I graduated from college! Now what?
Graduating from college or grad school is a huge accomplishment and deserves to be celebrated. This milestone also marks a big life change, and how you handle your money and finances will also change. Here are ten things to consider when planning for your financial future.
- Assess your current financial status. Create a budget and be willing to change it based on job and living expense fluctuations. You may consider using an app to help track these numbers.
- Create a plan for managing and paying off your debt. Understand your student loans - where are they held, what are the repayment guidelines, what is the interest rate? If you have high-interest credit card debt, try to pay off the highest-interest debt first, followed by other debts. It may be a good thing for you to set up automatic payments, so you never miss a payment, and it can help to build your credit.
- Establish your emergency fund. This should include 3-6 months of your standard living expenses, and should be kept liquid (easily accessible in case of emergency). This fund can be used for large, unexpected expenses, like job loss, medical bills, or major repairs to your home or vehicle.
- Start investing as soon as you can. If your employer offers an sponsored retirement plan, begin contributing at least to the employer match (for example, your employer may offer to match contributions up to 5% of your monthly paycheck). Beyond the basic 401(k) or 403(b), you may consider a Roth or Traditional IRA. These two types have different tax benefits, so do your homework before settling on one. You may also want to work with an investment advisor to determine which one best fits your situation and goals.
- Build and maintain your credit. Credit is important for big purchases, securing good loan rates, and sometimes, for your job. Pay your bills on time, every time. Consider using a credit card, and always keep up with your payments. Be careful of opening too many lines of credit, as this can negatively impact your credit score.
- Get appropriate insurance. Auto insurance is required by law, but you may want to work with your agent to get the plan that works best for you, as many things can be customized to save money or offer better coverage. Additional types of insurance you may consider are home or renters insurance, health insurance, disability insurance, and possibly life insurance.
- Understand your employer benefits. If you are a full-time employee at a company that offers benefits, understand what those are and use them as much as you can. Most companies offer their full-time employees health insurance, a retirement plan, and paid time off. You may also have the opportunity to use a health savings account, commuter benefits, education reimbursement, and wellness programs.
- Set and plan for major life goals, like purchasing a home, taking a big trip, or having children.
- Choose the right bank for your needs. Look into what different banks offer. Credit unions are often a good choice, as they have special benefits for their members you may not find at other banks.
- Continue learning more about finances and investing opportunities. It's always beneficial to learn from anyone with more education or experience, and being willing to ask questions and make adjustments based on the knowledge you've gained. We recommend working with professionals as often as you can, including an investment advisor. Continue reading articles and saying up to date with your own finances as a way to improve your future.
