Graduating college is a huge achievement, deserving of the celebrations that typically go along with it. With a diploma in hand, you can see the world open wide for you, and the possibilities for your future can seem endless. On the other hand, adulthood comes with rent, car payments, job searches and student loan repayments—and the financial demands can also seem endless.
Here are six tips for recent grads to help you stay financially responsible while trying to get your life in the real world started.
1. Develop a budget or spending plan.
Think about your monthly income and what expenses you have. First, consider your basic needs, such as food, shelter and clothing. How much money do you need for groceries, rent, gas and utilities? Devise a budget and stick with it.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
2. Make sure you have a student loan repayment plan.
According to studentaid.ed.gov, recent grads have several options for repaying their student loans. Ignoring the situation is not one of them. Even if you can't make a payment, you have to deal with it responsibly and devise a strategy to repay it when you can. There are options such as lowering the monthly payment or applying for a deferment or forbearance, which stops the student loan bill for a determined amount of time. Visit www.StudentLoans.Gov for more details.
3. Start a rainy day fund.
Put extra money aside for emergencies. Life is uncertain: the car could have issues, or you could have a dental or medical problem. You want to have enough cash on hand to cover any of these kinds of situations when they inevitably occur. Furthermore, consider the domino effect: if the car needs to be fixed, how are you getting to work? Always think, "What if?" And plan ahead.
4. Know your credit history.
Being financially responsible decreases the odds of falling behind on bills, which can damage your credit score. A poor credit score may result in higher interest rates when applying for loans. If you have bad credit, you might not qualify for a car loan or mortgage. It could even cause issues in attaining a good job. Also, many landlords will check your credit history before renting you an apartment. You can check your credit report for free at www.annualcreditreport.com. The site is a helpful resource for learning about credit scores and obtaining tips to improve a spotty credit history.
5. Protect yourself with insurance.
According to the National Association of Insurance Commissioners (NAIC), the average renter's insurance policy costs between $15 and $30 per month. Renter's insurance provides a safety net in case you get robbed or your apartment burns down. You might think it'd be cheaper to replace stolen or damaged items, but being held liable for an accident in the apartment would be more costly. And some landlords may require you to have it.
Health insurance is definitely required. Your employer likely offers this benefit. However, even if you don't have that option, health care can still be accessible and affordable. At www.healthcare.gov, you can find several options for recent college grads.
6. Start thinking about retirement.
What, you can't possibly be thinking about retirement!? Think again. Sure, you're young and just starting out. However, it is crucial that you start retirement planning as soon as possible. Think of it as wealth accumulation. It's a trifecta: Time value of money, tax deferred growth and compound interest all working for you to help you accumulate wealth for your future. Plus, if your employer offers a match or contribution to your 401(k), you need to take advantage of that. Don't leave money on the table.
Using these simple tips will make life easier and more affordable—and you'll be well on your journey to wealth creation.
Marguerita M. Cheng is the Chief Executive Officer at Blue Ocean Global Wealth. She is a spokesperson for the AARP Financial Freedom Campaign, a CFP Board Ambassador and proudly serves on the FPA National Board of Directors.
-
Seven Surprising Reasons Retirees Are Going Back to WorkSure, money is a big reason to come out of retirement, but it's not the only reason retirees are doing it.
-
Dow Gains 617 Points as Rate Cuts Near: Stock Market TodayWednesday's economic data didn't shift Wall Street's expectations that the Fed is preparing for a rate cut at next week's meeting.
-
Beyond Banking: How Credit Unions Serve Their CommunitiesCredit unions differentiate themselves from traditional banks by operating as member-owned financial cooperatives focused on community support and service rather than shareholder profit.
-
Answers to Every Early Retiree's Questions This Year, From a Wealth AdviserFrom how to retire in a crazy market to how much to withdraw and how to spend without feeling guilty, a financial pro shares the advice he's given this year.
-
I'm a Financial Adviser: You've Built Your Wealth, Now Make Sure Your Family Keeps ItThe Great Wealth Transfer is well underway, yet too many families aren't ready. Here's how to bridge the generation gap that could threaten your legacy.
-
Want to Advance on the Job? Showing Some Courtesy and Appreciation Could HelpTwo business professors share their insights about the impact of digital communication on the social skills of some in Gen Z and the importance of good manners on the job.
-
From Job Loss to Free Agent: A Financial Professional's Transition Playbook (and Pep Talk)The American workforce is in transition, and if you're among those affected, take heart. You have the skills, experience and smarts that companies need.
-
A Financial Planner's Top Five Items to Prioritize When Your Spouse Is IllDuring tough times, it's easy to overlook important financial details, but you'll be so much better off if you take care of these things right now.
-
An Expert Guide to Outsmarting Inflation: Don't Let It Restrict Your RetirementInflation is often underestimated when estimating retirement income, education funding or investment returns. These strategies can help preserve your purchasing power and reduce your financial anxiety.
-
Your 401(k) Options Just Got More Complicated: Here's What You Need to KnowPrivate equity, real estate and expanded annuities are now options, but they are more complex, less flexible and more expensive to own.
