How To Spend Your Money After Graduation

This was another google search term that led to my site. It’s an even better question than the first one, What should your net worth be at 30? And I have a better answer!

After graduation you should spend your money on…

Your immediate needs. This means food & shelter. Make sure you have a roof over your head and more than left-over pizza in your fridge. Don’t go out every weekend to eat at restaurants and call it a “need” because it’s food — that’s entertainment. I suggest lots of fresh veggies & fruits, but you can live on mac & cheese if it’s your thing.

A small emergency fund. Work on building up a buffer of about $1,000 to see you through any immediate catastrophes, like reduced pay due to taking a sick day or an unexpected dental bill. If you own a car, I would suggest a slightly larger emergency fund of $2,000 or even $3,000.

Interview clothes. When I graduated, I found that I owned practically nothing that could pass for business dress. This was a mistake. Go ahead and make the investment in a few quality pieces to see you through multiple interviews and one week of work at a new job. Once you land said higher-paying, new job you can get wardrobe to see you through more than a week of work.

Resume help. I went to the career centre at my university to get help with my resume. It was only $20, but the return was tens of thousands in increased income when my resume got me the job I wanted. I know burgers & beer sounds like a better way to spend $20, but I swear you’ll be able to buy way more burgers & beer if you spend $20 on your resume first.

A library card. As a student you probably had access to a library for free, but now that you’re a graduate you’re going to have the shell out the whopping $12 or whatever to take out books. I think this is a really important place to spend your money because like the two points I listed above, it’s an investment in yourself. After graduation, I visited my local library to take out books like What Color Is Your Parachute? and Life After College to help me get the job I wanted. I also hung around to read the latest copy of MoneySense and Elle (hey, can’t be serious all the time). Your library is way better than spending money buying books new or subscribing to magazines.

Your student loan debt. To quote my favourite financial hero Lesley Scorgie: “Congratulations, you’ve graduated and here is your bill”. If you don’t need to take advantage of the grace period, don’t. Start making payments on your student loans as soon as you can, and make those payments as big as you can. The faster you become debt free, the sooner you can get on with the awesome adult life ahead of you!

Your retirement. You have an income, start saving it. If you’re in your 20’s, you only need to set aside about 6% of your income for retirement. If your income is small, a TFSA is a better vehicle than an RRSP, but I would suggest researching all your options before making any decisions, since what’s best depends a lot on your income and student debt situation!

Your long and short term goals. Think retirement sounds boring and far away? Me too. That’s why it shouldn’t be the only thing you save for. Want a car? Set up a car fund. Want to put a down-payment on a home? Set up a house fund. Want to travel Europe? Set up a travel fund. Put money aside to pursue a graduate degree. Start contributing a little bit of every paycheque towards your long and short term goals in a high-interest savings account.

Spending money in these places ensures you are self-sufficient, financially secure, prepared, and have a plan. You’re also supporting your local library!