Financial Advice for the Soon-to-be College Graduates

College graduation is a meaningful and memorable life event for many. It means bidding adieu to many of the classmates and friends you’ve met over the past four years; it means taking time to celebrate your hard work and achievement; and it means the beginning of what can be a pretty major transition from the academic world to the working world. 

This last part can, at times, feel daunting since for many, post-graduation may be the first time college graduates are experiencing the financial responsibilities that come with adulthood.

Without the proper financial advice or if you’re not mindful of your financial habits, it can be all too easy for college graduates to rack up debt right out of college, especially if you seek a certain lifestyle that is well beyond your means. Some soon-to-be college graduates may enter the real world already thousands of dollars in debt thanks to student loans. While it seems like the odds are against you, there are plenty of helpful financial tips college graduates can put into play right out of college to ensure a bright financial future.

• Re-evaluate your options. As a recent college graduate you might not qualify for that no fee student checking and savings account you’ve had while in school. Look into the fees associated with your current accounts and shop around to find the best fit for you. Consider monthly balance requirements, direct deposit requirements and costs of using out of network ATMs. Look into checking and savings accounts at a local credit union. These not-for-profit institutions often offer low or no fee accounts.
• Create a budget. Yes it’s cliché but it’s imperative! For many college grads, this can be the first time they’re experiencing life with a disposable income. Don’t let that throw you off course. Without a budget, paychecks tend to come and go – often leaving people mystified at where their money has been spent. Many assume that budgeting means limiting or restricting one’s self. Rather, creating a budget tells you exactly what you have so that you can spend and save with conviction.
• Weigh your living options. Ask yourself whether it is more cost effective to buy or rent in your desired location. Some perspective home buyers may be attracted to living closer to work for various conveniences. If your commute to work plays a major role in your hunt for your first home, depending on your job’s location, it may be more cost effective to rent rather than buy a home.
• Consolidate. If you have student loans, contact your providers to look into consolidation and income based repayment plans. Income based repayment plans make it possible for you to successfully stay on top of your payments without breaking your budget. And if you can afford it, start paying back your student loans as early as you can rather than waiting for the grace period to end. Especially if your interest rates are higher, paying early can make a big difference in the affordability of your payments, and it is also a great way to establish credit since the student loans will be reported paid every month to the credit bureaus.
• Start saving! If you are living on your own for the first time having a safety net is very important. Look at your budget and decide what you will put aside every paycheck for savings. Treat your savings like a bill and pay into it as consistently as you pay your bills. Savings is a need, treat it like one.
• Think long-term. Right after college is the perfect time to start saving for retirement. The longer the money is in your retirement account, the more interest you will have an opportunity to earn. Saving for retirement early can have tremendous long term effects on your savings.
• Live well below your means. This means just because you make enough money to rent your own apartment or own a car doesn’t mean you should. If possible, consider living at home for two to three years after graduating college or taking public transportation so you can make additional payments on your loans.
• Check your credit reports using www.annualcreditreport.com. College is a time that many people establish credit, either through student loans, through their first credit cards or both. Right after graduating is the perfect time to see what is being reported to the credit bureaus and make sure that it is accurate. Taking a look at your credit reports can also help you understand what actually gets reported and what your priorities should be when it comes to protecting your credit and paying your bills. For example, one missed payment on a student loan or credit card can negatively impact your credit reports and score.

Perhaps most importantly, find a financial mentor. The best financial advice soon-to-be and recent college graduates can seek out often comes from someone who’s already walked in your shoes. Ask your parents, boss, mentor or financial institution what they did when they were your age to plan after college.