Setting Myself up for Financial Success After Graduation

 As current college students, the thought of “life after graduation” will most likely come across our minds at some point. Sometimes, this can be a student’s worst nightmare. The thought of moving out of your dorm room permanently can seem frightening at first, but fear not because here are a few answers to some common questions associated with this stage in life.

Nowadays, most students have multiple bank accounts like savings and checking which also comes with multiple cards (credit/debit). If you do not have these accounts, now may be the time to begin thinking about getting one. Some key things to look for when choosing the account are the fees charged by a checking account (many of which can be avoided if you follow their policies) and a savings account that has a decent interest rate. This may result in you choosing to use a money market account instead, which will usually payout higher interest. As you look for these accounts, confirm that they are insured by the Federal Deposit Insurance Corporation (FDIC) at banks and the National Credit Union Administration (NCUA) at credit unions. These organizations insure up to $250,000 per depositor.

Banks and other lenders enjoy seeing that you are capable of managing different types of debt; therefore, you might also consider a few ways to build your credit score while still in college. Obtaining and using a credit card WISELY can be an efficient way to begin boosting your credit score. This will allow you to begin establishing a more comprehensive credit history. For your first credit card, you will want to be aware of annual fees, interest rates, cash advance fees, and so on. You may also want to look at the benefits of the card like cash back opportunities or advantages to certain companies at which you enjoy shopping. Without an established credit history, your credit limit may be relatively low, which can be helpful since this card is not meant to go crazy with. Financial professionals recommend using 30% or less of your credit card limit and paying it in full, on time every month. The purpose of this card is to build a solid credit score which will look appealing to future creditors. A few other ways to build your credit score would be through student loans or Experian Boost. If you have student loans, paying them on time will positively affect your credit score. If you pay any utilities, you can also use Experian Boost, which connects to your bank account to track your on-time utility payments to help “boost” your credit score.

After earning your first full-time job and receiving a steady income, you will need to create a budget. It may be helpful to create this budget on estimates prior to getting the job so that all you have to do once you get the job is make some adjustments. A simple way to do this is to begin with listing your take home pay and fixed monthly expenses (rent, utilities, car payment, insurance, phone bill, etc.). After that, add in your variable expenses (groceries, entertainment, gas, car maintenance, gifts, etc.). Also, think through your savings goals. For example, maybe you want to buy a new couch for your new apartment within the next 5 months. If the couch costs $800, you would need to save $160 per month to reach your goal. Feel free to add other savings goals like an emergency fund (3-6 months of living expenses), a car, home, wedding, etc. You will then be able to subtract all of your expenses and savings goals from your take home pay and see where you are. If you have money left over, you could add in something else to your budget or increase some of the categories. For example, you may put extra on loans to pay them off quicker. On the other hand, if you are losing money each month, go back over your expenses and savings goals and cut back what you can or find a way to get more income. If your savings goals are high priority, you might decide to eat out less or choose entertainment options that cost less for the time being. This is simply a general overview to budgeting.

Another major question that comes up after graduation is if it is a wise idea to move back in with your parents. A survey done in 2008 by CollegeGrad.com found that 77% of graduates moved back in with their parents. There are pros and cons to this idea that should be addressed. While moving back in with your parents may seem like a great way to save money, it also takes away a lot of responsibility that adults need to learn after college as well as adds the responsibility to communicate well with your parents on expectations. Setting up a deadline to move out could be a smart idea; this way you will not be tempted to live with your parents longer than you anticipated or needed. You might also consider paying your parents rent, utilities, and groceries, even if it is just a small amount. Using this time that you are living with your parents to focus on boosting your career, paying down debt, or finding an affordable place to live, whether that’s with roommates or on your own, can be a great way to save money, as long as you do not overstay your welcome.

These are just a few answers to some pressing questions that college graduates are facing. If you would like more information, please feel free to set up an appointment through the following link or check out the book Money 911 written by Jean Chatzky: http://www.ronblueinstitute.com/schedule-an-appointment/one-on-one-coaching-res/book.