Graduating from college or university is an exciting milestone. It marks the beginning of a new chapter filled with opportunities, independence, and responsibility. One of the most important responsibilities you’ll carry is managing your money. While it may feel overwhelming at first, setting a solid financial foundation now can help you thrive in the years to come.
Below are some practical steps to help you build confidence in your finances and begin saving for your future.
Step 1: Understand Your Income and Expenses
Start by knowing what’s coming in and what’s going out. If you’ve landed your first full-time job, determine your take-home pay (after taxes, benefits, and deductions). Then, list your regular expenses, such as rent, utilities, groceries, transportation, student loan payments, and subscriptions.
This exercise provides a clear picture of your financial reality. Many new graduates are surprised to discover how quickly “small” costs add up, from daily coffee runs to streaming services. Awareness is the first step toward control.
Step 2: Create a Simple Budget That Works for You
Budgeting doesn’t need to be complicated. A widely recommended approach is the 50/30/20 rule:
- 50% of your income goes to needs (housing, food, transportation, minimum debt payments).
- 30% goes to wants (dining out, travel, hobbies).
- 20% goes to savings and debt repayment beyond the minimum.
Adjust the percentages to fit your circumstances, but keep savings and debt reduction a priority. Use a budgeting app, a spreadsheet, or even a notebook - choose a system you’ll actually stick with.
Extra tip: If you can live at home for a while, you’ll be able to save that much more – or make a larger dent in any student loan debt you might have. It’s not an option for everyone; however, it’s definitely worth considering.
Step 3: Build an Emergency Fund
Life is unpredictable, and unexpected expenses such as car repairs or unfortunate circumstances such as a job loss can derail your budget if you’re unprepared. Start by aiming for a small cushion of $500 to $1,000. Once you’ve achieved that, continue building until you have three to six months’ worth of living expenses.
Keep this money in a separate savings account, ideally one that earns interest but is easy to access when needed.
Step 4: Tackle Student Loans and Other Debt
If you graduated with student loans or credit card debt, you’re not alone. The key is to create a repayment plan. Always make at least the minimum payments to protect your credit score, but try to pay extra toward high-interest debt when you can.
Two common strategies are:
- Snowball method: Pay off the smallest debt first for quick wins.
- Avalanche method: Focus on the debt with the highest interest rate to save the most money long term.
Choose the approach that motivates you to stay consistent.
Step 5: Start Saving for the Future (Even Small Amounts)
It might feel too early to think about retirement, but time is your greatest advantage. Thanks to compound interest, money you save in your 20s has decades to grow. If your employer offers a retirement plan, especially one with matching contributions, sign up as soon as you can. If your employer offers a pension, consider yourself incredibly fortunate!
Aim to save at least 5% and preferably 10% of your income for retirement, and you’ll be able to retire in comfort one day. Remember that you’ll also save on your income tax if you save in an RRSP!
Step 6: Establish Healthy Money Habits
Beyond the big financial steps, small daily habits can make a big difference:
- Track your spending for a month to identify patterns.
- Automate your savings so you don’t have to think about it.
- Use credit cards responsibly by paying off the balance in full each month.
- Automate bill payments to protect your credit score.
- Avoid comparing yourself to others. Financial journeys are personal.
Step 7: Seek Support and Keep Learning
Money management isn’t something you have to figure out alone. Trusted mentors, financial advisors, or your Kindred branch can provide guidance tailored to your situation. Continue reading, asking questions, and building your knowledge over time.
To get a sense of how you are currently doing, use Kindred’s Financial Health Score Calculator to get an accurate picture where you’re at, and what you could work on.
Final Thoughts
Starting out after graduation can feel both exciting and uncertain. By setting up a budget, saving consistently, and being intentional with your spending, you’ll create a foundation for financial wellbeing that allows you to focus on what truly matters in life, whether that’s building a career, travelling, giving back, or pursuing your passions.
Remember: financial health is a journey, not a destination. The important part is to begin.