The first few months after your college graduation are exciting and a little scary — you’ve got decisions to make about jobs, furthering your education, and where to live. If you know what to do money-wise, that’s one less decision to make. Here are the five things you must know about money post-graduation:
1. The First Day to Think About Your Student Loans Has Already Passed
If you’re one of the 60 percent of college graduates with student loans, then your biggest money concern post-college will be digging your way out of debt. Ideally, you’ve borrowed wisely and have already begun making some dent in your debt before graduation, but if not, there’s no time like the present to start thinking about how you will repay your loans. For most student loans, there’s a six-month grace period after you graduate before you start repaying. Well before that grace period’s up, contact your lender or lenders to settle on a repayment plan that’s right for you.
2. Think Big, Spend Small
When you land that first after-graduation job, it’s tempting to splurge. Don’t. Don’t move out of Mom and Dad’s basement, don’t ditch your roommates, don’t trade the old beat-up car for a new one just yet, don’t plan a three-day run on the poker tables in Vegas. In other words, don’t commit yourself to higher rent, a car payment, or other debts until you’re better established. Make plans now for the better apartment, the nicer car, and all the other big-ticket items, but hold off until you’ve got a little in the bank.
3. Speaking of Banking…
Start saving now. Whether you’ve got some plan in mind for your money or not, get in the habit of stashing a little away. You never know when the old car is going to give up the ghost or when you’ll find yourself recruited for best man or bridesmaid duty. Having something in the bank not only gives you a little extra wiggle room in your budget, it also helps you to avoid racking up more debt.
4. Start Building Credit
If you’re one of the select few graduates who’ve managed to avoid credit cards this long, congratulations. If, on the other hand, you’re a graduate who’s leaving school with student loans and credit card debt, you’re more the norm than the deviation. Avoid opening new credit accounts if you already have several, use your credit cards wisely, and start making more than the minimum payment as soon as possible. For those who don’t have cards, get at least one, but use it carefully, trying never to charge more than you can pay off at the end of the month, or within three months. Make your credit card payments on time, every time — it’s the fastest way to build credit that you’ll need to achieve your financial goals later on.
5. It’s Never Too Early to Start Planning for Retirement
Retirement can seem eons away when you’re just embarking on your career, but now is the time to start planning and saving toward that goal. If your employer offers a 401(k) or other retirement plan, try to put at least 10 percent of your earnings in. If not, open your own individual retirement account (IRA), and start saving on your own. Trust me on this one — no one ever reached 65 and said “I wish I’d saved less for retirement.”