9 Things I Wish I Knew About Money Before I Graduated College
My first month of college, I wasted $1000.
First of all, I never cooked my own food, even though my parents kept my dorm stocked with groceries. I also never used coupons or bought things on sale. I just swiped my debit card first and asked questions later, like when my entire savings account was empty.
I continued this pattern even when I was working at a fine dining restaurant in The Empire State Building, so I was making almost a thousand dollars a week but I still wasn’t putting anything away. Fortunately, I figured out why it’s important to manage my money responsibly, otherwise I would still be struggling to this day.
Here’s everything I wish my younger self had already known about money, from someone who is still trash at dealing with money, but getting there.
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1. Saving money is way more possible than your brain thinks.
Omg, it’s so simple. I don’t know how I didn’t get this. Even when I thought I couldn’t save, I was lying to myself.
Literally, put 20% (or more!) away every paycheck and don’t touch it. Not even in a fake emergency. Not even in most real emergencies. Spend like you don’t have a safety net. Ultimately, a savings account is more satisfying then any of the new purchases you think you need, and the only time I thought otherwise was before I had experienced a real savings account.
2. Budget yourself and track your spending.
Give yourself an amount to spend for the month and narrow it down by category (beauty, dining, groceries, etc). When you go over in one category, you’ll know immediately when you need to chill for the rest of the month. Ashley, a staff writer at Galore, gives herself $60 to spend on dining and if she goes over, she knows that she can’t go out for meals for the rest of the month.
And remember, it’s okay to miss a movie date or not go shopping as often. It’s okay to be frugal. Ashley recommends cooking your own meals to save money on dining out, but there are so many ways to make it easier to save, the possibilities are endless.
3. If you suck at budgeting, there’s an app for that.
Mint.com is a personal finance and money managing app that links to your bank account and tells you how much you should spend based on your income. It also automatically tracks your spending and barks on you when you’ve gone over.
It’s a lifesaver for some people, while I actually hated getting yelled at via push notifications. There are other apps too, like BillGuard and Fudget, but if an app doesn’t work for you, just make an Excel sheet or Google Doc that does the same thing.
4. Build credit (as soon as possible).
I didn’t own a credit card until I was 23, which was only a year ago.
The first time I applied for an apartment and I realized they check credit, I was shocked. What even was my credit score? I had no idea how to check. I also needed credit when I was applying for my first solo phone plan and learned that without it, you have to pay for your entire phone up front. Can you imagine getting an iPhone without monthly payments?
Finally, Capital One gave me a starter credit card that had a $300 limit and I worked my way up to qualifying for other cards. My close friends all swear by Discover, which has a referral program and offers cash back for some purchases.
5. Your credit score has more factors than you think.
Starting out, my score wasn’t high because it factors in the age of your oldest credit line. So when you first open a credit card, you will have below average credit and then it’s hopefully uphill from there. Your credit score also considers how many on-time payments you’ve made, so I make sure to pay every single month before the due date.
Lastly, your credit score factors in how much of your credit you’ve used and how much credit you have available, so spending all $300 instantly lowered my score, whereas paying it off immediately raised it. That also means that if you’re no longer interested in using a credit card, cancelling it will lower your available credit, and therefore your credit score. So instead of cancelling a card, just stop using it (or cut it up).
6. Don’t just pay the minimum on your credit card(s).
Credit cards charge interest, although each one is different and you should know the details of your specific card. Some offer no interest for the first few months to a year. If your card does charge you interest though, it means that the longer you take to pay it off, the more you’ll end up paying.
When I was only paying the minimum, I was barely making a dent in my debt (which is sad because again, I had a $300 limit and I never maxed it). By paying it off quicker, I paid less in interest and my score went up faster! So pay as much as you can, whenever you can.
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7. You will have to file taxes and it won’t suck (that bad).
I use 1040.com to file my taxes. All I do is fill in information regarding my education and job from the past year, which is all available on my 1098-T and W-2 statements. If your address throughout the year has changed, or you offered different addresses to different employers, make sure you call them to get everything sent to the right place.
If you’re self-employed, you won’t have the luxury of a W-2, so you have to be super organized throughout the year and keep track of how much you’re making. Maria, another writer at Galore, advises that freelancers file with H&R Block so that they can actually talk to someone. Plus, keep in mind that you’ll be taxed extra for being self-employed, which is cray but unavoidable.
8. A side hustle is a major key.
My best friend sells her old items on Ebay, especially if it’s name brand stuff with minimal wear and tear. She also advises checking out thrift stores and reselling the items you find there, which is how some teenagers are making bank on Depop. You could even use websites like InstaCart or TaskRabbit to do grocery shopping for other people.
Either way, when you have a side hustle, you always have an additional stream of income, which will help you save money in the long run.
9. There’s a savings account, and then there’s a f*ck off fund.
I first heard about this from a Huffington Post article and my life hasn’t been the same since. Your savings account can be for emergencies or large purchases, but your f*ck it fund is for super emergencies. This is for that boyfriend/job/business partner that you need to tell to f*ck off and never look back.
When you have the financial freedom not to take someone’s crap, you won’t. So you won’t stay in a trash relationship because you can’t afford to leave, and you won’t stay at a job that ruins you emotionally because you need the money. Your whole attitude will change once you have a f*ck off fund.
This would’ve helped me when I worked a job that wouldn’t even give me a day off for my aunt’s funeral (or, in general, breaks). This also would’ve helped when I had to unexpectedly move out of my boyfriend’s place. At minimum, this account should have enough to maintain your current lifestyle for three months or get you a new apartment if you unexpectedly need one, whichever costs more. And remember, a new apartment usually costs three months rent upfront (unless your credit score sucks, then it’s even more).
If I’d incorporated these nine tips into my life before graduation, not only would my savings account be hefty AF, but my credit score would be glowing even more. I’d also probably be drinking out of a coconut in Miami right now, but maybe that’s just wishful thinking. Regardless, even if you take one thing away from this, you will thank yourself later.