3 Financial Tips for Graduates

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During the peak of the great recession, it was fair to say that graduates in the UK struggled to find employment. The landscape has shifted over the course of the last five years, however, with the UK now ranking 12th in the world in relation to employment rates for recent graduates.

In the UK, an estimated 84.4% of recent graduates aged between 20 and 34 have found work after finishing their studies, while an estimated 48.2% of the country’s population have secured some form of higher education qualification.

However, whilst the current generation of graduates may be finding it easier to seek out work in the UK, it’s also important that they adopt a proactive approach to managing their finances against the backdrop of a volatile economic climate. Here are some actionable steps to help them on their way:

 

#1 Plan to Save

The UK economy received a considerable boost in the three months ending August 2018, when real wages increased by 3.1% in comparison with the same quarter one year earlier.

However, this increase followed more than a decade of lost wage growth, while disproportionate increases in the rate of inflation have also left households increasingly reliant on savings and borrowing in recent times.

Given that the UK’s departure from the EU is likely to exacerbate this issue (at least in the short-term), it makes sense that graduates plan to save as much of their disposable income as possible from the moment they enter the world of work.

Regardless of the job that you’ve been required to take as a graduate, it’s important that you prioritize your earnings to cover everyday expenses (like food and utilities), recurring bills and a consistent savings contribution. This will help you to get the most out of your income, particularly in terms of minimizing debt and accumulating savings.

 

#2 Take Control of your Debt from the Outset

The concept of debt is an important one, while it’s something that new graduates must deal with proactively from the moment they begin to earn.

The reason for this is simple; as whilst debt can devour cash flow and devalue your assets over time, there are also positive examples of debt that enable you to get on the housing ladder, buy a car and even fund a business venture.

So before you begin to accumulate debt and spend your hard-earned cash, you’ll need to distinguish between the various types of debt and develop a strategy that helps you to settle your burden within a predetermined time-frame.

This way, you can create a strategy that’s based on the amount that you owe and the nature of individual credit agreements, while striking the balance between retaining control of your finances and saving towards the future.

 

#3 Become a Good Credit Risk

On a similar note, it’s also important that you utilize credit wisely as a new graduate. After all, this will enable you to apply for mortgages and similarly high-value secured loans in the future, which in turn will be central to the quality of your life as an adult.

So while some people may be tempted to avoid debt as a way of managing their finances more effectively, this is a false economy that will actually prevent you from fulfilling some of your life objectives in the future.

To avoid this issue and ensure that you become a good credit risk, you’ll, therefore, need to pursue positive credit transactions and look to build your score over a sustained period of time.

If you’re looking to build a credit history from scratch as a new graduate, it is recommended that you open a basic bank account. This will enable you to regulate your spending and build positive credit by repaying your bills each month.

What financial tips would you share for graduates?

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