Post-college money management

Congratulations! All your hard work and dedication paid off, and it’s time to head into the world with a college degree. Stepping into post-grad life can feel a little overwhelming, and there may be questions about getting started on the right financial foot. For a smoother transition from student to full-time employee, here are several tips you can follow now to help create a brighter financial future.

College graduate budgeting basics

Landing a job after college can often bring the financial security of a regular paycheck and employee benefits, which can make it tempting to spend more freely. To avoid overspending and accumulating debt, it's important to create a budget or update an existing one you can stick to. This can also be an ideal time to set savings goals, define spending limits, and develop a clearer understanding of financial habits and priorities.

How to create a budget after graduating college

With today’s technology, several budgeting apps can make managing finances more convenient and straightforward. These apps allow users to organize spending into categories, set goals and spending limits, create bill payment reminders, and gain a detailed overview of expenses. For example, if there is a goal to repay student loans, funds can be automatically allocated toward this target each month. A budget can also be maintained using a spreadsheet and by tracking expenses through bank and credit card statements. Whatever method you prefer, using a budgeting tool can help optimize income, achieve savings goals, and build a more secure financial future.

Financial advice for managing student loans

Leaving college with debt is becoming increasingly common in this country, where borrowers average over $35,000 of student loan debt after graduation. For those with student loan debt, it's a good idea to create a plan for paying down the balance. Developing a personalized strategy that aligns with a budget can help minimize the financial burden of student loans and reduce the time needed to pay off the debt.

In certain cases, individuals may be eligible for student loan forgiveness, where the loan is forgiven, canceled, or discharged. For example, working as a government employee or a full-time teacher may provide opportunities for loan forgiveness.

How to manage student loans with a repayment plan

Most lenders offer a six-month grace period after graduation before the first student loan payment is due. It can be beneficial to start making payments during this period, even if the amount is small. Interest accumulates over time, so paying down the balance sooner can result in long-term savings. Many repayment plans span 10 years, so you may want to assess whether this timeline is feasible when reviewing a budget and developing a repayment strategy.

You could, whenever possible, consider making larger or more frequent loan payments. For example, if a bonus or tax refund is received, putting a portion toward the student loan can help reduce the balance more quickly. A well-structured budget can be a key tool in supporting the success of a repayment plan.

Steps to achieving financial literacy for young adults after college

Building financial literacy for young adults is an important step in successfully transitioning from college to the working world and gaining financial independence. To improve financial knowledge and make more informed decisions, you can start by gaining an understanding of key concepts such as budgeting, saving, investing, and managing debt. Building this strong foundation can help young adults make sound financial choices and boost long-term success.

Sharpen money management skills

Entering a new stage in life can be both an exciting and stressful experience, as it involves adjusting to new responsibilities and expectations. Practicing mindful spending and acquiring skills that promote financial health can help reduce stress and pave the way for achieving long-term goals. Here are a few tips to help set a strong foundation for success during this transition:

•  Eliminate unnecessary spending and subscriptions
•  Automate bill payments and transfers to savings
•  Consider an employer-sponsored healthcare plan or flex account
•  Monitor credit score
•  Establish an emergency fund

Consider the credit cards for new graduates to build credit

For those who did not have a credit card during school, this may be a good time to consider applying for one. When used responsibly, credit cards can help build a credit history and improve a credit score, which is essential for future purchases such as a car or home. Take time to research options and select a credit card with low annual fees, and possibly one that offers rewards or cash back on everyday purchases. Starting with small purchases, such as groceries or gas, and paying off the balance each month can help develop positive financial habits and prevent overspending or accumulating unnecessary debt.

Contribute to 401(k)

Joining the workforce not only provides a steady paycheck but also offers an opportunity to begin saving for the future. While retirement may seem far off, saving early and consistently can make a big difference.

Many employers offer 401(k) plans as part of their benefits package, allowing a portion of each paycheck to be automatically directed into a retirement account. Some employers even offer a company match to further boost retirement savings. When enrolling in a 401(k), it's important to consider factors like time horizon, risk tolerance, and tax implications. A financial professional or an HR representative can provide guidance in choosing the right approach. Additionally, a 401(k) is portable, meaning it can be carried over if a job change occurs, preserving both contributions and earnings.

Explore investing opportunities

Even for those new to investing, there are many options available to help build a financial portfolio and accumulate assets for retirement. The earlier saving begins, the more time there is for funds to grow. Options such as IRAs, high-yield savings accounts, CDs, bonds, or mutual funds can be effective tools for building wealth. For those interested in exploring investment opportunities, consulting with a financial professional can provide guidance in selecting the best options and developing a strategy to meet both short and long-term financial goals.

Share goals with a financial professional

Having a financial expert in your corner can be valuable when navigating the transition to life after college, as they can help strengthen financial knowledge and provide guidance and advice. Consulting with a financial professional offers the opportunity to review finances from a fresh perspective, answer questions, develop a plan to achieve goals for the first year out of college, and explore available options to reach those goals.

As financial understanding deepens, individuals can adopt healthy money habits and make informed decisions about their finances. A financial expert can also assist in adapting a financial plan and budget as needs and goals evolve over time.

With a new era beginning, there are several opportunities to create a strong financial foundation to further build your life upon. As you continue to grow your knowledge and make your savings goals a priority, you help set yourself on a path toward greater financial freedom and success.

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.

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