Financial moves to make before you graduate college

After graduating college, there’s a new world to navigate as you strike out independently. You may plan to join the workforce and will need to learn how to manage your money and keep to a budget effectively. Before you earn your diploma, there are several financial moves you can make now to help get started on the right foot after college.
 

  Avoid overspending

One of the most valuable financial planning tips for college students is to keep on top of spending and avoid running up excessive debt during their years at school. Often, budgets are tight, and you must make every dollar go as far as possible. Sticking to a budget and being realistic about your lifestyle and what you can afford is essential. Creating a budget can act as a roadmap, revealing where your money goes and identifying opportunities to cut unnecessary spending or save more toward your goals.

To help keep track of your expenses, consider using a budgeting app that includes spending limits and will send alerts when approaching these amounts. Create different categories to organize your monthly expenses and make adjustments as your income or needs change. Adopting these healthy financial habits benefits you in the short term and can help you successfully manage your money after you graduate and beyond.

  Create a plan to repay student loan

If you’ve borrowed a student loan to help with your college tuition and expenses, you’re likely considering how to repay this balance after graduation. Knowing what to expect can help you be better prepared and allows you to lay out the steps necessary to repay your student loan in a reasonable amount of time. As soon as you graduate, you typically have a 6-month grace period before your first payment is due. If you’re working during college and have extra income that is not needed for essentials, consider creating space in your budget for repaying your student loan, whether that begins while you’re still in school, during your grace period, or several months after graduation.

You may want to consider automating your student loan repayments and examining the repayment options available through your loan provider. Some providers offer income-based repayment plans to help you manage costs based on your budget. As your loan balance decreases, so does the amount of interest you’ll pay, so creating a repayment plan as soon as possible can help you get out of debt faster and free up income to spend on other things.

  Save for the future

When you’re busy studying and working toward your degree, saving for the future may not be top of mind. However, thinking about your future self while still in school can be hugely beneficial. Putting money away each month can help you make larger purchases down the road and create a more solid financial foundation once you graduate. Helpful ways to free up money that can be put toward your savings include:

• Buying second-hand clothes, furniture, and textbooks
• Earning extra income through tutoring, odd jobs, or housesitting
• Minimizing eating at restaurants or ordering take-out
• Carpooling if living off campus
• Taking advantage of your student discount at retail stores, digital services, and movie theaters

  Create an emergency fund

Stashing away cash for a rainy day can help protect your bank account or credit card from taking a hit if an unexpected event pops up. This financial safety net helps you avoid borrowing more money, increasing debt, or drastically cutting back on necessary expenses. Beginning to build your emergency fund as a college student can help lower stress levels, knowing you have a fallback plan in case financial challenges arise. Include this savings goal in your budget, and regularly deposit money into this account. If you exit college without using these funds, you’ll already have a reserve that you can continue to build upon as you enter the workforce and begin your post-graduate life.

   Keep an eye on your credit score

Your credit score is a crucial indicator of your financial health and is used by lenders to determine how well you manage your money and pay down your debt. A good score can help you secure financing for larger purchases, like a car or house. If you’re looking to rent an apartment, your score tells your potential landlord if they count on you to make monthly payments. You may not have much credit built up during your college years, but any time you use a credit card, aim to pay off your balance each month instead of letting the total amount build. Be mindful of how much you use your available credit limit. Many financial experts recommend keeping your credit utilization ratio below 30%. This means you use under 30% of the available credit limit on a given credit card account each month.

Earning your college degree is a great way to invest in your future and acquire essential building blocks to help launch your career. By being mindful of your finances and following healthy money management practices while you’re still in school, you can help begin your post-graduate life with less debt, more savings, and positive financial habits that will benefit you for years to come.

B3-MN-5-23