college graduateSo you have finished college and are now going to head out to the “real world.” You have dreamed all your life about being a real adult and getting to be in charge right? Well, as they say, “with great privilege comes great responsibility.” You will now be in charge of your finances, and no doubt you want to be successful and able to afford your dreams. Here are 6 things that you need to know so that you can be successful with your money:

1. Money = Personal Work Energy (PWE) – You have a limited supply of time and energy to spend in order to earn money to buy the things you want and need. It is a good idea to start thinking about how much time it will take you to work to buy the things you want so you can decide what is truly important to you. While you might like to buy new DVDs every week, how long do you have to work to pay for those? Is it worth it? When looking for your new job, you should also consider PWE in the perks and benefits of a job (perks are things like free soda and benefits are things like a 401(k) plan) so you can see what you are really getting for your time.

2. How to budget – This is a very important concept when you are starting out. You want to be able to start on the right foot and stay on it. Budgeting allows you first to be able to pay off student loans, pay for expenses like insurance, groceries, and entertainment without racking up debt, and it helps you save up for your goals/dreams (i.e. house, wedding, car, etc). Budget can seem like a scary word, but when you really break it down, it is just a matter of adding and subtracting. And if you are a college grad, then chances are you can add and subtract (no multiplication or dividing or fractions or proofs required!).

3. Tracking – This is how you know what you are really spending. You can budget $200 a month for food, but will you really spend that or will you end up with $300 realistically? Take a little notebook with you to keep track of what you actually spend when you spend it so you know if your budget is working or needs a little adjusting.

4. Periodic expenses and saving – You want to be able to put money into a savings account that will grow and that you can leave untouched. But you will also have emergencies or other expenses come up, like car repairs or a flight out to your best friend’s wedding, that you should be saving for in a separate “periodic expense” account. This way you have the money you need when you need it, and you won’t break the bank on those expenses that you can sort of plan for but don’t always know when they will happen.

5. Start investing now – don’t let your money only sit in a savings account because you might actually lose money over time thanks to inflation (that same $10 won’t buy as much in 10 years, and your interest rate will likely be much lower than the inflation rate). You do need to have some liquid cash, meaning money you can get to fast if you need it, but you should be investing also. When you start investing now, you give your money time to grow thanks to the magic of compound interest – that means the longer your money is there, the more it grows, and the more interest you earn over time. It is a good idea to start making the habit of investing now so that you can keep it a priority throughout your life and reach your financial goals.

6. You can do it! Maybe your parents were good with money, or maybe they weren’t. In either case, you can be successful with your money. Whether you are starting fresh or have some student loans and debt accrued already, it is not too late to start handling your money the right way. iMoneyCoach offers a Financial Life Training System – online courses that help you learn not only about how to handle your money, but how other areas of your life affect your money and how you can make smart decision.

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