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New Grad Tips for Managing Your Money — Even If You Don’t Have a Job Yet

Creating a budget early on can help you figure out exactly how much you'll need to financially support yourself before you get a job offer.

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Personal Finance Expert at Tally
May 4, 2021

With the economy rebounding, the class of 2021 will enter a promising job market. Though the pandemic remains top of mind for many, lots of companies are ramping back up as  restrictions ease  

That’s great news for college graduates. But even before they pick up their diploma, and start their first jobs, young adults should start thinking seriously about how to manage their money and build a strong financial foundation for their future success. 

This period between graduating and starting work is an opportune moment for young adults to set themselves on track to hit their long-term and short-term financial goals. 

Here are six smart money moves for saving, investing, and paying down debt as a new grad. 

Assess Your Financial Situation

Many new grads think that assessing their finances is not necessary because they don’t have any money yet. The truth is that it’s never too early to start. Think about it: You can’t set realistic goals without thoroughly knowing where you stand financially regardless of having a paycheck. 

Don’t assume you have a net worth of zero or don’t have important financial decisions to make just because you haven’t entered the workforce yet. This unique season of your life is a great time to lay a strong financial foundation. Get a system in place that you can stick with. Find a money management system that works for you, whether it’s on paper, a budgeting app, or spreadsheet. 

Know Your Income Requirements 

Creating a budget early on can help you figure out exactly how much money you need to make at a minimum to financially support yourself before you get a job offer. If you know you need a certain number to meet your financial needs, you will be much more motivated to be persuasive and ambitious when you try to negotiate a starting salary. Start with your spending. Look at all your credit card and bank statements from the last year to figure out where you are spending your money. Many banks and credit card companies have helpful tools to make doing this easier. For example, their websites may allow you to sort your purchases into categories and illustrate them in charts that make it easy to visualize where your money is going. 

Once you have a better idea of how you’re spending your money — and ideally where you can cut back on spending — you can rebuild your budget starting from zero. Start by adding the most essential costs such as food, housing, utilities, and internet to your budget first. You will also likely see that you are spending more than you thought in categories that you can cut back on, like dining out. 

Next, you can add your non-essential expenses like travel, clothing, and entertainment to your budget. These are the costs that make up the lifestyle you want to have. Knowing how much you need to cover these costs is an important part of the budgeting process. 

Don’t Adopt a “Dream Job” or Bust Mindset

You don’t need to wait for the perfect salaried job to start making money and building your resume. While you’re searching for that dream job, consider a side hustle or other ways to get direct or indirect work experience. Your job out of college does not have to define the rest of your career. Taking on a side hustle or a part-time job can help you make enough cash to start building your financial future or can give you a safety net if you run into a large unexpected expense such as medical bills or auto repairs. 

Once you do land work in your field, focus on doing exceptional work and building relationships, which will pay off later in faster promotions, raises, and bonuses. 

Save Smart, Save Early

If there is one thing we’ve learned in the pandemic, it’s that we need our cash cushion to be extra cushy because financial circumstances — like being employed — can change at a moment’s notice. So once you have income, set up a regular savings deposit where a percentage of each paycheck goes directly into savings automatically. Simultaneously, this is also a good time to start saving for retirement. Once you find a job, if your employer offers any matching investing program, sign up and max it out — that’s free money.

Avoid Investing FOMO

There is so much noise right now about investments like NFTs and SPACs, and all the cryptocurrencies. Tread carefully here, these are high-risk investments. It’s okay to keep things simple and start with well-diversified ETFs or mutual funds to spread out your risk. These options are also a lot more cost-efficient and tax-friendly. As for day trading, that’s not investing, it’s gambling. Unless you really know what you’re doing, don’t do it. And if you think you know what you are doing, you are probably wrong so take a step back.   

Start Systematically Tackling Debts

If you have debt, you’ll want to add your minimum monthly debt payments to your budget as well. On a piece of paper, write out each lender, how much is owed, and the interest rate. Seeing it right there is really motivating. Student debts may be the bigger debt, but these loans often have lower rates and in some cases, payments can be frozen during the pandemic. Instead, prioritize paying off higher-interest debts like credit cards. Tools like the Tally app can help manage your payments and pay down your credit card debt faster.

Want to start post-grad life with less credit card debt? Tally can make it easier to pay down credit card debt while saving money on interest!