Jeffrey Schwartz is the executive director of Consolidated Credit Counseling Services of Canada and president of the Credit Association of Greater Toronto.
Well, that was fun, wasn’t it?
The last 20 years or so have been spent in various classrooms, but now, you are walking off campus for the last time. Pretty soon, you’ll be taking your first steps into the real world. Don’t fall!
Seriously, don’t fall.
The first few months after graduation can be tough, especially if you aren’t walking into a high-paying job. You will have to make some serious financial decisions going forward that could set the tone for the rest of your life. Scared yet?
Don’t worry, because here are a few tips that will help you avoid stepping into the real world on the wrong financial foot.
It’s called work—Do it
Graduation doesn’t mean you have more time to spend re-watching Breaking Bad and playing Candy Crush. You need to get a job. Shocking, eh? The reasons are twofold. First, you have bills to pay. Rent, cable, Internet, your bar tab . . . they all need to be paid. And second, you need experience. Working will show that you understand the value of a paycheque, and every piece of experience can be adapted to fit your next potential job. For example, if you apply to a bank after spending a few months working at Dairy Queen, your ice cream serving experience is suddenly “experience in handling time-sensitive assets in a fast-paced environment.” Sounds good, right?
Debt is not your friend
Those pieces of plastic in your wallet can be your downfall. Credit was created so that we can buy what we can’t afford. Don’t fall into that trap. Just because you are no longer a student, it doesn’t mean you need a new set of golf clubs, a 65-inch 3D television and a subscription to a “caviar of the week” club. With the high interest rates on credit purchases, you will end up paying much more than you need to for anything you buy. Staying out of debt comes down to a really simple rule—spend less than you earn.
Depositing money in a bank account doesn’t usually get featured in a Kanye West video, but it really is the wisest decision when you are young. Setting aside a consistent percentage of your earnings (say, 10–15 per cent), will put you on the path to financial success. First, that money is going to earn interest and multiply if you don’t touch it. Second, it’s going to be there to bail you out if you hit some tough times. One reason people get into financial trouble is because they don’t have a safety net when they lose their job or have unexpected expenses. Building up some savings now will help you get through the tough times without having to go into debt to do it.