Graduation may mark the culmination of 16 plus years of studies and hard work, but the relief and joy of college completion barely sets in before the jarring start of “real world” fiscal responsibilities, especially amidst a COVID-19 pandemic in which the access to the coming-of-age ceremonies are rather limited and the employment world looks more confusing than ever.
While navigating this time’s “firsts”, freshly minted grads should get back to the books – educating themselves on the financial basics that facilitate independent adult life.
Here are five top tips for every new grad to get started….
Know What You Owe.
Remember that money you borrowed to pay for the last four years of your life? It’s time to start paying it back. As overwhelming as that may seem, know that student loans left unattended only become more daunting.
Make a list of what you owe, when and to whom. Work those numbers into a realistic monthly spending plan. If paying down the liabilities still seem unattainable, take the time to research your alternatives – refinancing, consolidating, applying for government programs like Income Based Repayment, etc. The most important thing is to be proactive. Procrastination doesn’t pay.
Track Your Spending.
The cost of basic living can be a real shock to the system. Even mundane necessities like paper products and cleaning supplies place surprisingly significant demands on spending.
Get grounded in your day-to-day costs by tracking every dollar spent. Once you know how much it costs to live, you’ll know exactly how much you need to make – at a minimum.
Taking a look at your expenses in this way can also be an illuminating exercise in appreciating value. When you see how much a visit to your favorite salon costs for example, compared to how long it takes you to earn that same amount of money, former “necessities” suddenly become far less important.
Check Your Credit.
If you’ve been having trouble being approved for your first non-dorm room apartment or your first solo credit card, you may want to give your credit score a quick check. Even if you have no immediate need for credit, checking your score is good practice as it’s the primary measure of your fiscal responsibility to future landlords, lenders, insurers and in some cases, employers.
Spend some time learning about your credit and what you can do to improve it. Building credit takes time, so get started now. Sign up for a credit monitoring service there are a ton of great free ones, and go to www.annualcreditreport.com and pull one of your three available credit reports at least once a year.
Think About The Future.
With so much happening post-graduation, it’s hard to think 30 to 40 years in advance, but cultivating your long-term mindset will serve you for years to come. If you’re already working with a full-time employer, take the time to understand your benefits and enroll in company health and retirement programs.
If you’re still figuring it all out on your own that’s fine too, but it’s no excuse to defer future planning. Look into individual retirement accounts like a Roth IRA, or a Health Savings Account, and start reading up on investment basics or talk to a financial professional that has experience working with young professionals to get a grasp of essential principles.
Have Some Fun.
The end of college isn’t the end of all things fun and exciting…if anything, it is the beginning of independence. Learn how to spend on the things you savor. Realizing those priorities early on will set you up for smart, value-based decision making for the rest of your life.
Congratulations and enjoy!
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Legacy Care Wealth is a member of leading organizations in the industry, including NAPFA, Fee-Only Network, and XY Planning Network. They have been featured in multiple publications and websites including Kiplinger, CNBC, U.S. News & World Report, NerdWallet, and Forbes. President Danna Jacobs has been a featured guest on multiple podcasts including “Wine & Dime”, “XYPN Radio”, and “Financial Advisor Success”. She has also been a speaker at industry conferences including “Digital Marketing for Financial Services Summit”, “SEI Women’s Network Annual Leadership Summit” and “XYPN Live”.
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