By Carla Hindman
Director Financial Education, Visa Canada
Anyone who’s graduated from college or university understands the relief of leaving behind years of cramming for exams and living on dorm food. With the next chapter of their lives about to begin, this year’s grads deserve kudos for successfully negotiating the twists and turns of higher education. Now the fun begins.
Take it from someone who’s learned a few lessons the hard way – there are steps you should take now to ensure you start off on sound financial footing. A few tips:
Step 1: Budgeting 101. After living on a shoestring budget throughout university, people may be tempted to go to the other extreme after landing their first full-time job, buying all the things they’ve done without. Before going on a spending spree, first think about out (A) how much you earn and (B) how much it costs to live. If (B) is larger than (A), not only will you not get ahead, you may soon find yourself reeling from debt.
Step 2: Figure out what you owe. You can’t fix what you don’t know is broken. Roughly two-thirds of young adults begin their post-graduation job search saddled with student loan debt. According to the 2015 Graduating Survey by the Canadian University Survey Consortium, the average student graduates with around $27,000 in debt, but it may be much higher. When you factor in living expenses, car payments or transit and other monthly obligations, it’s easy to see why some grads feel overwhelmed.
Make the decision to pay off your debt. We all say that we really want to be debt-free, but our actions don’t always follow our words The Canada Student Loan Program says that most students take about 10 years to pay off their federal debt. Set a goal that’s realistic and achievable so you can stay on track as you continue to make financial decisions.
Although most government student loan programs offer a repayment grace period, many private loans don’t. Ask your lender whether they’ll reduce your loan’s interest rate if you agree to automatic monthly payments or after making a certain number of on-time payments. If you anticipate repayment difficulties, contact your lender immediately to discuss your options. You may be able to work out an agreement to defer payments, extend the loan’s term or refinance at a lower rate.
Step 3: Know the score, credit-wise. Many people don’t realize the important role their credit score plays in their financial future until after they’ve seriously damaged it by making late payments, bouncing checks, opening too many accounts or exceeding their credit limits. This can haunt you later, not only when you try to borrow money for a house or car, but also when you try to rent an apartment or apply for a job, since many landlords and employers check credit records and may reject applicants with poor credit.
Find out where you stand by ordering credit reports from one of the major credit bureaus – Equifax (www.equifax.ca) or TransUnion (www.transunion.ca).You can order one free credit report per year from each bureau.
Step 4: Finding the perfect job: It’s time to roll up your sleeves and put that lifetime of education to work for you. Finding the right job isn’t easy- it takes motivation to go after the industry or company you want, effort to ace the application and interview process and a bit of luck to land the job.
- School Career Centre: There’s a variety of resources out there to ensure a successful search. Reach out to your school career centre, and be on the lookout for recruiters who often come to schools or universities looking for future prospects. Many campuses hold job fairs and career events year round.
- The Internet: Online job hunting is fairly convenient. Job sites such as LinkedIn, Indeed, and Career Builder allow you to apply for jobs and/or post your resume for potential employers to come find you. Many employers look to social media when deciding on the perfect candidate, so it’s important that you clean up your social media profiles-no one wants a questionable picture or post to come back to haunt them.
- Networking: If you’re trying to get your foot in the door, start networking. Many of the best jobs out there are never advertised. The key to landing them is a lucky combination of being in the right place at the right time and talking to the right person. Don’t be afraid to go to social events and advertise yourself or talk about your goals. It’s also important to join online networking circles. Post a profile on LinkedIn and join groups to connect with relevant professionals.
Make sure you think about the big picture and not just the job you want now. Beyond earning a paycheque, what skills and experiences do you want to take away from your new job? Look to the next step of your career and think about which job will get you closer to that goal. Also, look at the associated benefits. A high-paying job with no benefits may not be as advantageous as a lower-paying position with a complete benefits package.
Bottom Line: Graduation is when all your hard work finally starts to pay off – just make sure you don’t sabotage yourself by overextending your finances early in your career.
Carla Hindman directs the Practical Money Skills program for Visa Canada. More budgeting and personal finance tips can be found at www.practicalmoneyskills.ca. As always, consult a financial professional regarding your particular situation.