Last updated on June 16th, 2020 at 04:06 pm
For college students, the undergrad years are usually one of most carefree times in life.
But that’s only because many college students tend to ignore real-life responsibilities at that time.
And while financial responsibilities shouldn’t be ignored, college students often put them on the back burner. So how can you prevent your financial obligations from coming back to haunt you after graduation?
The answer is to start preparing before you graduate. Planning your real-life finances might not be the way you want to spend your senior year. But it is the best way to prevent a financial catastrophe.
Having rented apartments to thousands of college students, we’ve learned a thing or two about college finances.
Keep reading to learn the 7 things you can do to avoid a major financial crisis in your last year of college.
Gather Important Paperwork
The key to staying out of financial trouble is to secure a job so you can pay your bills. Gather the important paperwork you’ll need before you start applying for jobs.
This paperwork includes personal documents, i.e. your social security card and birth certificate. It also includes financial statements like bank account information and student loan documents.
If you really want to be on top of things, gather letters of recommendation from college employers and professors. You’ll want to have those on hand as soon as you start the interview process.
Apply For Jobs Early
You don’t have to wait until you graduate to start applying for jobs. Get a leg up on the competition and reach out to companies before graduation. Let them know what date you will be graduating and let them know when you will be available to work.
This shows prospective employers that you’re motivated. It also puts you one step ahead of your fellow graduates who plan to wait until the summer to start their job search.
Start Your Side Hustle
As the gig economy grows, the concept of the side hustle becomes more and more popular (and more and more relevant). While you’re still in school, start freelancing to make some side money. In the freelance market, you can do all sorts of things, from graphic artwork to creative writing to customer service.
Want to get out of your dorm room for a bit? Drive for Uber or Lyft. Walk dogs. Find gigs as a babysitter or a pet sitter. Do what you can to start building up your bank account and making yourself financially independent. Having a way to make money while you’re in college will make it easier to pay your bills once you graduate.
Review of Student Loan Requirements
Do you know what your repayment schedule for your student loan is?
Most college students don’t. Take the time to research your loan requirements so you aren’t blindsided at the last minute. Most loans start repayment six months after graduation, so have a plan in mind of how you are going to be able to afford that bill every month.
Also, make sure you know what your loan interest rate is. Speak to your loan officer about different repayment options. Typically, longer loans will have lower monthly payments but higher interests rates, costing you more money in the long run. Loans with shorter terms will have higher monthly payments and lower interest rates, so you can pay your loan faster and spend less in total.
Whichever you choose, weigh your options to ensure that you are making the best financial decision for your situation.
Create a Budget
Create a budget so you know exactly how much money you’ll need after you graduate. How long can you go with no income? How long can you survive on your side hustle alone?
Do you intend to move back home?
Do you want to rent your own apartment? How much will you need for rent, utilities, food, and car payments? Think in detail about everything you will need to pay for and create a realistic budget so you know how much money you’ll need.
Plan Your Exit
After you’ve created your budget, create your exit strategy. And that doesn’t mean planning a huge party to celebrate your graduation and move out of your dorm.
Upon graduation, where do you plan to live? Where do you want to work? If you have a job lined up before graduation, you’re on the right path. But if you don’t, create a schedule an action plan that you can follow.
Decide when you will apply for jobs. Determine how much time you intend to spend on your side hustle. As a graduate, you’ve got to think about where you’re going, what your goals are, and how you’re going to reach those goals.
Don’t wait until graduation day to make these decisions. Being in limbo can be a terrible feeling. Do what you need to do beforehand to avoid that sense of uncertainty.
It’s easier said than done, but it’s best to avoid debt as much as possible. Debt is the leading cause of the financial crisis for college students and recent grads. So unless you like living at home with your parents, avoid debt as much as you possibly can.
When you’re in college, it’s easy to rack up credit card debt. You’ll just pay it back when you get a job, right? Wrong. It’s a horrible mindset to get into. It’s an awful habit. When you have debt looming over your head, it can seem like an impossible situation to dig yourself out of.
When you’re in the college bubble, it’s easy to forget that there’s a real world out there with real responsibilities. And once graduation comes, those responsibilities are going to smack you in the face. Before the frat parties are over and the late-night cram sessions have ended, take the time to create a plan so you can actually function in the real world.
While you’re still in school, gather your important paperwork. Apply for jobs early. Start a side hustle that can bring in some extra money. Make sure you understand the terms of your student loan requirements. Create a budget for how you are going to pay for everything once school is done.
And, most importantly, avoid the temptation of racking up credit card debt.
Everyone looks forward to graduation day. But a stark reality (and a lot of responsibility) will be waiting for you the day after. If you put these ideas into motion while you’re in school, you can avoid a major financial crisis and put yourself on a path to be a successful adult. In the real world.