the moment to create systems that will free your time and keep you on track and accountable.
Get your papers right
To apply for jobs, credit cards, insurance or a retirement fund, you will need copies of your identity card, social security, diplomas and more. Make sure you get a substantial reserve of copies and have the original stored in a safe place.
Also, during this time consider rewriting your resume and your CV to reflect your qualifications, knowledge, and experience. If you never worked before, include internships and volunteering stages. Prepare several versions of both the resume and CV and customize them for different jobs that you want to apply to or even different companies. Don’t underestimate the amount of work that goes into preparing a CV that gets you to the interview stage.
Work towards getting a (better) job
Getting a job should be your top priority in this period. After completing all the steps listed in this small tutorial, you will also have a rough estimate of what your starting salary should be to accommodate all expenses and have a little left for life’s little pleasures, like the avocado toast that got millennials a bad reputation.
Once you have a solid CV and resume pair, it’s time to go digital and create a keyword focused LinkedIn profile. Put in your title or description the skills or words you might find in your dream-job ad. Don’t just rely on online applications, since it ‘s hard to stand out at this stage, with little or no experience.
Use this slow time to make some business connections, network, join professional associations and try to make yourself useful or known in your branch. Most employers tend to hire people who are recommended by someone instead of just browsing through heaps of resumes.
Get your accounts in order
The starter pack for any responsible adult includes a checking account, a savings account, and a low-interest credit card. Be savvy about these and try to shop around as much as possible for the best interest and other bonuses like flying miles or other discounts of your choice.
Use the credit card wisely and look at is as a FICO score building tool, not a free pass at your local mall. The key is to show credit bureaus that you can manage finances maturely and diligently and that they can trust you with a mortgage.
You can use the card to automate payments for utilities and other living necessities and be sure to connect it with the checking account where you get paid. The smart tip here is to allow a few days between your salary payment day and paying your credit card debt to avoid accumulating debt.
Create a student loan repayment schedule
This is your only financial constant at this point, and although it looks like a mountain of debt, it is just about one-third of what you will have to pay for your home. The key is to start small, but be consistent about it.
Think about the amount you can repay each month without exception. Of course, you have the refinancing or consolidation options, but avoid making the sentence longer than necessary.
Design a budget
Remember the KISS (keep it simple, stupid) principle when designing your budget. Only include broad categories and round your estimates to the nearest $50 for example. Start with a backbone made of three bins: fixed costs (rent, utilities, food, credit card), investment (401(k), Roth, IRA), savings (dreams, down payments). Whatever remains it’s your guilt-free bonus. Multiply the sum of these three bins with 1.2, and this will give you the estimate for the minimum wage you can accept. It is by no means your dream salary but will get you through the month, paycheck to paycheck.
As your income rises gradually, you should set aside the necessary emergency funds for at least 3-6 months, but this is not a priority right now.
Think about insurance
When you live on a string budget, an accident or misfortune can be a real setback. Health coverage should be the first one you check on your list since paying hospital bills out of the pocket is a recipe for disaster. Next, it goes without saying if you are a driver that you should get your car insured. A less known insurance is the renter’s package. Think about the value of all your stuff and the replacement costs. For the equivalent of 2-3 coffees/month, you can protect those. Just write these under fixed costs.
Think about the future
It is an exciting and a stressful time. You have so much opportunity and so much uncertainty that it can feel overwhelming. To recap, here is a loose schedule of what you should do in your first six months after graduation:
- Get your papers in order, write your CV, apply for jobs, make business connections, create a rough estimate for your budget.
- Go to job interviews, expand your network, learn about financial options regarding cards, accounts, and insurance.
- Open at least the basic accounts on your name.
- Get hired and design a repayment schedule for your student loans.
- Start a 401(k) or other saving account and get insurance and health coverage.
- Re-assess your estimates and adjust accordingly.
How far along this journey are you so far? Do you have a tip you would like to share?