Kirby on Finance

Five Tips for Frugal College Grads

I recently found an article on BankRate.com that offered up some advice to recent college graduates on ways to manage your expenses as well as get yourself geared for a prosperous future. Most of the tips are obvious, but I think they’re a good reminder for us all whether or not you’re a recent college graduate.

1. Sock away some cash. “Having a small emergency fund can take a lot of the stress out of your financial life. That way if your job search takes longer than expected or your car needs a major repair, you know you’ll be covered. Having three to six months’ living expenses in a savings account or money market would be ideal. Do the best you can. Why not tuck away the $500 you got at graduation?”

I think I’m guilty of mismanaging my graduation money. I believe I saved a little bit of it, but blew the rest on unnecessary items. Hopefully I’ll have learned my lesson by the time I graduate law school!

2. Be thrifty. Dressing for a first job can be pricey. Be sure to check out the career-wear bargains available at thrift stores.

3. Watch those cell phone bills. Talking the talk with a cell phone can get awfully expensive. Using a pre-paid phone card can take a big bite out of your bill. “It makes you very aware of what you’re paying for phone calls, and it’s often cheaper,” Dunnan says.

4. Learn to cook. “The money that twenty somethings spend on food and eating out is mind-boggling,” says Jason Anthony, co-author of Debt-free by 30: Practical Advice for the Young, Broke, & Upwardly Mobile. Eating in can save you a bundle. So be sure to pack a lunch a couple times a week and cut back on some evening meals at restaurants. Why not have a casual dinner party at home and then head out for an evening?”

I’ve made a point to bring some Progresso soup with me every day for lunch. It’s amazing how quickly those savings adds up. Doing this has easily reduced my food budget by about a fourth!

5. Join your company’s 401(k) plan. Once you enter the working world, be sure to take advantage of an employer’s 401(k) plan. Many companies fully or partially match their employees’ contributions. Most employers let you sign on as soon as an initial probationary period ends. Setting aside 10 percent to 15 percent of each paycheck toward retirement is a good goal. If that’s too much, start with 5 percent and gradually work your way up. At the very least, contribute enough to qualify for your company’s matching contribution.”

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