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Budgeting 101

5 Things Fresh Graduates Should NOT Be Spending Their Money On

Your future self will thank you.

You have finally graduated. After spending countless hours chasing deadlines and studying for your exams, you’re finally free. And you now have a full-time job.

It’s tempting to go wild when your first paycheck comes in. After all, there’s so much you want to buy. You’re no longer living the days of a poor college student.

Here are 5 things that fresh graduates should try not to spend too much of their money on.

1) Expensive Clothes

Looking professional and stylish can be expensive. Every ambitious fresh grad wants to put their best foot forward, when it comes to interviews or starting a new job. Dressing to impress is important.

Sometimes, we want to go the extra mile to look immaculate. G2000 seems too ordinary since everyone is buying their clothes there. To look different from others, we might be more inclined to buy clothes from more expensive places such as Hugo Boss, Dunhill, or even tailored shirts.

A good shirt, pants, or pencil skirt is a good buy when it is well tailored. They make great staple outfits during important meetings and events. Also, tailored clothing is likely to be durable because you are usually paying for quality material and craftsmanship.

The problem lies in splurging for the sake of the brand name. For the face. The need to fit in and be admired. There’s a limit to everything. Even if tailored clothes are a good buy for the long run, it is excessive if every outfit worn to work was tailored.

People are novelty seeking, especially when it comes to clothes. Splurging on outfits for work isn’t worthwhile. We suggest finding the comfortable zone between quality and affordability.

2) Transportation

Uber and Grab fans, we’ve got bad news for you. We know dragging yourself out of bed in the morning, and squeezing like canned sardines on packed train is dreadful. You feel better skipping the morning rush with the help of Uber or Grab. Arriving at the office comfortably makes you feel good.

Until you see the bill.

Demand for rides to the CBD area in the morning is always high. A surge will be levied; you pay more on top of the standard amount for the same journey. Without a surge premium, a trip to work may cost around $25 – $30, depending on where you stay.

Uber provides a rather accurate fare estimate. Grab may sometimes be unclear about how they estimate their fares. A $25 – $30 trip could cost more than originally expected (see picture below).

The ride would have usually been around $27 for Grab around the same time on weekday mornings.

Spending on private transport can snowball to a large amount over a period of time. Simply waking up half an hour earlier to take the train could save you hundreds of dollars a month. Imagine how much you could’ve saved in a year.

Read Also: A Fresh Graduate Guide To Achieving Financial Freedom: Part One – Living Expenses

3) Dining

Everyone loves good food. It is even better when it’s convenient. Some of us love dining out at cafés and restaurants. A meal per person can easily amount to $30++.

The busy (or lazy) ones may prefer ordering their meals through popular food delivery apps like Food Panda, Deliveroo, or Uber Eats. Their food prices are similar to restaurants, with a minimum order required. Ordering delivery may be worthwhile only if the promo code offers substantial discount. Otherwise, it does not differ from eating at a restaurant.

It is not wrong to be eating out at nice restaurants. However, when it starts becoming a weekly habit, it will hurt your pocket substantially.

A more economical way would be the good ‘ol hawker centre food, or eating home-cooked meals more often. Food is especially awesome when it’s good and cheap.

4) Gadgets

When your first paycheck arrives, you’ll feel this swell of excitement. There are many things on your wish list that you want to buy. A new laptop, an Apple watch, a new phone, maybe even a new fitness tracker. The list goes on.

While the thought of finally satisfying your wants is gratifying, your bank account (and future self) will disagree. You need to learn how to differentiate your needs from your want. Are you buying a new phone because your current one is faulty? Or because you want to be seen using the newest model?

When we look back, count the number of things which you have bought that you didn’t really need. They could be all around you.

Impulse buying is dangerous for your pocket. With control of your spending urges, money saved can go a long way.

Read Also: A Fresh Graduate Guide To Achieving Financial Freedom: Part Two – Fixed Expenses

5) Grad Trips

Graduating is a significant milestone in your life for you and your friends. You celebrate by booking an overseas trip together hoping to post a group shot on Instagram that is #travelgoals worthy.

Overspending in your fit of excitement can cost you, especially if your peers have many plans for the trip in mind. From sightseeing tours, transportation, hotels, food, and shopping, your budget may be forgotten when you’re having so much fun.

The reality only sets in when you return home to bank balance and realise just little money you have left.

Key Takeaways

Fresh graduates should not spend unnecessarily. You are at a point in life when you can easily save lots of money if you want to. Invest and take advantage of compound interest. It should be your priority.

Saving more money today will ease your financial stress tomorrow. In future, you will be buying your first HDB flat, preparing for your wedding or starting a family. These will cause significant cash outflow. Do yourself a favour and buy only what you really need. You’ll thank yourself later.

Read Also: Why Saving $100,000 In 10 Years Is Much Easier Than Saving $10,000 In One Year

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