Financial Tips for Every College Graduate to Help Buy a Home

College graduation is one of the greatest life achievements for most of us. However, it can also leave you confused about your future and personal finance. And it is completely normal if you’re feeling a little lost or unhappy. No doubt, you have spent countless nights studying and hours and hours in your lecture halls, there’s one thing largely overlooked by academic education, i.e. how to handle your finances in real life.

As far as building a solid financial future goes - the most realistic and specific your financial goes are, the higher the chances of accomplishing them. Whether you want to get your finances back on track or you’ve just graduated your college and looking to attain financial freedom as soon as possible, here are some of the simple yet highly effective tips to put you on the right path.

1. Make a Budget and Stick to it

Budgeting is something that can go a long way in securing your financial future. The key is to make a realistic monthly budget and stick to it. This will help you make informed buying decisions and accomplish your financial goals. It will help you fight the temptation of buying unnecessary stuff. Start with listing out your monthly expenses. To know how much you can save every month, subtract your monthly expenses from your income.

2. Manage Your Student Loan Debt

Don’t delay figuring out the exact amount and due date of your student loan payments. Now is the best time to make all those calculations. The payments of many student loan payments begin right after you’ve graduated college. On the other hand, some lenders offer a little grace period of around 6 months or so. If you think you won’t be able to make the payments on time, get in touch with your loan service provider and ask them to set up another payment plan to fit your needs. Regardless of what you do, never neglect your student loan. If you miss any of these payments, it can cause serious damage to your credit and affect your creditworthiness in the future.

3. Create an Emergency Fund

Right now, an emergency fund might make a little sense to you. However, in times of emergencies such as car repairs, job loss, or medical bills, you’ll realize the true importance of having an emergency fund. Using your credit card for these emergency expenses can be financially risky. Start by creating an emergency fund that can cover your expenses for a period of 3 to 6 months. Take a look at your budget to determine you much you can save on a monthly basis without affecting your everyday expenses. The next step is to set an automatic withdrawal into your emergency fund every month.

4. Improve Your Creditworthiness

Creditworthiness simply means how deserving or worthy you are of credit. Lenders use the creditworthiness of individuals to determine their ability to pay back the money. Unfortunately, recent college graduates do not have any substantial credit history, so their creditworthiness is almost negligible. However, if you want to purchase a car or house in the future, you need to have good credit.

There are a few simple options you can use to build credit. Get a credit card and use it to make small purchases. If you know someone with good credit, you can ask them to make you an authorized user for that account. Thirdly, apply for a small personal loan that you can pay back easily. If you go for the first option i.e. getting a credit card, make sure to pay your credit card balance in full each month.

5. Start Saving Now

When you're still young and looking to make a career for yourself, saving for your retirement might not cross your mind. But the fact is, the sooner you start saving for your retirement years, the sooner you can get retired and the more your money will grow.

For instance, if you start saving $200 (at an interest of 7%) each month from the age of 22, you can save up to one million dollars by the age of 67. However, if you wait for another 10 years to start saving, your savings will be nearly halved. Secondly, take advantage of the 401(k) match offered by most employers.

6. Save for a House

One of the most effective ways to create wealth is to buy property. That's why experts recommend preparing for buying one when you're still young. While you just need at least a 3% down payment (in some cases even 0%) to purchase a home, it is advisable to save up a larger amount to get a better interest rate. Larger down payment will also reduce your burden when paying back your loan. When you start saving at a young age, you'll be able to buy your dream home without thinking twice when the right time comes.

7. Invest In Home Improvements

Whether you own a home or you’re planning to buy one in the future, make sure to save for upgrades and repairs. When you have sufficient savings available for home repairs or improvements, you can avoid using your emergency fund for this purpose. Regular maintenance, repairs, and upgrades can also help boost the value of your property, protecting your financial investment.

The Bottom Line

The above steps might not solve all your personal finance problems, but these tips can certainly help you develop some good financial habits and set you on the right track. As you start making real progress, the prospect of having sufficient savings, getting relief from debt, making good investments, and having enough cash on hand will act as a powerful motivator—and you’ll attain your financial freedom with aplomb.

If you are wanting to buy your first home for sale in Louisiana, let the real estate pros at Louisiana Landsource help you with great advise.