Everybody needs a few financial management tips right now. But there’s one group that will probably need it the most – the 2020 college graduates.
It’s actually reminiscent of what happened 2008 – during the Great Recession. We watched as the new graduates struggled to find jobs. What should have been a new chapter to reach their dream career became the start of a nightmare. They were left with limited job opportunities and a huge student loan debt.
Now, we are in the same situation. Or at least, the college graduates of 2020 are in for a very rough job market. According to reports, a lot of job offers made to college graduates were withdrawn because of the economic downturn. This will not just delay the life milestones of these new graduates. It will also leave them in a difficult financial situation. Instead of being able to start strong and independently, a lot of them will have to worry about their student loans. Some may be forced to take jobs that they don’t like just to be able to start paying off their loans.
All in all, it is not a good picture for the future of the new graduates.
But does that mean they have no chance to be financially successful? Not exactly. They can still turn this around. Just like how the Great Recession graduates rose slowly yet steadily, the college graduates of 2020 can also do the same. But they have to implement the right financial management habits to make it happen.
Financial management tips for new graduates
But what exactly should the new graduates do? Here are a couple of tips that will help strengthen your finances despite what is going on in the economy and job market today.
Focus on survival
Anything that is related to your survival should be prioritized. This includes housing, food, and other necessities. Before you spend on anything else, take care of these first. That means this is a must regardless of how much debt you owe.
You should also consider the specific expenses that you will make. For instance, food is a necessity but eating out isn’t. Housing is necessary but that doesn’t mean you should live in a big house with rooms that you don’t even use. You can move back to your parent’s house in the meantime. That will help you save on rent. And what about transportation? This doesn’t mean paying more by riding your car everywhere. Maybe you can opt to sell your car for now and use public transportation.
The whole purpose of this is to lower your monthly expenses. If you can do this, you‘ll have more extra money to manage and use to strengthen your finances during the recession.
Live on a bare-budget plan
Your budgeting strategy will play a big role in helping you survive any recession financially. It will help you stay in full control over your finances – no matter how limited it is. A budget plan allows you to manage where your finances will go. It will help you plan how you will spend every dollar that you earn. That is very important if you want to financially survive the recession that is upon us.
Remember, as a new graduate, you don’t have the same income opportunities as those before you. In fact, everything is uncertain right now. A lot of businesses are closing down. The more companies that close, the fewer job opportunities you will have. That means whatever finances you have should be stretched for a long as possible.
That means a bare-budget plan will really do you a lot of good right now. If you’re already focusing on expenses that are necessary for your survival, then that is a good start. This budget plan will support this. It will remove all the other expenses from the picture. It may seem like it’s a difficult thing to get used to. But the longer you get used to this lifestyle, the better. You can keep on using this budget even if you don’t need it. That way, you’ll have more extra money to save and invest.
Get an insurance
Getting insurance is not a priority for some people. They think that it’s just going to be a waste of time and money. But that thought is wrong. You should never doubt that investing in your protection is the right thing to do. And that is exactly what insurance will help you with. Those under 26 years of age will still qualify for your parent’s insurance. Take advantage of that if your age allows you to. This will help you get insurance at a lower price. The protection will help you when you face an emergency. In case you don’t have insurance with your family, get something that the government offers for free. Get to know your options.
This insurance will mostly protect you financially and ensure that you will have what you need to survive another crisis. Just like this recession. Something like this will happen again. If you are not prepared right now, don’t let it happen again.
Keep looking for a job
Without a doubt, it’s harder to get a job right now. According to reports, the unemployment statistics in the country grew from 6.2 million to 20.5 million in only 3 months’ time. If there’s a job available, it will be harder to get chosen if there are millions like you vying to get a job.
But don’t lose hope. Sometimes, persistence will help you win no matter what the circumstances are. Keep trying to look for a job. While you are waiting for a dream job, get a job that will at least help you pay the bills. Or chip in with your folks if you are one of those who moved back with their parents.
There are a lot of opportunities that you can tap into – especially online. After what happened during the coronavirus pandemic, businesses have shifted their focus on their online presence. If you can market yourself as a talented and skilled online worker, you can find a lot of job opportunities here.
Set up multiple streams of income
Admittedly, finding a job is hard. So getting multiple sources of income seems like a difficult financial management tip to follow.
But if you manage to secure a job, don’t stop looking for another. If you are working online, this should be easier to do. You have to take advantage of the opportunities that come your way. The more sources of income you can set up the more secure your finances will be.
It wouldn’t matter if the recession happens again. You know that your multiple sources of income will help you survive. It will give you a feeling of security because you know that even if you lose one job, you still have another.
Monitor your credit score
This may seem highly unnecessary given the circumstances that are happening around us. But don’t think that monitoring your credit score should have a season. You should constantly monitor it – just like you should always use a budget plan.
You see, hackers and cybercriminals will not care about your schedules. They can strike anytime. So you have to be vigilant too. Make sure you check your credit report regularly. It’s not that hard because you can get one free copy of your credit report each year. This is true for all three major credit bureaus. That means three free copies.
When you get a copy of your report right now, it shouldn’t contain much – because you haven’t really been using credit for long. Maybe just your student loans or your credit cards. Make sure you track how you use credit. That way, if there is an entry in your credit report that is unauthorized, you can spot it immediately. When this happens, you need to report it immediately so it will be investigated. In case you were a victim of identity fraud, it will be easier to prove if you spot it immediately.
What to do with your debts during the recession
Now that you have gone through the necessary financial management tips that you need to implement in your life, what’s next?
You need to take care of your debts. If there’s a global crisis, you need to make sure that your debts will not compromise your progress. So what should you do?
Understand your student loans
Being a new college graduate, the main debt that you have to deal with is your student loans. You have to understand every loan that you used to pay off your education. It’s not just about how much you owe and when you should be paying your dues. You have to understand your payment options. Student loans have a specific set of options to pay off your balance. It has its own rules. Like this is a debt that cannot be discharged through bankruptcy. So you have to make sure that this debt will be prioritized.
If your finances are not enough to pay off your loans, then find a program that will allow you to delay payments. Or what can you do to make it more affordable? Whatever the answer is, pursue it. Manage your student loans before it catches up to you. You still have a grace period of 6 months after you graduated. Use that time wisely and find a way to keep your student loans from destroying your finances.
Talk to creditors
Once you’ve dealt with your student loans, it’s time to do something about your other debts. Talk to your creditors one by one. Since you are a new college graduate, the list will probably not be lengthy. Work on your credit cards first. This is the one that has a high-interest rate. So paying it off as soon as possible would keep you from wasting money by paying huge interest.
When you talk to them, give them an honest account of your situation. Most of the time, these creditors have programs in place that will help people like you with their debt payments. Communicate with them and be cooperative. You might be surprised that they are willing to help you through this.
Fortunately for you, there are several debt relief options that can help make your payments affordable. Do your research and find the best solution that you can use. It’s always best to act immediately so the problem can be solved as quickly as possible.