Did you recently graduate from college or university in the middle of Covid-19? Graduating can be an exciting and stressful experience, so it is perfectly understandable that some students may be feeling even more anxious about graduating during the Covid-19 pandemic. To help make the transition from student life to adult life easier, here are some financial tips for recent grads.
Live Like a Student After Graduation
When you land your first full-time job, it can be tempting to start living the high life. As a recent grad, you may experience pressure from your friends to indulge in the nicer things that life has to offer. This could mean renting an upscale apartment or buying a fancy car. But living like that right after graduation will set you back financially, especially if you still have some student debt.
You’re probably already used to living like a student, so why not continue to do so? This may not be the most exciting thing to hear, but it’s all about the long-term. Short-term pain for long-term gain, as the saying goes.
Instead of going out and renting the most expensive place you can find, why not consider living with roommates for the first while? It will enable you to start saving for the future.
If you live in the city, do you really need a car? It is smart financial decisions like this that can really pay off in the long run.
Prioritize Paying Off Your Student Debt
Do you aspire to own a home one day? A home can be a great way to build wealth long-term, but it also requires long-term planning.
When you apply for a mortgage, any other debts that you have is factored into the equation. If you have student debts, this can substantially reduce your maximum purchase price. Through goal setting, you pay off your student debt sooner.
Set yourself a goal of when you would like to have your student debt paid off by - let’s say in three years. Then, work your way backwards. Figure out how much money you’ll need to put towards your student debt each month in order to achieve that.
Do you have enough money from your current budget? If not, you might consider cutting back on your spending or getting a side hustle. By paying off your student debt, it can help your home buying dreams become a reality one day soon.
Establishing Your Credit
Again, if you plan to make a big purchase, such as a car or home, you’ll want to take steps after you graduate in order to that. One important way to do that is by establishing good credit.
If you don’t already, you may want get a couple of credit cards with at least a $2,000 limit. Use them responsibly. That means paying off the balance in full each and every month. By doing that for a couple of years, you’ll help to establish your credit score to make it a lot easier to apply for a car loan or mortgage later on.
Relief Benefits Available to Post-Secondary Students
If you’re a new grad graduating during the current Covid-19 pandemic, there are some things you’ll want to know.
If you worked during the school year and earned an income of at least $5,000 in 2019, or the 12 months before the date of your application, you may be eligible for the Canada Emergency Response Benefit (CERB). The CERB provides $2,000 a month for up to four months if you’ve lost income due to Covid-19.
If you’re a new grad who’s looking for a job, but haven’t stopped working because of Covid-19, unfortunately you won’t be eligible. Likewise, if you did not work during the school year, you won’t be eligible for the CERB.
Even if you don’t qualify for the CERB, help is coming your way. Payments on Canada Student Loans will be put on hold March 30 to September 30. Your student loan won’t accrue any interest during this time. Interest relief is also available for similar provincial student loans.
For a full list of relief measures for student and eligibility criteria, you can check out this article.