The Ultimate Personal Finance Checklist for the Recent Grad
On behalf of our staff here at the Student Loan Education Office, we would like to extend our congratulations to all of the students who celebrated a graduation this past weekend. What an accomplishment to have come this far, and have so much ahead of you!
While graduating college should be an exciting time, a lot of students express that they have mixed feelings when it comes to graduating. You might be feeling overwhelmed or anxious about making the transition from being a student to a ‘real adult,’ and that’s totally normal! Personal finances are typically a major contributor to this mix of emotions students feel post-graduation. You’ve worked hard, spent countless hours in the library, finished projects and took finals –now you’re whisked into adulthood, expected to manage a budget, start saving money and pay your bills on time. All while adjusting to working a new full time job! All of the sudden, taking those finals doesn’t seem so bad… 🙂
The Student Loan Education Office is here to help! We’ve created “The Ultimate Personal Finance Checklist for the Recent Grad” that highlights six important steps to help you ease into the world of “adulting,” especially when it comes to managing your financial life.
1) Create a budget. If you’re transitioning into the working world after graduation and will be paid a salary or hourly wage, it’s very important to determine now what you can afford in rent, utilities, debt payments, and other financial priorities first. Don’t wait until you are coming up short each month after selecting a little “too expensive” apartment, or buying that fancy car. The first step is to estimate your net pay (salary after taxes) and then factor out your fixed expenses, like the items we listed above. The remaining is your variable or discretionary spending, like food, entertainment and transportation. Find more budgeting resources!
2) Track your expenditures. In a previous Facebook post we shared an app called Mint you can use to help budget your money. This app helps you understand your expenditures and makes tracking them a breeze. You can also choose to track your expenses by checking your bank statements at the end of the month, or using an Excel template. Focus in on the trouble areas you had in college. For example, those items you maybe spent a little too much on –like entertainment, shopping, and dining out. If you know your personal spending habits and set limits on these items now, you’ll save yourself money and will be out of debt faster!
3) Pay down debt. With graduation comes student loan payments. If you haven’t already, we encourage you all to complete Exit Counseling, which helps you to understand the repayment process, and select the repayment plan that’s best fits your budget. If you can, pay more than the minimum payment each month to ensure that you are keeping the interest down, which will help you get your student loans paid off quicker. If you are paying off credit card debt or a car loan, the same rule applies. With less debt payments, you’ll find more financial freedom for the things that matter, like saving and being able to live a higher quality life!
4) Start saving for retirement. If you are able to, start contributing to your retirement account right away. These savings multiply quicker if you start saving within the first few months, versus waiting until you’re older to start saving for retirement. (Remember the Time Value of Money? This is it!) We are not retirement experts by any means, but do recommend following TIAA CREF for advice. Their website has links and calculators to help you jump start your retirement planning and understand some of the lingo. Your employer may also have referrals within the Human Resources department who can help you create a customized retirement savings plan to fit your needs.
5) Monitor your credit. Credit definitely becomes a more pertinent part of your life after graduation. By making your student loan payments and other debt payments on time, those actions are going to start building your personal credit. This credit history will eventually determine what interest rates you’ll be offered on mortgages, car loans, and credit cards. Making late payments, and maxing out your accounts can negatively affect your credit. We advise checking your credit report for free from this site annually. To get your score, we recommend Credit Karma. Both your credit report and score can be utilized when working with lenders. [Side Note] Always be proactive about preventing identity theft by shredding these documents when you’re done, protect your passwords online and do not give out your personal information over the phone. New college grads tend to be easy targets for scammers, so be careful!
6) Take a free course Being comfortable with your personal finances doesn’t happen overnight. The transition will take some time! If you don’t know where to start, there is a free online personal finance course every student can take called CashCourse. And yes, it’s FREE! Their online personal finance tools help you build real-life-ready financial skills specific to your income and goals. If you are seeking one on one assistance, feel free to contact us today to make an appointment to create a post-graduation budget or a debt management plan with one of our advisers. Our office phone is 515-294-2223 or email us to request an appointment at firstname.lastname@example.org