(Photo Credit: Philip Taylor/Flickr)
In the infographic below, OnlineCollege.org begins with budgeting basics, breaking personal finances into six main categories to help you allocate your monthly income accordingly:
As the infographic points out, there are three main financial accounts that most people have: a checking account, credit cards, and a savings account. It’s important to note that, while credit cards seem to be a means of building good credit over time, “plastic money” makes it too easy to overspend on luxuries in life that you, in actuality, cannot afford. Therefore, understanding the pros and cons of credit cards use is crucial when it comes to long-term credit and spending habits.
We’ve all heard the term, “save for a rainy day,” and probably don’t think much of it until something in life makes you understand what it means. It’s smart to always have a financial “cushion” to fall back on when life presents difficult situations, like losing your job. If you don’t have a savings built up “for a rainy day,” then you will be caught in a sticky situation where you either need to rack up your credit card debt or borrow money to pay your bills, which is never a smart move short- or long-term. So, allocate at least 20 percent of your monthly income to savings, so that you don’t get caught jobless, homeless, and scrambling for food.
For more information on the best cities for new grads as well as online tools to help you manage your personal finances after graduation, take a look at the infographic below.