5 Money Tips for Graduating Seniors

Your college years are almost behind you, and soon you’ll be crossing over the threshold into the uncharted jungle of financial independence. Establishing good habits as your enter this next phase of your life will put you on the right road to financial security and prosperity. Here are five tips to make the transition a bit more manageable.

1. Gather your papers

There are a few key documents—such as Social Security card, birth certificate, banking and credit card account numbers and insurance policies—that you’ll need for job hunting and other life purposes. Now is the time to get them together (don’t forget to check your parents’ house), organize them and consider purchasing a fireproof document safe to keep them secure.

2. Get ready to start paying off your student loans and credit card debt

Unfortunately, college students are graduating with an average student loan debt of $28,000 and credit card debt of over $3,000. Federal loans, and some private loans, give you a grace period after you leave school before payments become due, which gives you a little time to get organized. If you borrowed money to complete your degree, start by making a list of all your outstanding student loans. For federal loans, you can log in to www.nslds.ed.gov to view your balances and find information about your loan servicer(s). If you have private loans, check out the Consumer Financial Protection Bureau’s Student Debt Repayment Assistant for more information on the repayment process and how to determine what kind of loans you have.

You’ll also want to explore your repayment options. Contact your loan service provider(s) to discuss the options and determine which repayment plan is best for you. For a quick estimate of what your monthly loan payments are likely to be, check out this handy calculator.

If you have outstanding credit card debt, make it your top priority to pay that off, starting with paying more than the minimum payment and avoiding additional credit card purchases.

3. Reel in your spending

One of the biggest mistakes recent college graduates make is spending all or even more than what they earn. Unchecked spending habits threaten your financial health and your ability to reach long-term goals such as owning a home or saving for retirement. Getting off on the right foot is not that hard if you stick to a realistic budget, track your spending and avoid things like high rent, new cars and dining out too much. Remember, the key to gaining wealth is spending less than what you earn and saving the rest.

4. Start an emergency fund

Set aside a certain amount each month to build your emergency fund. Set up a direct deposit from your paycheck into an insured money market fund or savings account—even $25 will add up quickly. Your goal should be an amount equal to three to six months of your living expenses.

5. Pay yourself first

One great financial advantage you have as a recent college graduate is time. Money you invest now will have years of compounded growth. While paying off your credit card debt and making sure you can afford your monthly student loan payments should be your top priority, it’s never too early to start saving for your retirement. If your new employer has a 401(k) plan, be sure to sign up as soon as you are eligible and plan to put in 10 percent of your salary. In the meantime, consider opening an Individual Retirement Account (IRA). Small steps you take now can really make a difference to your retirement nest egg down the road.

What tips would you give to a graduating senior? Post a comment today!

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Showing 2 comments
  • Mike Stewart

    You may not be graduating with an Accounting Degree; however, now is the time to do your research and find out what is considered as Income; and what is considered as a Deduction, for your income tax. Many of you (students) will find yourselves on your very own for the first time in your life with your own job, place, and bills! By understanding your IRS stated deductibles, you should have a good idea of what $financial expense$ are considered as a deductible item. This is another area that I feel that you may turn into a habit. Start saving receipts, vouchers, charitable donations, volunteer work, child care, cost for schooling, moving expenses, cost of preparing to find that first job – to include transportation, luncheons, admin (postage, resume quality paper, and professional resume creation), and all of the miscellaneous items that apply.

    The next area pertains also to the mental habit forming process of gathering and organizing retailer coupons. Many retailers offer digital coupons directly from their Web-site. The local Sunday newspaper usually has a ton of coupons. The main point here is, with a little effort, you can start realizing how much you can actually save by being practical and using those coupons over a long period of time. When you see for yourself the comparison between the amount of what you use to spend to what you are now saving – it’s a no-brainer!!!

    The next item I mention may sound strange for someone as young as the median college graduate; however, this is very similar to the habit of savings through a money market or IRA. Shop around for a sound, solid investment for a Universal Whole Life insurance policy. They accumulate equity and you may need to borrow from this policy later down the road. The beauty of this is that you pay back what you borrowed from your own money a very, very small simple interest rate and you still have full coverage life insurance. Also, while on the topic of insurance – if you are renting your own place, take the time to get renter’s insurance. It’s inexpensive and very helpful to cover replacement of your valuables should something happen to them…

    The last topic will speak for itself! Find the best bargain – no matter if it’s airfare, hotels, vacations, retail shopping, 2 for 1 deals, anything that rhymes with saving money. You can shop till you drop, but look for the bargains. Some local thrift shops still have name brand items at give away prices.

    Today is the first day of the rest of your life. Start out with retirement on your mind and start preparing for your own future today! Enjoy!

  • Dave Thompson

    I think it is a great idea to buy your grad a fire proof safe for college. They can keep there important papers in there like tax documents as well as a passport. That way if anything were to ever happen they won’t have lost everything. I’ll definitely have to get one of those for my son when he graduates next year.